The finance-extending mandate of the U.S. Export-Import Bank ended on June 30, since polarized Congress could not agree to reauthorize it. The bank, commonly referred to as the EXIM, continues to service more than $100 billion in outstanding loans and guarantees, but it can no longer offer new aid. And its current funding will only last until September 30. Now, this limbo status is having real consequences. Sources reported on Tuesday that Boeing is scrambling to find alternate financing for a satellite contract, worth “several hundred million dollars,” that was scuttled by ABS due to uncertainty about the future of the EXIM. And last Thursday, GE said it may ship up to $10 billion of manufacturing work overseas in the absence of EXIM support.
Opponents say the EXIM is just unnecessary taxpayer subsidies to big corporations who don’t need it, and supporters say it helps American companies compete and thus safeguards American jobs. The bank itself says it has supported 1.3 million private-sector American jobs since 2009 (164,000 jobs in fiscal year (FY) 2014 alone). Nearly 90% of EXIM transactions—more than 3,340—in FY 2014 directly supported American small businesses. Over the past two decades, the EXIM has generated nearly $7 billion more than the cost of its operations, including a $675 million surplus in FY 2014.
EXIM financing supported $27.5 billion worth of U.S. exports in FY 2014. Of that total, $10.7 billion represents exports from U.S. small businesses, while big businesses in the aircraft, oil & gas, satellite, service, and other manufacturing industries accounted for $16.8 billion. The large firms may not need EXIM financing in the same make-or-break way that small exporters do, but nearly 60 other export credit agencies around the world are also trying to win jobs for their own countries, so the EXIM Bank helps level the playing field for American businesses. And without it, as GE’s statement demonstrates, big firms are willing to outsource work if they can get more favorable financing elsewhere.
Politico reported that Boeing and GE have halted political contributions to more than a dozen Republican lawmakers opposed to reauthorizing the EXIM, after cutting checks to them during the 2014 election cycle. The EXIM may be reauthorized, but not before more economic and reputational damage is done. Unfortunately, we have been down this road before, particularly with the self-inflicted government shutdown fiasco in 2013. EXIM should be reauthorized ASAP, but knowing Congress, a temporary deal will probably be reached at the last minute, i.e., before the money runs out in September.