In recent months, Congress has engaged in a strange and costly debate over the future of the U.S. Export-Import Bank (Ex-Im). For eight decades, Ex-Im has provided loans and guarantees to cover financing gaps for American exporters. However, due to congressional inaction, Ex-Im was forced to shut its doors when its charter expired on June 30 this year.
The benefits of Ex-Im’s programs for the U.S. economy are plain: Over the past eight years, it provided financing or guarantees for more than $200 billion in U.S. exports, supporting more than 1.5 million American jobs at 7,300 companies.
Ex-Im is especially important to Idaho because trade plays a big role in the state’s economy. More than 35 Idaho companies financed trade through the Export-Import Bank, supporting $192 million in export sales and 1,227 Idaho jobs.
Although many exports are financed by commercial banks, Ex-Im is indispensable in some specific circumstances. For instance, commercial banks usually won’t allow smaller companies to use their foreign receivables as collateral. In these cases, most small businesses simply couldn’t export. That’s why Ex-Im is critical: It provides guarantees for commercial banks’ loans, making exports possible for small businesses.
This is also why small and mid-sized businesses account for nearly 90 percent of Ex-Im’s transactions. In Idaho, where more than 1,700 businesses are exporters, access to Ex-Im has proven vital for these companies. Nationally, thousands of smaller companies that supply goods and services to large exporters also benefit from Ex-Im’s activities.
Not only does Ex-Im directly support American jobs, but it operates at no cost to the American taxpayer. Far from being a subsidy for corporations, Ex-Im charges significant fees for its services. Over the past 20 years, Ex-Im has generated $7 billion in revenue above its operating costs and returned these funds to the U.S. Treasury. The bank also follows rigorous accounting and risk management standards, resulting in less than a 2 percent default rate over the last 80 years.
Every major trading nation has an export credit agency like Ex-Im; more than 80 of them are in operation around the world. Failure to reauthorize Ex-Im would amount to unilateral disarmament in the face of other governments’ far more aggressive export credit programs, which have provided 18 times more export credit to their exporters than Ex-Im did to U.S. exporters last year.
If Ex-Im’s charter is not renewed soon, Idaho and other American companies will be forced to compete with one hand tied behind their backs. Ex-Im helps small businesses, fills a need in the market, returns a profit to the government, and helps maintain our competitive edge in the global economy. The time for Congress to reauthorize Ex-Im is now — before tens of thousands of jobs are lost.
Alex LaBeau is president and Zach Hauge is vice president of the Idaho Association of Commerce & Industry.