Critics have set their sights on the little-known Export-Import Bank, saying it amounts to welfare for big corporations.
WASHINGTON – At roughly $25 a pop, there’s good money to be made in supplying the world with plastic traffic poles.
Pexco, a small manufacturing company with 150 employees in Fife, Wash., already ships the poles to 28 countries. If all goes as planned, thousands more will soon be headed to Turkey each year.
“We’ve got good products; we know there’s demand for that,” said Peter Speer, the company’s vice president of sales.
There’s also a danger that foreign customers might not pay, which is why many commercial banks look askance at such deals. But Speer can sleep a little easier knowing the U.S. government will step in if things go bad.
That federal insurance — which covers $2 million of Pexco’s exports — comes from the little-known Export-Import Bank of the United States, which has set off a big spat over the nation’s financing of global trade.
As a federal agency, the bank’s job is to provide credit insurance, loans and guarantees to help foreign buyers purchase U.S. goods and services. Critics say it’s corporate welfare, unnecessarily putting taxpayers’ money at risk.
As they revive a fight from two years ago, many conservative Republicans in the U.S. House want the bank disbanded when its funding expires Sept. 30.
Members of Washington state’s congressional delegation are among those rallying to save the bank — often called Ex-Im — and it’s easy to see why. Since 2007, 183 of the state’s companies have lined up $111 billion in financing through the bank, with no state benefiting more.
That’s nearly half the national total of $232 billion.
“Here’s the bottom line: If the bank is allowed to go away, thousands of jobs in Washington state will be lost. That’s the fact,” said Rep. Denny Heck, D-Wash., a member of the House Financial Services Committee.
Washington state’s top ranking — it’s followed by Texas and California, each with $21 billion over the seven-year period — is due largely to the muscle of aerospace giant Boeing Co., the nation’s largest exporter.
With so much on the line, the bank won unanimous support from the Washington state delegation when Congress last voted to extend it, in 2012.
“It is trade that unites our delegation more than anything else,” said Eric Schinfeld, the president of the Washington Council on International Trade. “And the reason why is that 40 percent of all the jobs in Washington state are tied to international trade. So they get it.”
In the House, opponents are led by Rep. Jeb Hensarling, R-Texas, the chairman of the Financial Services panel, who in May called the bank the “poster child of the Washington (D.C.) insider economy.” He noted that more than 60 percent of the bank’s financing last year benefited just 10 large corporations, including the likes of General Electric Co., Ford Motor Co. and Boeing.
“These multibillion-dollar companies would do just fine without the Ex-Im Bank’s corporate welfare,” Hensarling said in a speech to the conservative Heritage Foundation.
While acknowledging that most Americans have never heard of the bank, Hensarling said that would change in coming months, calling the debate over its future “a defining issue for our party and our movement.”
Heck said Boeing’s dominance was “a natural consequence” of what the bank funded, following its charge to operate in markets where traditional financing wouldn’t work.
“Who’s going to finance Uganda purchasing a $300 million airplane?” he asked. “Wells Fargo, Bank of America or your local community bank is not going to do it.” Yet the bank boasted of a default rate of less than 1 percent last year, which Heck said “would be the envy of any commercial bank.”