Congress leaves town this week for the Independence Day holiday without renewing the Export-Import Bank charter, putting the livelihoods of thousands of hard working Americans at risk.
Boeing is one of the many U.S. exporters that are competitively disadvantaged without Ex-Im. Airlines have been telling Boeing for months that they are concerned about the potential demise of Ex-Im and the impact that could have on their ability to finance purchases of U.S.-made airplanes. Uncertainty over Ex-Im’s future is giving airlines a reason to buy from Airbus. All of Boeing’s foreign competitors have government export credit agencies backing their sales.
Commercial airplanes are America’s number one manufactured export, supporting more than 160,000 jobs at Boeing and another 1.5 million jobs in its U.S. supply chain. Eliminating the bank would weaken the U.S. aerospace sector and cede sales, market share and high-tech jobs to countries like France and China. It also would risk losing skills and knowledge that are essential to national security. More and more defense products are being built on commercial platforms – the Navy’s P-8A maritime surveillance aircraft and the new Air Force KC-46 tanker, for example.
Opponents of Ex-Im casually dismiss such arguments, saying the private sector will do what Ex-Im does. They ignore the fact that companies like Boeing cannot perform the role of a bank and still have the capital needed to develop new products – especially commercial airplane products that require billions of dollars to bring to market.
They also ignore what commercial banks have said repeatedly, which is that they are in no position to compensate for Ex-Im should Congress let it expire. Commercial banks have limits on how much they can lend any one customer or industry. Boeing’s customers sometimes fall outside of those limits, either because they are in developing regions that are last in line for commercial loans, or because they are growing fast and can secure loans for additional airplane purchases only if a government agency like Ex-Im is willing to guarantee the loan.
Too risky, some might say? Ex-Im’s track record for loan defaults is actually better than most commercial banks – less than 2 percent during 80 years of operations, and less that one-quarter of one percent last year. The airline default rate on Ex-Im-backed loans is especially low – close to zero. Ex-Im has a rigorous vetting process, and with the fees it collects for its services it not only is able to cover all of its own expenses, but earn a sizable profit for the U.S. Treasury.
There are a lot of good reasons for reauthorizing Ex-Im and absolutely no good reasons for letting it die. Most members of Congress know that. They should be given a chance to vote on an Ex-Im reauthorization bill. Read more at http://exportersforexim.org/ .