Partisan bickering in Washington may be a gold mine for 24-hour news channels and some print media, but it could bring Main Street in for some hard economic times.
The latest threat? For the last few years, political operatives in Washington, D.C., have been ginning up a battle royal over the Export-Import Bank, an export credit agency that helps finance U.S. exports when commercial credit isn’t accessible.
For decades, majorities in both parties reauthorized Ex-Im with little controversy. They saw the clear benefits of Ex-Im, which helps American exporters create jobs without costing taxpayers a dime. But because of a recent political campaign against the bank, this could be the first year Congress fails to reauthorize Ex-Im. That could damage important parts of our economy for no good reason, costing the greater Phoenix area millions in lost export revenue.
In the last five years, dozens of local Phoenix companies used Ex-Im to finance more than $500 million in sales overseas. These companies could not originally find commercial financing to back their exports. Ex-Im helped them grow their business, expand hiring and raise the standard of living for our whole community. More than 80 percent of the companies that obtain Ex-Im credit are small- and medium-size businesses — the kind of “Main Street” operations that are critical drivers of our economy.
Aerospace firms like Orbital Science, General Dynamics and Honeywell all have a presence in the Phoenix area and rely on exports — including some exports financed through Ex-Im — to fuel their revenue and future growth. Also negatively affected would be the next-level suppliers or subcontractors to those directly using the Ex-Im. These companies in Arizona supply many of the aerospace components used by companies such as Boeing, America’s largest exporter by dollar value.
The Valley’s leaders in Congress should be trying to increase our natural advantage in exports by rallying behind the Ex-Im Bank. Failing to reauthorize the Ex-Im Bank would be like closing up shop just as customers are lining up at your door.
But critics of the Ex-Im Bank are trying to cloud the issue through a classic campaign of fear, uncertainty and doubt. They’re peddling three myths about the Ex-Im Bank that don’t hold up to scrutiny.
First, they argue Ex-Im-backed exports are risky or costly for taxpayers — just like Fannie Mae and Freddie Mac. They cherry-pick misleading accounting standards designed for private-sector companies that have little in common with the Ex-Im Bank. In fact, Ex-Im doesn’t cost us anything. According to congressionally mandated accounting, the bank pays for itself through fees and interest and even has profit left over at the end of the year.
Second, critics say the Ex-Im Bank interferes with the free market. In fact, the bank’s own rules prevent it from competing with private lenders. Companies only qualify for Ex-Im financing if they’ve demonstrated commercial financing isn’t available.
Third, critics say the Ex-Im Bank “picks winners and losers” by promoting exporting industries over non-exporters. Yet doing away with Ex-Im wouldn’t benefit other segments of the U.S. economy. All it would do is allow foreign competitors — usually European and Asian companies — to scoop up the overseas business lost by American firms.
If there are problems with the Ex-Im Bank, they should be fixed as appropriate, but that’s hardly an argument for abolishing the institution. The fact that some in Washington are trying to make the Ex-Im Bank into a partisan issue is further proof how out of touch the capital is with the Main Street economy. Congress should stand behind American business exporters — large and small — by reauthorizing the Ex-Im Bank as soon as possible.
• Roc Arnett is president and CEO of the East Valley Partnership, a coalition of civic, business, educational and political leaders dedicated to the economic development and promotion of the East Valley of Greater Phoenix, Arizona.