It is time for the federal government’s Export Import Bank to sail into the sunset when the June 30 “reauthorization” date arrives.
What traditionally had been a small business aid generations ago now includes facilitating loans for companies as large as Boeing and General Electric. Though it is true many small businesses are in the food chain of such companies, what has developed is a kind of financial arms race among foreign countries and the U.S. to back loans to finance exports. We get the global marketplace that we must do business in, but we don’t agree with the premise that we have to keep backing loans for our companies because dozens of other countries have their version of the Ex-Im, and without ours, we will concede a competitive edge.
Ex-Im boasts about taking on higher-risk loans — and creating business, and jobs — that the commercial banks won’t. Why? If it is not a good loan — and Ex-Im makes bad ones like any bank does — why should American taxpayers shoulder the risk? In an era of $14 to $18 (take your pick) trillion deficits, why are we continuing to write blank checks to fund Ex-Im and reauthorize its charter?
Sales, jobs and more sales, right? Who is to say those jobs would not have come without Ex-Im?
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Though a recent New York Times story reports the Ex-Im bank returned “$6.9 billion to taxpayers over the last 20 years from fees, premiums and interest,” an analysis by the independent Congressional Budget Office paints a much bleaker picture. Opponents of Ex-Im, including members of the Idaho congressional delegation, criticize the bank for “picking winners and losers” and point to an ongoing fraud investigation of the bank.
It is a fact that through Ex-Im loan guarantees and insurance, some 37 Idaho companies have done more than $200 million in business overseas since 2007. But when we spoke to some Gem State clients of the Ex-Im we were surprised to learn that even they have mixed feelings about using the bank.
Ex-Im insurance for loans costs less, and terms for deductibles are better than they could ever get in the commercial market — at this time. Well, maybe that’s because we are subsidizing the lower price points. True, some Idaho companies have thrived using Ex-Im, which leads Gov. Butch Otter and other Northwest governors to support it.
Names of Idaho companies that use Ex-Im are a matter of public record. That said, we have had trouble finding Idaho companies that will publicly sing Ex-Im’s praises. One such company identified by staffers at the Idaho Department of Commerce never returned our calls. Another would not speak on the record fearing a political backlash for taking advantage of a perfectly legal program. One Idaho company anticipates an end to the Ex-Im and has begun to get quotes from private insurers.
Our congressional delegation is somewhat split over keeping Ex-Im. Rep. Raul Labrador and Sen. Mike Crapo are against reauthorization. Sen. Jim Risch was on the fence the last time we asked. Rep. Mike Simpson — long a supporter of Ex-Im — has said his vote may depend upon a bill that includes changes and reforms to the bank.
Something tells us Idaho and the rest of the country will find a new profitable path in a post-Ex-Im era, and do just fine in the export markets.
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