When a wide range of political leaders agree on something, you can bet it has broad support. And that’s certainly true of the bipartisan call for Congress to re-authorize the Export Import Bank to help American companies do business overseas.
The Bank’s value is undisputed – it supported $27 billion in American exports last year without costing taxpayers a dime. But its future is far from assured.
Ex-Im is the worst possible poster child for Big Government supposedly run amok. For one thing, it’s just not very big – the Bank is a 400 person technocratic outpost that does little more than provide loans and insurance to help U.S. companies sell goods and services abroad. The cataclysmic charges of government domination from Bank opponents simply don’t stand up.
Opponents do even worse when they demagogue the Bank’s finances and claim it puts taxpayer dollars at risk. In fact, Ex-Im is run more cautiously than most commercial operations, with a default rate 80 percent lower than most private loans.
Thanks to this careful management, the Bank is able to control costs and pay for all its operations out of the interest and fees it charges for its work – most years it even turns a profit, money that goes back to the Treasury to pay down our debts. Bank critics call it “crony” capitalism but that looks like plain old vanilla capitalism to me.
Those who question the value of the Bank need to take a closer look at how it works. From Fritz-Pak Corporation in Mesquite, a small manufacturer that relies on Ex-Im insurance to sell concrete products to Europe, to Deugro in Houston, a freight and logistics company that has one-third of its projects financed by Ex-Im, its impact is felt across our entire state. The CEO of Austin’s Aereon Corp. recently warned that, without Ex-Im credit guarantees, “we’d only have one-tenth the buying power.”
Other Austin companies like Flare Industries, On-X Life Technologies, and Emerson Process have relied on the bank for deals ranging from just a few thousand dollars to over a hundred million dollars in Texas sales. Overall, the Bank has had a hand in $21 billion in Texas exports over the last five years, helping us climb the ladder to become the nation’s top exporting state.
And all that economic activity translates into jobs. Ex-Im transactions supported 164,000 US jobs last year. And the bulk of these are at small businesses, which are involved in nearly 90 percent of the Bank’s transactions. But if the Bank’s opponents close the Ex-Im Bank, these transactions and the Texas jobs they support would be lost – and likely end up in the hands of our rivals overseas. Outsourcing U.S. jobs most definitely is not good business.
Critics attack the Bank for distorting private markets, but Ex-Im’s charter forbids lending where a private market alternative exists. So we must be very clear – if opponents succeed in shuttering the Bank, these billions in dollars in exports cannot simply shift to private financing. These deals simply won’t go through, and the business will be picked up by our rivals in China, Europe, and around the globe, who offer more export credit than Ex-Im does. America already ranks just 8th out of the 10 largest global economies in export credit offered as a share of GDP.
Shutting down the Ex-Im Bank would be unilateral economic disarmament – I urge Texas Congressional leaders to support jobs and business in our state and reauthorize the Bank before its charter expires this June.
Mike Rollins is President of the Greater Austin Chamber of Commerce, serving more than 3,000 members.
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