Could America have had hundreds of thousands more jobs by now than it does? You bet it could! Here’s an example of how one complex and obscure institution is being used by Congress to hold jobs for Americans hostage.
The US Export-Import Bank
Ours is not the only Export-Import Bank in the world, but it is the most significant in terms of its financial impact on all parts of the globe. According to the Bank’s own web site, “Global Access for Small Business is a top priority of Ex-Im Bank”.
The Bank focuses on US small businesses who create goods for export abroad. The list of “Expenditures” on the map on ExIm’s home page bears this out. Most of the Bank’s assistance goes to our small businesses.
And the Bank is quite successful too! According to the Sacramento Bee this week [the link goes to updated report]:
In the past five years (from Fiscal Year 2008), Ex-Im Bank has earned for U.S. taxpayers nearly $1.6 billion above the cost of operations. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.
Ex-Im Bank approved $32.7 billion in total authorizations in FY 2011 – an all-time Ex-Im record. This total includes more than $6 billion directly supporting small-business export sales – also an Ex-Im record. Ex-Im Bank’s total authorizations are supporting an estimated $41 billion in U.S. export sales and approximately 290,000 American jobs in communities across the country.
And there is more. On the ExIm.gov home page, the flashing banner reads “Ex-Im Bank Sets Record of $500 Million for Minority and Woman-Owned Business Support”.
So, why did the headline in the Financial Times for March 21, 2012 (p4) read “Export finance dispute divides Congress”?
At the end of 2011, the US Export-Import Bank was nearing its $100 billion (bn) spending cap. President Obama, who has stated he wanted to create more new jobs for Americans by doubling the amount of US exports, asked that the ExIm cap be increased to $140bn. Eric Cantor dug his heels in and said $113bn would be the Republican’s limit. Republicans have pledged to limit government spending – even if that would abort job prospects for Americans and result in lower consumer spending and tax revenues.
According to Fred Hochberg, the chairman of ExIm, “at risk [in this dispute] were 1,000 Americans jobs for each working day”. (FT article cite above)
The US Chamber of Commerce, a champion of small businesses, was strongly in favor of the $140bn for the Bank, but according to the Financial Times, “Conservative groups have rallied against ExIm, denouncing export finance as ‘corporate welfare’ and ‘market-distorting subsidies’”.
We have to ask, “corporate welfare” for whom? After all, ExIm mostly serves small businesses, not corporations. And, “market-distorting subsidies” for which market? The corporation was Boeing; the market was the US airline industry.
Boeing is a multinational aerospace and defense corporation with plants all over the US and about 164.5 thousand employees. It’s the biggest single recipient of ExIm support. US airlines, Delta in particular, complained that foreign airlines, such as Air India, were getting Ex-Im Bank subsidies to buy Boeing’s planes while they weren’t.
As the Farm Bill of 2012 showed, Republicans were not adverse to “corporate welfare” for American agribusiness. However, Eric Cantor, leader of House Republicans stated he wanted to “cut international export subsidies,” from ExIm. Cantor was also quoted by the Financial Times as saying he didn’t oppose $140bn, but “…his goal is to protect taxpayers from the credit risk brought on by a rapid increase in the ExIm balance sheet….”
President Obama, on the other hand, has repeatedly complained of being stymied by Republicans whenever he has tried to create new jobs for Americans.
Congress and the President have not been entirely at loggerheads. Republicans in Congress have stated that their chief priority is to keep Obama from getting a second term as President. Therefore, if a bill contains a proposal to postpone spending until after 2012, they’re free to be all for it.
This is just what happened with HR 2072 – Export-Import Bank Reauthorization Act of 2012. In a show of huge bipartisan success, Democrats and a large number of Republicans in Congress compromised and voted to pass this bill this summer. ExIm is allowed to spend $120bn in 2012, $130bn in 2013, and $140bn in 2014.
The delay in providing the full $140bn to ExIm until 2014 has impacted Obama’s re-election chances for 2012. It certainly isn’t hurting Boeing’s revenue and earnings right now, but Cantor’s control of the majority-party votes in the House ensures there will be far fewer new jobs for US small-business this year than by 2014.
Republicans can now criticize Obama for not creating jobs. If Governor Romney wins the election, he will get the credit for new jobs in 2013 and 2014 created by HR 2072, even though new government spending for ExIm will double over the next two years. How many more of these “bipartisan” deals to block new job creation now while raising government spending in the future has Congress made to get rid of Obama?
Reprinted from Huffington Post