Every industrialized country in the world helps offshore customers to obtain financing for exports they wish to purchase. The main agent of such transactions in the United States is the Export-Import Bank, often referred to as Ex-Im. Last year, Ex-Im helped finance $36 billion in exports, including $6 billion from small businesses — in the process sustaining 250,000 U.S. jobs. The loans and credit guarantees the bank provides must comply with international rules and congressional legislation prohibiting predatory trade practices. To cover the cost of its operations, Ex-Im charges users a fee that has resulted in payments of about $2 billion to the Treasury since 2008.
This sounds like a pretty good deal — a federal agency that creates jobs in the U.S. while turning a profit by charging fees to foreign customers. However, critics have repeatedly sought to impede the bank’s operations by denying it congressional reauthorization or preventing the appointment of senior leaders. These critics come in two flavors: free-market ideologues and self-interested companies. The ideologues say Ex-Im distorts market forces by handing out government subsidies, which is untrue. The companies say Ex-Im helps foreign companies compete with U.S. companies, which is also untrue.
It is an easy thing to demonstrate why the charges that critics level are inaccurate. It is even easier to demonstrate that U.S. exporters would be at a big disadvantage if the federal government unilaterally ceased providing credit while all of America’s key trading partners continued their own financing programs. But there’s a more telling point about the critics that commentators are often too polite to mention: they tap into export credits when it serves their purposes, even as they seek to deny those credits to others. For instance Chris Chocola, president of the Club for Growth that frequently assails Ex-Im activities, headed a family-owned maker of agricultural machinery called CTB International that repeatedly used Ex-Im programs to facilitate offshore sales.
Delta Air Lines, the most strident corporate critic of Ex-Im, is a major recipient of government export credits from Brazil and Canada, and earlier this year was able to win a contract for engine maintenance services because the offshore carrier purchasing the services obtained a $45 million loan guarantee from Ex-Im Bank. It was recently reported that Delta will receive up to a billion dollars in export assistance from an arm of the Canadian government to purchase regional jets made by Montreal-based Bombardier. Some of those Delta jets may end up competing with other U.S. carriers on international routes — precisely the reason Delta says Ex-Im should not be helping foreign airlines finance the purchase of widebody jetliners made in the U.S.
This sounds a wee bit hypocritical. Delta and the Club for Growth may have some tortured explanation for why tapping Ex-Im programs was O.K. in their case but is still bad for America in a larger sense, however I’m going to guess most people will have trouble following their reasoning. But I don’t want to be unfair. So I would like to extend to Delta and the Club — and any other Ex-Im critics so inclined — the opportunity to explain on Lexington’s web-site why it’s O.K. for them to utilize government export-financing programs at home and abroad, but a bad thing for other folks to follow the same practice. Inquiring minds want to know. Please limit your responses to 500 words.
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