Have you been following the battle over the Export-Import Bank? If you are a manufacturer who relied on the bank's financing assistance to help you obtain business, you probably have watched every twist and turn. For everyone else, there is the less critical appeal of watching enormous energy and money spent on a process that should be -- in the larger scope of American politics -- fairly trivial.
The Ex-Im Bank helps guarantee financing so that American businesses can sell to foreign buyers. Since July 1, the 80-year-old federal agency has been out of commission for new business because Congress failed to reauthorize the bank.
Until recently, the bank's reauthorization was routine business. But in the polarized, overly lobbied world of Washington politics, very little is routine anymore. The government lurches from one ideologically driven crisis to another and largely ignores the issues that matter the most.
In the time that lobbyists, think tanks and pundits have besieged Congress with statistics and talking points about Ex-Im, Washington has not fixed corporate taxes, found permanent ways to incentivize research & development, addressed workforce training, offered real solutions to soaring entitlement deficits, or found the money to pay for our crumbling infrastructure.
Why has the Ex-Im Bank drawn such wrath? Critics call it an example of corporate welfare. That means giving taxpayer money to those who don't need it. Washington is awash in such shady cronyism, the argument goes, and Ex-Im is a place to finally draw a fiscal line in the sand.
While about 90% of Ex-Im transactions support small business, critics say that figure is relatively meaningless. What counts is that most of the money goes to support a relative few multinationals -- primarily Boeing and General Electric. Other major users of the Ex-Im financing assistance include Bechtel, Caterpillar and Exxon Mobil.
Bank critics also argue that commercial banks can readily provide financing for U.S. exporters and their customers. They say the bank's loans cover less than 2% of U.S. exports. As Doug Bandow wrote in Forbes.com, "The bank simply doesn't matter much in an $18 trillion economy."
Supporters counter that 60 countries have their own export credit agencies. Doing away with the Ex-Im Bank amounts to unilateral disarmament by the U.S. They warn that this comes while the country continues to run huge trade deficits. And many manufacturers say the argument that Ex-Im is not needed flies in the face of their own experience. As Jim Goltz, the president of industrial furnace manufacturer Retech Systems told IndustryWeek, "In spite of what some people in Congress say, I have no idea what we are going to do if they do away with the Export-Import Bank."
It is certainly possible to argue that the Ex-Im Bank is unnecessary in some absolute construct, but should that negate the fact that the bank is very useful?
The Ex-Im Bank can't solve mercantilist policies or other forms of unfair competition, but it helps U.S. firms find the financing to sell their goods overseas. Offering that competitive assistance is useful, whether it helps Boeing or a small manufacturer.
Despite a good deal of debate over the accounting, the bank appears to make money while helping exporters. According to Ex-Im's annual report, the bank returned $675 million to the Treasury in FY 2014. There is risk attached to guaranteeing loans, but managing risk while costing taxpayers nothing is useful.
Lauren Wilk, NAM's director of trade facilitation, said manufacturers were able to "hit the pause button" on financing in July, but by mid-August were starting to see deals jeopardized by the Ex-Im freeze. The "dire warnings" NAM gave lawmakers are starting to come to fruition, she noted.
The ironic part of all this is that most observers expect the Ex-Im Bank to be reauthorized, most likely by attaching it to another bill. This maneuvering is necessary despite the fact the bill has passed the Senate three times and would likely clear the House as well if it could get to the floor for a vote.
Thank goodness the Ex-Im Bank isn't being asked to guarantee sensible behavior from lawmakers. Far safer to place a bet on puffery, pretense and posturing -- you know, the stuff that is unnecessary and useless.