The U.S. Export-Import Bank, which helps finance the export of U.S. goods and services that support jobs here at home, is bumping up against its borrowing capacity, which will expire on May 31 unless renewed by Congress. The Bank is one of the few federal institutions that exist to make it easier for U.S. exporters to compete in foreign markets, and its activities have a direct and positive impact on U.S. jobs.
Given the fragile economy and the need to create millions of manufacturing jobs, one would think that funding the Bank would be a no-brainer. While many agree, including organizations that often find themselves on opposite sides — such as the International Association of Machinists and Aerospace Workers and the U.S. Chamber of Commerce — reauthorization of the Bank is being stymied by Tea Party ideologues and a big airline company. These two factions now threaten U.S. manufacturing jobs. If they succeed, U.S. exporters will be at a serious disadvantage when competing with foreign exporters for manufacturing sales.
Most developed countries operate export credit agencies like the U.S. Export-Import Bank. Together these agencies finance about $430 billion of business activity abroad, which vastly exceeds credits provided by all other official sources (such as the World Bank). The Ex-Im Bank finances exports of aircraft, construction equipment, and other big- and small-ticket items. Conservative opponents of the Ex-Im Bank, such as the Club for Growth, claim that its financing distorts markets and picks winners and losers. However, if the United States unilaterally refuses to renew the Ex-Im Bank and increase its borrowing cap, U.S. export sales will go to other countries. Why would we want to tie our hands in the face of unrelenting competition from European companies? Why would we want to tie our hands when it comes to China’s burgeoning export credit agency?
Arguments by Delta Air Lines, which claims that Ex-Im Bank financing for aircraft sales puts it at a disadvantage relative to foreign airlines, should be met with deep skepticism. The simple truth is that if a foreign airline does not receive Ex-Im financing to purchase aircraft from a U.S. company like Boeing, it will receive subsidized financing from Europe to buy those aircraft from Boeing’s EU competitor, Airbus. Consequently, the foreign airline’s route system will remain the same — except that now, the airline will be using European-manufactured aircraft produced in large part by Europe’s aerospace workers.
Claims that efforts to eliminate the Ex-Im Bank would be combined with efforts to eliminate export agencies in other countries are disingenuous. Unlike the United States, other countries have a plethora of tools to assist their exporters. If the small number of organizations that want to stifle the Ex-Im Bank’s ability to support U.S. manufacturing workers truly care about U.S. workers, they should argue for permission for the Bank to assist U.S. airlines in the purchase of domestically produced aircraft.
At the same time that the Ex-Im Bank’s mission and exposure limit are being attacked, there are also attempts to weaken the Bank’s domestic content requirements. These efforts are dangerous and misguided. Greater domestic content means that a greater percentage of the product for export is made here in the United States by U.S. workers. If anything, the Bank’s domestic content requirement should be strengthened. The multinational corporations that seek to lower domestic content requirements are the same corporations that have shifted thousands of production jobs outside the United States.
The Ex-Im Bank’s mission is “to assist in financing the export of U.S. goods and services to international markets,” enabling “large and small companies to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.” Our economy is improving, but it is still fragile. Now is the time to strengthen, not weaken, institutions which support exports that support U.S. jobs.
Owen Herrnstadt is the Director of Trade and Globalization, International Association of Machinists and Aerospace Workers. Robert E. Scott is the Director of Trade and Manufacturing Policy Research, Economic Policy Institute.
The authors thank Josh Bivens and Ross Eisenbrey for comments.