The latest skirmish in the protracted power struggle within the Republican Party is being waged over a little-known federal agency tasked with helping U.S. companies sell products to foreign customers.
For 80 years, the Export-Import Bank has offered products, including loans and insurance, to U.S. companies hoping to break into new overseas markets. In Ohio, some 258 businesses benefited from the program between 2007 and 2014, and the bank has supported $2 billion worth of business.
“It’s an important tool for Ohio companies to maintain global competitiveness,” said Jeff Hoagland, president and CEO of the Dayton Development Coalition. Hoagland said the Export-Import Bank has assisted in more than $100 million in foreign sales by Dayton area companies.
But the bank is endangered unless Congress reauthorizes it by Sept. 30. A coalition of conservative groups that includes Heritage Action for America, Americans for Prosperity and Club for Growth is urging Congress to cancel the bank’s charter, saying the agency is a perfect example of “crony capitalism” and “corporate welfare.”
Opponents say the bank picks winners and losers and puts taxpayers at risk. And they say private banks can fill any void left by ending the public institution.
“There’s a potential to secure a massive victory for conservatives,” said Dan Holler, communications director for Heritage Action for America. “This would be the biggest victory since the earmark moratorium.”
But groups like the National Association of Manufacturers and the U.S. Chamber of Commerce say eliminating a tool that supports U.S. exporters is foolhardy when the country faces a huge trade deficit. Most of the businesses that use the bank, they say, are small businesses.
“We’re already at a competitive disadvantage in a lot of ways,” said Christopher Wenk, senior director of international policy at the U.S. Chamber of Commerce. “If we were to do away with (the Export-Import Bank), the playing field would be even more unlevel in terms of our ability to compete overseas.”
Bank praised by local company
John Granby, senior vice president at LION, a mid-sized Dayton manufacturer, said the company has used the Export-Import Bank to sell its products in foreign markets, including Mexico.
LION produces safety and training gear for fire and rescue teams, law enforcement and the military.
Without the bank, “it could easily cause us to either slow our own production or lay off a few people,” Granby said of his company, which employs 350 people in Dayton and Kentucky.
Supporters argue the bank is more than self-supporting. According to the chamber, the bank has returned more than $3.4 billion to the Treasury above all costs and loss reserves since 2005. Small businesses account for 87 percent of the bank’s transactions. And borrowers have defaulted on less than two percent of all loans backed by the bank since its creation in 1934.
They also worry about an unfair playing field if the agency is allowed to disappear. About 60 countries, including China, South Korea and most European counties, have some sort of equivalent institution, they say.
“The worst thing for us to do is just unilaterally disarm and put our job creators at a competitive disadvantage,” said Rep. Steve Stivers, R-Upper Arlington.
Stivers said the debate is “fairly illustrative” of internal divisions within the GOP.
“It’s not even philosophical,” he said. “It’s about whether we’re going to be pragmatists. Because I consider myself to be a center-right conservative, but this is really about whether we’re going to be practical or philosophical, driven by a bunch of college professors or people who live in the real world.”
But a lot of conservatives see the issue in free market terms. One of them is Rep. Jim Jordan, R-Urbana.
“I’m for letting it wind down,” Jordan said. “Let the marketplace work.”
Rep. Tim Huelskamp, R-Kansas, and a bank critic, argues that big companies like Boeing gain financing through the bank while small businesses end up with “the crumbs.”
“This is, I think, a make or break time for the Republican Party here in Congress,” he has said. “Who are we going to stick up for? Are we going to stick up for Wall Street or Main Street? And with Ex-Im Bank, it’s pretty clear.”
Ohio’s senators support keeping bank open
Ohio’s two senators — Republican Rob Portman and Democrat Sherrod Brown — both support keeping the bank open, though Portman said he wants “meaningful improvements” aimed at ensuring that taxpayers are protected.
Brown, a senior member of the Senate Banking Committee, said the bank plays a vital role for small businesses.
“I’ve seen what happens to our state with job loss because we import so much more than we export,” Brown said, adding that the bank “does help, in many cases, for Ohio companies to sell products abroad.”
Facts about the Export-Import Bank
Established: 1934 by President Franklin Delano Roosevelt
What it does: Borrows money from the U.S. Treasury for American companies who want to sell abroad and to help foreign buyers purchase U.S. goods and services.
What supporters say: The bank pays for itself. Since 2005, the Export-Import Bank has returned more than $3.4 billion to the Treasury above all costs and loss reserves, according to the U.S. Chamber of Commerce. Small businesses account for 87 percent of the bank’s transactions.
What opponents say: The bank picks winners and losers, putting taxpayers at risk. They say private banks could handle the same business.
“I’m for letting it wind down. Let the marketplace work.”
U.S. Rep. Jim Jordan, R-Urbana.
“It’s an important tool for Ohio companies to maintain global competitiveness.”
Jeff Hoagland, president and CEO of the Dayton Development Coalition.