In-Depth: Sen. Kevin Cramer (R-ND) introduced this bipartisan bill to reauthorize the Export-Import Bank for 10 years and prevent its expiration on September 30th:
“Many North Dakota businesses utilize the Export-Import Bank to access global markets. Reauthorizing the bank, with these reasonable reforms, gives it a chance to implement necessary changes while also offering more American manufacturing firms and small businesses the opportunity to compete on the world stage.”
Sen. Kyrsten Sinema (D-AZ), this bill’s lead Democratic cosponsor, added:
“The Export-Import Bank is critical for Arizona’s economy because it ensures our businesses can compete, and win, on a level playing field with a foreign competitor. This bipartisan renewal provides certainty to employers across our country, and represents a step away from Congress’s usual short-term crisis management.”
The U.S. Chamber of Commerce supports this bill and states that the Ex-Im Bank helps American businesses compete with foreign rivals:
“Foreign governments have established 113 ECAs of their own around the world. In 2018, China’s two ECAs alone provided 130 times as much medium- and long-term export credit support as the Ex-Im Bank. Due to the extensive competition in this space, it is vital that Ex-Im be reauthorized to ensure that U.S. businesses and workers are not deprived of a basic tool enjoyed by their competitors in every other country.”
Proponents of the Ex-Im Bank point out that nearly 90% of the Bank’s total transactions involved small businesses, and in 2014 those transactions were valued at about $5 billion, making up around 20% of the total value of the Bank’s activity that year. It has also been noted by the Bank’s supporters that these activities supported over 160,000 U.S. jobs in 2014.
The Export-Import Bank (or Ex-Im Bank) has been criticized as "corporate welfare" because several of the companies benefitting from its existence are among the largest corporations in the U.S. About 40 percent of the Ex-Im Bank’s 2014 authorizations benefited Boeing alone, and nearly two-thirds of the Bank’s 2013 money went to 10 U.S. companies, including General Electric, Caterpillar, and Ford along with Boeing. Of the $2.3 trillion that the U.S. exported in 2013, the Ex-Im Bank only approved $27.3 billion of loan guarantees — amounting to about 1.2% of the value of that year’s exports.
Writing for the Competitive Enterprise Institute, Ryan Young argued that this bill “contains no positive changes and several bad ones,” and elaborated on his opposition to Cramer-Sinema:
“It would do away with board approval for large projects, increase Ex-Im’s portfolio cap to $175 billion, and would last for ten years, more than double the usual period. It would mainly benefit large companies like Boeing and Caterpillar that don’t need help, plus large state-owned enterprises such as China Air.”
Rep. Justin Amash (I-MI) introduced a bill to end the Export-Import Bank (H.R. 1910) after a three-year wind down period, saying on its introduction:
“The Export-Import Bank is a prime example of Washington’s addiction to political cronyism. Instead of allowing businesses to compete in a free market, politicians pick winners and losers. Meanwhile, taxpayers assume the financial risk for the bank’s federally backed loans while a few corporations pocket the profits.”
This legislation has the support of 14 bipartisan cosponsors in the Senate, including nine Democrats and five Republicans.
Of Note: The Export-Import Bank (or Ex-Im Bank) was established in 1944 by President Franklin D. Roosevelt to serve as the official export credit agency of the U.S. and help American businesses export their goods and services. Here’s how the Ex-Im Bank describes its role:
“When private sector lenders are unable or unwilling to provide financing, EXIM fills in the gap for American businesses by equipping them with the financing tools necessary to compete for global sales.”
In other words, it uses insurance policies, direct lending, and guarantees to facilitate transactions between foreign buyers and American companies to occur that otherwise wouldn’t happen because of credit or country risks.
The Ex-Im Bank is self-funded through user fees it collects, but ultimately it’s backed by the full faith and credit of the U.S. government, which means that taxpayers are liable for losses incurred. Legally, it can only authorize transactions with a “reasonable assurance of repayment” and as a result it reported a default rate of only 0.5% in December 2018.
In addition to doubts about the Ex-Im Bank’s benefits, it has been maligned for its cost — its price tag was estimated at $2 billion between 2015 and 2024 by the Congressional Budget Office.
Doubts about the long-term survival of the Ex-Im Bank date back at least as far as December 2011, when the White House drafted a contingency plan to be put into place if Congress failed to authorize the Bank’s appropriations during that budget cycle.
From 2016 until May 2019, the Ex-Im Bank’s board lacked a quorum, which caused a $40 billion backlog of prospective transactions to accumulate and $20 billion in export opportunities to be missed. The Senate’s confirmation of three board members in May 2019 re-established a quorum.
Summary by Eric Revell(Photo Credit: iStock.com / aapsky)