Export-Import Bank helps Wisconsin businesses create jobs

As the reauthorization saga of the US Ex-Im bank continues, today we publish yet another opinion favoring reauthorization.  These arguments make sense  and provide a generally correct view of the situation.  Our own view on the US Ex-Im Bank situation will be published in the upcoming issues of this publication.

Milwaukee-Wisconsin Journal Sentinel
OUR VIEW | EXPORT-IMPORT BANK

House Budget Committee Chairman Paul Ryan (R-Wis.): Ryan opposes the Export-Import Bank.
Associated Press

If world markets really worked the way Rep. Paul Ryan wishes they did, he’d be right about the need to eliminate what he calls a “strange collusion of big business and big government,” an obscure little federal agency called the Export-Import Bank.

But world markets do not work that way. Governments routinely support domestic businesses; Chinese export credit subsidies were about 50% higher than those provided by the Ex-Im Bank in 2012. Given the reality of the global economy, the U.S. needs to be in this game to compete. And the U.S. government needs to play a role.

Killing the bank, as critics such as Ryan advocate, would kill American jobs, including jobs in Wisconsin. The bank’s charter expires Sept. 30, and, for the first time, this efficient agency may be in jeopardy. That could be costly to the state.

It’s surprising, all this huffing and puffing about “crony capitalism” and government waste, because this is a tiny agency as measured against a $3.5 trillion federal government. The Ex-Im Bank had a total operating budget in 2013 of a mere $90 million, the Congressional Research Service reports, and it costs taxpayers exactly nothing to operate; the cost of running the bank is paid by fees and interest charged to its private customers. In fact, the bank returned $1.1 billion to federal taxpayers last year.

We might be more willing to listen to Ryan and his cohorts in this venture if they were more willing to carve up some of the fatter budget hogs — say farm subsidies — but lawmakers of both parties have been loathe to touch those sacred cows. As columnist Robert J. Samuelson of the Washington Post concluded recently, this is “mostly political grandstanding.” We quite agree.

“In a perfect world there’d be no need for it, but the Ex-Im Bank prevents the U.S. from facing a competitive disadvantage with our trading partners based on policies put in place by their governments,” Republican U.S. Rep. Reid Ribble told Journal Sentinel reporter Craig Gilbert.

The Ex-Im Bank is a reasonable way to help American companies climb over such hurdles. The bank, which was created in 1934 by President Franklin D. Roosevelt, makes loans and provides loan guarantees and credit insurance to help foreign buyers purchase American-made products. The bank estimates it supported about 205,000 export-related jobs in 2013.

And while it’s true that the overall effect of the bank’s work is sometimes hard to gauge, that’s hardly a reason to eliminate it and put jobs in Wisconsin and elsewhere at risk.

As the Journal Sentinel article noted, the bank last year authorized a $694.4 million loan to help an iron ore mine in Australia with the condition that it buy hundreds of millions of dollars of equipment from Caterpillar Inc. and two other companies. While the bank claimed that the loan would bolster 3,400 jobs in the U.S., critics of the deal say production at the Australian mine will put downward pressure on prices and harm producers in this country.

One of the loudest critics of the bank has been Delta Air Lines, which competes against foreign airlines that buy their American-made Boeing jets with subsidized loans backed by the bank. Delta may have a reasonable concern, but it’s one that the bank and lawmakers could address, as U.S. Sen. Tammy Baldwin (D-Wis.) has noted. Killing an agency that has helped to support so many other jobs is not the way to address those concerns.

Since 2007, the bank has worked with 183 Wisconsin companies and supported $4 billion in exports in the state, according to statistics provided by the bank. That translates into an estimated 25,500, many of them with small businesses.

If the Export-Import Bank were closed, “it would have a ripple effect throughout the U.S. economy,” says Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce. He told Gilbert that the argument against reauthorization “crashes on the rocks of reality when it comes to competing in a global market.”

Lawmakers need to face that reality. They should have a healthy debate because no government agency is above tough scrutiny. And if loan procedures need to be tightened to address unintended consequences and legitimate complaints, then they should be tightened. But don’t kill the bank. If the Ex-Im Bank goes away, jobs will go away, too, and some of them will be in Wisconsin.