Pizza in Motion is happy to see some movement extending the Export-Import bank’s charter, even temporarily.
I don’t think Ex-Im should go away. I say this narrowly from the perspective of someone who’s a Boeing supporter.
Here’s a video my employer put out a month ago to explain Ex-Im winners and losers.
The Export-Import Bank backs $37 billion worth of exports, which amounts to 1.6% of the U.S.’ $2.28 trillion in exports. The bank states that $12 billion of that (0.54% of total US exports) is justified based on foreign competition.
The Export-Import bank itself claims to support 200,000 – 300,000 jobs each year out of ~ 10 million export-related jobs in the U.S.
Now, the Export-Import bank is small as far as federal programs go. CBO projects $2 billion in losses over the coming decade, which is peanuts compared to the budgetary impact of other agencies. So the flashpoint in Congress is mostly symbolic — the agency is supposed to sunset without reauthorization, which is what generates the attention now. And it’s corporate welfare for some large US companies — the single largest beneficiaries are Boeing and GE.
But if the goal were to make US firms competitive, corporate tax rates is one place to start..
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So, Crony Capitolism isn’t good for America??
Why does anyone care about importing and exporting pets?
Corporate tax reform is a right-wing bugaboo. Most large US corporations pay little to no federal income tax, despite the high rates. Boeing, for instance, paid none last year. As for Ex-Im, I agree it’s corporate welfare, but eliminating it would put U.S. exporters at a disadvantage since the European credit agencies will continue to support their own exports.
@Richard there are ways to avoid the corporate income tax at current rates, but those are generally bad for the economy and the country. The point of tax reform should be to avoid the economic distortions inherent to tax avoidance. But I’d take issue with “most” large corporations paying little or no federal income tax, that’s just a much more extreme claim than is true.
I don’t think we should be helping Emirates and other gulf carriers buy Boeing planes at a cheaper rate than US airlines can get.
@Richard is actually correct. Not only is corporate tax reform a “fake” crisis created by those who advocated neo-liberal policies and corporate practices like outsourcing this video is nothing more than a political hack job. The assumptions behind much of the “looser” are not just naive they are downright disingenuous. When neo-liberals argued for their destructive trade policies they promised that the tax system was going to even out the distortions, now they are reneging on their promises and corporations are refusing to pay their fair share. @Richard is also correct on corporate tax evasion.
If the only “real” losers of the Ex-Im, domestic airlines really care about fair trade then let them argue for opening the domestic travel market to foreign competition. Ex-Im is corporate welfare but its also a cheap “Industrial Policy.”
Don’t Kill the Export-Import Bank
By WILLIAM E. BROCK IIIJULY 28, 2014
WASHINGTON — AMONG the many things that President Ronald Reagan did to promote economic growth was to ensure a level playing field for American businesses abroad — including by supporting an expansion of the Export-Import Bank, which provides financing for the export of American goods and services.
Thanks to his focused, principled leadership, the American economy grew significantly in the 1980s, a fact that the bank’s recent, vociferous critics, including many from Mr. Reagan’s own party, should bear in mind.
As a Republican, I would prefer that the private sector carry the entire load of supporting our international competitiveness. But the world market is not a level playing field, and the bank is absolutely vital for companies involved in the global economy. Having worked closely with Mr. Reagan on trade issues, I am confident that he felt the same.
In the 1980s, as today, the bank came under criticism, accused of playing favorites among companies and industries. Then, as now, many politicians called for it to be “sunset,” or phased out. But rather than abolish it, Mr. Reagan called for change, insisting that it become more transparent and fiscally responsible.
He did so because he understood the bank’s clear, enduring value. Last year, it returned about $1 billion to the Treasury, something almost unheard of for a government agency. And while the Ex-Im Bank is no replacement for the private sector, it has a remarkable record as a financial institution: Its default rate, below 1 percent, is better than that of many private banks.
And while it is true, as some critics maintain, that the bank is focused on helping very large companies, its assistance ripples through the economy to help the smaller and medium-size businesses that supply larger companies.
In my home state of Tennessee, for example, the Ex-Im Bank has supported nearly $900 million in export sales since 2007, according to publicly available data from the bank; that translates into support for about 6,000 jobs. Nationally, over the last five years the bank has supported 1.2 million jobs — and many of those are the sort of well-paying, high-skilled manufacturing jobs that we should be championing.
The bank is particularly important today, when tight credit allocation by banks, still cautious after the recession, has left many companies, especially small and medium-size ones, unable to find financing to sell their products abroad.
These companies face tough competition from companies in other countries. Many of these foreign businesses receive credit financing from their own export-import banks, at levels unseen in the United States. In 2013 China provided $46 billion in medium- and long-term official credit support; the United States offered only $15 billion.
Those foreign export-import banks aren’t going away; if anything, they will grow more important as the global economy continues to integrate. That is why recent calls to end the Ex-Im Bank won’t work. Should we tell American companies to stop exporting? Are we prepared for the job loss that would result from decreased support for American exports?
The bank is not perfect. It could do more to increase efficiency and transparency, and to better leverage partnerships to reach even more small businesses. But as President Reagan understood, that is a reason to reform it, not end it. Opponents of the bank say that it supports just 2 percent of all exports. Still, 2 percent amounts to $37.4 billion of American products made by American workers in American plants. That translates into tens of thousands of jobs from every state in the country.
Lawmakers of both parties say they want to introduce policies to create and support jobs. But before we go creating new government programs, we should look at what already works — including the Ex-Im Bank.
William E. Brock III, a former Republican senator from Tennessee, served as the trade representative and secretary of labor under President Ronald Reagan.
@Stuart Falk – it is a gargantuan stretch to suggest that 1980s growth is in even some modest way attributable to such a small program as Ex-Im. No respectable economist would make this claim, I guess it’s not surprising that it would take a former Senator to do it!