This month there has been quite a bit of intense discussion about small business in Washington D.C. The discussions have revolved around the Export-Import Bank of the United States (EXIM). As with most issues in Washington, there are strong arguments “for” and “against”. If you’re a business owner, I think this topic is important to watch, even if you are not involved with international trade. To give you a quick snapshot of the issue, I’ve assembled a small collection of articles. But, before we jump into the debates, let me give you a quick primer on EXIM.
What is the Export-Import Bank?
The Export-Import Bank of the United States (EXIM) is the official export credit agency of the United States. EXIM is an independent, self-sustaining Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services.EXIM provides loans and loan guarantees as well as capital and credit insurance to facilitate US exports. The financing is back by the “full faith and credit” of the US government (taxpayers are liable for any deals that go bad). Now, you see one of the red flags. EXIM’s current credit portfolio exceeds $140 billion.
When private sector lenders are unable or unwilling to provide financing, the EXIM Bank provides financial assistance and, thus, equips American businesses with financing tools necessary to compete for global sales.
The Export-Import Bank was incorporated in 1934 by President Franklin D. Roosevelt to finance trade with the Soviet Union. Congress later constituted the bank as an independent agency under the Export-Import Bank Act of 1945. The most recent authorization of the Ex-Im Bank was set to expire on September 30, 2014, but lawmakers extended the charter until June 30, 2015.
What do different sides say?
As I mentioned above, this small collection of articles will give you detailed information on the oppposing opinions. I’ve tried to present you with articles on both sides of the fence in an effort to be fair and balanced.
Peterborough: Export-Import Bank loss could hurt NHBB
New Hampshire Ball Bearings — the town’s largest employer — is now hiring machinists and engineers as it prepares for an expansion in its commercial aviation sales. But NHBB, which has 680 employees, will be forced to reevaluate its plans if Congress does not reauthorize the Export-Import Bank by June 30, said Executive Vice President Jim Geary. Read more…
Tucson employers: Export-Import Bank provides key help
The 81-year-old bank, whose charter expires June 30, is facing strong opposition from some Republicans in Congress and conservative advocacy groups, who have called the agency “corporate welfare” and accuse it of putting taxpayer money at risk to subsidize large companies. For local companies that depend on the bank, the argument is much simpler. “If we did not have access to Ex-Im financing, this company, and the 60 employees that work here in Tucson, probably wouldn’t be in business,” said Dennis McCarthy, chief financial officer at Competitive Engineering Inc. Read more…
Charlotte business execs: Export-Import Bank is critical for doing business abroad
When Jenny Fulton and Ashlee Furr lost their jobs in the financial industry several years ago, they began producing and selling pickles from their home base in Belews Creek in Forsyth County. Now, their jars are being packed and shipped to China and countries across the globe – thanks to the Export-Import Bank of the United States, Wayne Cooper, chairman of the N.C. District Export Council, said Wednesday at a meeting in Charlotte. Read more…
A Small Business Owner Against The Export-Import Bank
…As a small business owner from Charlottesville, Virginia, I hope that Congress lets the Export-Import Bank expire when its charter runs out on June 30. I oppose Ex-Im…. It’s a federal agency that sends tens of billions of taxpayer dollars to big businesses that span the globe. It may support a tiny percentage of America’s exports, but it harms the rest of the economy-including the vast majority of small businesses-in the process. Read more…
Rep. Jeb Hensarling: GOP-Led Congress Must Close Export-Import Bank
It’s time to for Congress to stop funding the taxpayer-backed Export-Import Bank, says Rep. Jeb Hensarling, chairman of the House Financial Services Committee….According to Hensarling, the Export-Import Bank does nothing more than promote corporate welfare while taxpayers take the risk, if the companies it funds don’t turn a profit.
Read more…
This Small Business Succeeded Without Ex-Im Financing
Supporters of the embattled Export-Import Bank argue the bank helps small businesses move into global markets and remain competitive. But a California-based company is speaking out about how the agency provided its competitors with an unfair advantage. Read more…
Before I end this post, I want to refer you to one other source, Mercatus Center at George Mason University. Veronique de Rugy is a senior research fellow at the Mercatus Center and a nationally syndicated columnist. Ms. de Rugy supports the notion of ending the Ex-Im Bank and has written several publications laying out her position using data. Most of the data is from Ex-Im and the U.S. Census. She does present interesting positions that merit thought.
Frankly, I think there is truth on both sides of the issues around the Ex-Im Bank. On one hand, it has provided useful services to a few small business, but, on the other hand, the lion’s share of benefits have been reaped by large corporations. And, I don’t support providing financial assistance to corporations that are owned and controlled by foreign governments. I think our taxes should support and directly assist U.S. companies or citizens.
Maybe the answer lies in serious modifications to the Ex-Im programs. It’s important to listen to your critics, no matter how harsh, and perhaps look for ways to redesign services to produce a better product and eliminate the disapproval and mistrust. I’ll be watching how this hot potato gets resolved.
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