Another look at purpose of Ex-Im Bank

contributing writerMarch 25, 2012 

In the annals of children’s appeals to their parents, none has been used more and proven less effective than “everyone else gets to.”

In matters of public policy, however, it seems to work just fine.

That point is worth keeping in mind in evaluating multiple debates over government-backed incentive and economic development programs, starting with one of considerable interest in this corner of the world – the Export-Import Bank.

Reauthorization of the Export-Import Bank is before Congress, but it has run into opposition from the domestic airline industry, most notably Delta, which argues that subsidized financing for foreign carriers to buy American products lowers their cost of competing with U.S. operators.

The American products those foreign airlines are buying are, of course, Boeing planes. Not for nothing is Ex-Im called “Boeing’s bank.” From 2007 to 2012, according to the bank’s own website, Ex-Im backed more than $27 billion in loans in support of more than $62 billion in Boeing sales from Renton, Everett and Seattle. Dozens of other Washington companies participated in Ex-Im financing programs over that period, but none of them represented even $100 million in activity over that period.

Not surprisingly, then, Ex-Im’s backers include senators from both parties in states with sizable Boeing presence including Washington and South Carolina.

The arguments in favor of not just keeping the bank but raising the cap on its lending and guarantee capacity seems to boil down to these: Jobs, “everyone else does it,” and “what’s the harm?”

The jobs argument is obvious enough, although critics question whether export jobs would really disappear if the bank did.

“Everyone else does it” is true enough in that other countries subsidize and support the export programs of their domestic countries. Thus the challenge from bank proponents: Do you want to be the one that unilaterally disarms in global competition?

As to the matter of “what’s the harm?” bank supporters note that Ex-Im supports itself. Detractors might take note of how well getting involved in housing finance has worked for the government or the taxpayers now on the hook for losses. But there’s a larger issue of harm, having to do with Ex-Im representing one more strand in a web of cross-subsidies so complex and tangled that we have no idea who in our economy is accruing what net benefits, never mind the big-picture question of what anything truly costs, once the subsidies and support are stripped out.

Whether it’s aircraft sales or housing finance or health care or seaports, government involvement not just distorts the market but twists it beyond recognition.

And for many voters, politicians and business leaders, that’s just fine, so long as the participants reap the jobs, votes and tax breaks they’re seeking or are promised. Even the suggestion of tweaking the system is greeted with anguish and outrage. Large-scale reform, to test the notion whether jobs, votes or financial competitiveness would truly vanish in the absence of such programs? Unthinkable.

Ex-Im isn’t going anywhere. Too many people have too much of a stake in seeing it maintained to do away with it. It may emerge from this scrum with expanded lending and loan guarantee programs. If Washington’s minor film-industry tax break, which expired last year, managed a revival in this year’s legislative session, the continued existence of a much larger, more visible and more politically connected program such as Ex-Im seems assured. Especially when everyone else is doing exactly the same thing. It’s as though parents, taking their cues from Olympia and Washington, respond to the plea that “everyone else gets to” skateboard off the roof or play with firecrackers with the admonishment, “Well in that case, have fun!”

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

The News Tribune is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service