Export-Import Bank more than just the ‘Bank of Boeing’
In this Washington, the idea that a federal agency helped Boeing sell 106 airliners last year might have us doing handstands, especially when we learn that it didn’t cost taxpayers a dime. The Export-Import Bank of the United States did it by offering $7.9 billion in loans, loan guarantees and credit insurance to foreign purchasers of Boeing aircraft, the same sort of thing it has done for the last 80 years.
Leave it to the other Washington to turn things upside down. Critics in Congress say this represents failure. They are leading a crusade to shut down the bank, on grounds that its lending to large corporations represents “corporate welfare” and crony capitalism.”
Somehow conservative rhetoric has been harnessed for a cause that will hamper America’s ability to compete in markets abroad, and the argument is so lofty it drifts in the direction of outer space. But here’s what counts. If Congress fails to reauthorize the bank by Oct. 1, the little guy gets whacked just like Boeing does. It’s not just the Bank of Boeing.
The Times editorialized recently in favor of the bank’s reauthorization, and certainly its support of Boeing transactions are reason enough. Last year Boeing accounted for a little over a quarter of the bank’s book of business, though some years it has exceeded 40 percent. Boeing’s position as top beneficiary is easily explained, as airliners are high-dollar items, Boeing is really the only major domestic producer, and there just aren’t a lot of commercial banks clamoring to lend to airlines in sub-Saharan Africa. Boeing calls on 15,000 suppliers, so there is an indirect impact on small business. But there also is a direct one.
Just talk to Jason Speer, vice president for sales at PEXCO, a Fife-based manufacturer of traffic cones, reflective traffic lane markets and other highway control gear. It just concluded a deal to sell $125,000 worth of equipment to Denmark, financed through Ex-Im. Without it, the deal could not have been done. The bank’s demise “would definitely hinder our growth,” he says.
There are plenty of cases like that – international deals too small for commercial banks, advocates say. And maybe it demonstrates how statistics can be used to prove any point. Critics say 60 percent of the bank’s business supports exports from 10 large companies that may not need any help. Advocates, like U.S. Rep. Denny Heck, D-Wash., who is leading the fight for re-authorization in the House, point out that 89 percent of the bank’s transactions support small business.
Here in this trade-dependent state, the bank has quite an impact. Since 2007 the Ex-Im Bank has supported $110 billion in exports from Washington. Most of it was for Boeing, of course. But of the 183 Washington companies that have received support, 133 of them are small businesses. Heck notes that the number-two company in Washington state to avail itself of the Ex-Im Bank’s services is Chateau Ste. Michelle winery — an indication of the wide range of products the bank supports. He says:
“When we talk about the impact of the Export-Import Bank, we aren’t just talking about the big companies. This helps the little guys too, like a boot manufacturer in Spokane. But the bigger transactions, like an order for tractors, often include parts produced by small manufacturers. The beginning to the end of the supply chain is a part of the export ecosystem.
“We must not purposefully remove ourselves from these global markets that want quality, American-made products. These small businesses work hard to expand their reach. We can’t abandon tools that allow them to thrive and hire more people by competing on a global scale, either directly or indirectly.”
Normally re-authorization is about as non-controversial a vote as can take place in D.C., but last time out, in 2012, there were 93 votes against the bank in the House, all Republican, and critics are gearing up for an even stronger push to kill it. Last week, House Financial Services chairman Jeb Hensarling, R-Texas – a man some consider House-speaker material — outlined the case against Ex-Im in a speech to an enthusiastic crowd at the Heritage Foundation. Theoretical was the word for it. He called demise of the bank “an achievable victory” for “our movement,” for a Main Street vision of business over a “political insider” vision of business. But he never did get around to explaining the good it will do America to lose business to foreign competitors with functioning credit agencies. Every other country of the developed world has such an agency – 59 countries in all. Hensarling was dismissive: “It kind of sounds like the argument I hear from my 10 and 12-year-olds, “ he said. “’Everyone else is doing it, daddy. ‘”
It’s hard dealing with argumentation of that sort, Heck says. “Welcome to my world.” He looks forward to a battle over the next four months in which he will have to convince lawmakers Ex-Im is worth their attention. Last time out, all members of the Washington delegation voted yes, Republican and Democrat. Might be easier if they would all help Heck make the case.