With nearly $100 billion in outstanding loan guarantees the Federal Export-Import Bank is coming up against its loan limit ceiling. Supporters in Congress are proposing to raise taxpayers’ exposure to these loan guarantees to $160 billion over the next three years, $20 billion more than requested by the Bank.
The author of the House Bill that would accomplish this is Representative Gary Miller of California’s 42nd District. Co-Sponsors consist of four republicans and five democrats, most notably Congressman Barney Frank. No members of the Tea Party Caucus, other than Gary Miller, have signed on to this legislation that promises to, “Ensure that the Bank provides financing, when commercial banks are unable or unwilling to do so.”
The Export-Import bank was first created during the Great Depression to facilitate American exports to none other than the Soviet Union. By the end of World War II, its mission had expanded to develop American export opportunities throughout the world. Today this Bank is an arm of the Federal Government guaranteeing nearly $100 billion in outstanding loans made by American banks to foreign companies who purchase American exports, most notably Boeing airplanes.
Proponents of the Export-Import Bank claim the Bank merely levels the playing field for US exporters because other countries offer similar financing. Congressman Miller’s office makes the following additional points:
- To create jobs, American companies need to be competitive with foreign companies that have access to export credit.
- The House Republican bill includes strong language to ensure that surpluses the Ex-Im Bank returns to the Treasury ($3.4 billion since 2005) are continued into the future.
- The bill ensures that the Bank stays true to its purpose as a lender of last resort, and does not compete against private sector commercial banks.
- The bill includes language to keep default rates low.
The National Review On-Line and editors of the Wall Street Journal (Saturday/Sunday March 3-4, 2012) recently came out with a different take on the Export-Import Bank, making arguments for not raising taxpayer exposure and ending the operation of the Bank altogether. Among their arguments:
- Why should taxpayers bear risks that private banks are unwilling to take?
- Subsidies benefiting foreign companies’ purchase of American exports has the unintended consequence of hurting American firms as exemplified by Delta Airlines that claims losses of 7500 jobs and $684 million a year due to the Bank’s subsidies of its foreign competitors (Air China and Air India).
- The Bank distorts free markets in picking winners and losers.
- US goods and services exports in 2011 totaled $2.1 trillion, of which the Bank’s contribution was negligible.
Former Reagan Former Budget Director David Stockman says, “Giving the heave-ho to the well-heeled lobbyists of big corporations who keep the whole scam alive would be dramatic proof that we (Republicans) meant business, not business-as usual.”
The bill extending the credit limit and charter of the Export-Import Bank has passed out of the Financial Services Committee and is before the house.
By Mark R. Powell
Contact Information for Congressman Gary Miller:
1800 E. Lambert Road, Suite 150, Brea, CA 92821
Phone: 714-257-1142 Fax: 714-257-9242
Congressman Miller’s website
Mark R. Powell covers Congressman Gary Miller for the Tea Party Patriots’ Government Accountability Project. He can be reached at firstname.lastname@example.org