The U.S. Export-Import Bank closed its doors last night after Congress failed to extend its charter. If it stays closed it will be bad news for American export firms that compete with their foreign counterparts in the nearly 60 countries that have export subsidy programs.
There is hope, however, that the charter will be restored by Congress later this month. A majority of the House and Senate support the long-standing export credit program.
The key problem is getting the legislation to the House floor. Rep. Jeb Hensarling, R-Texas, the chairman on the House Financial Services Committee which has jurisdiction, is strongly opposed to renewing the Ex-Im Bank. So are a majority of House Republicans, who have threatened to make trouble for Speaker John Boehner, R-Ohio, if he allows the Ex-Im legislation to reach the House floor.
Opponents of the export subsidy program say it is a special-interests gift to big businesses like Boeing, Caterpillar and General Electric, all of which take advantage of Ex-Im guarantees for the loans their overseas clients take out to purchase their products.
The more persuasive counter-argument is that those companies’ foreign competitors all have similar government loan guarantees to help them make sales. Remove the Ex-Im Bank’s help to American exporters and they will face an uncompetitive situation, with predictable economic consequences for the U.S.
The bank does its largest loan volumes for big-ticket exporters like Boeing, but it also helps mid-sized exporters across the country. Without its help, many of them would withdraw from foreign markets.
Opponents of the Ex-Im Bank appear to think that they are appealing to ordinary working Americans who distrust Big Business and government subsidies. But their position, if successful, will reduce blue-collar jobs.
The opponents also appeal to principle, arguing that government ought not to subsidize the private sector. Yet it is notable that they have decided to attack the Ex-Im Bank, a comparatively small player in government subsidies, instead of focusing on much larger tax breaks for certain industries and hedge funds, or huge government guarantees of home mortgages that are beneficial to the financial industry and real estate sector.
Admirable as the desire is to disentangle government and the private sector and do away with sweetheart deals, opponents of the Ex-Im Bank have chosen the wrong target.
They would close an institution that helps American firms compete against subsidized foreign competition and in the process create economic growth and good jobs.
And they call themselves Republicans?