Most S.C. lawmakers rally in support of Ex-Im Bank with Boeing, GE jobs in the balance
Source: Post and Courier
May 26, 2015
With a showdown looming over reauthorization of the Export-Import Bank, at least one analyst says Congressional bickering over the federal financing agency is already hurting the lender’s biggest customer, and one of South Carolina’s biggest private employers: Boeing Co.
“My market intelligence tells me that Airbus has already used the ambiguity over Ex-Im’s reauthorization in sales campaigns against Boeing,” Scott Hamilton, editor of the Leeham News and Comment newsletter, said this week in an open letter to Congress.
Hamilton added that if the bank is not reauthorized, France-based Airbus — Boeing’s largest commercial airplane competitor — “will have an international advantage over Boeing.”
The Ex-Im Bank provides loan guarantees, loans and insurance to help foreign companies buy U.S. goods when commercial lending isn’t available. Boeing, which makes its 787 Dreamliner jets in North Charleston and Everett, Wash., is the 81-year-old bank’s top customer.
During the 2014 fiscal year, which ended Sept. 30, the bank made or guaranteed 22 loans for commercial airline sales to 18 foreign countries totaling nearly $7.4 billion. That figure represents more than one-third of the $20.5 billion in financing the bank approved last fiscal year.
“To be sure, Boeing airplanes received the majority of Ex-Im Bank commitments and guarantees,” Hamilton said. “This is because Boeing makes the most expensive things Ex-Im supports. But plenty of small businesses benefit from Ex-Im as well.”
On life support
The Ex-Im Bank said in its annual report that small business deals accounted for nearly 90 percent of the 3,700 transactions it conducted in fiscal 2014.
The bank, which has been criticized by conservatives as a form of corporate welfare, barely survived a Tea Party effort to kill it last year. Instead of giving the bank its usual five-year reauthorization, Congress in September approved a resolution that kept the bank on life support through June 30.
The Senate this week agreed to hold a vote in June on the bank’s reauthorization. It isn’t clear whether the House will follow suit.
Sen. Lindsey Graham, R-S.C., is among those leading the charge for reauthorization. He notes the bank is crucial to many of this state’s top manufacturers, including Boeing’s Dreamliner facility and General Electric’s gas turbine production in Greenville.
“I’ve never felt better about the opportunity to reauthorize Ex-Im Bank than I do today,” Graham said Thursday after the Senate reached its deal. Graham said he believes there will be “strong bipartisan support for the bank (which) will ultimately lead to its reauthorization.”
Sen. Tim Scott, R-S.C., and Rep. Mark Sanford, R-1st District, also support the bank’s reauthorization.
While Sanford recently said he is philosophically opposed to the bank, he added that “on this one ... I think I have to vote with my district.”
Beverly Wyse, vice president and general manager of Boeing’s North Charleston campus, which employs 7,500 workers, thanked Graham and Scott this week for their support of the bank, saying the two are “looking beyond Washington politics and doing what is right” for South Carolina workers.
“Our senators realize how critical the Export-Import Bank is to South Carolina jobs,” Wyse said in a statement. “Because of the Ex-Im Bank, we are able to build airplanes in South Carolina to sell to customers all over the world. Jobs and economic development in South Carolina should be a top priority for all our elected officials.”
Ted Pitts, president and CEO of the S.C. Chamber of Commerce, said opposing the Ex-Im Bank “is bad for South Carolina jobs.”
Pitts’ remark was a response to Rep. Mick Mulvaney, R-5th District, who opposes a reauthorization vote in the U.S. House.
“Just because the Senate votes on a piece of crap doesn’t mean we have to vote for it,” Mulvaney said Thursday.
Mulvaney and some other conservative legislators say the bank is providing loans in countries — such as China — and for big businesses — such as Boeing — that don’t need the subsidies. The bank’s demise, they say, would be a victory for small government and free-market capitalism.
Supporters point out the bank does not cost taxpayers — it operated at a profit of about $645 million last year, which was returned to the U.S. Treasury — and its loan default rate is less than two-tenths of 1 percent compared to an average default rate more than twice that size at the nation’s commercial banks.
The Ex-Im Bank also helps American exporters compete with goods shipped from about 60 other countries that have similar loan-guarantee programs.
China, for example.
“China’s Ex-Im Bank is bigger than the banks of the United States, France, England and Germany combined,” Graham said. “If Ex-Im and its competitive financing go away, the United States will lose the market share we have today.
“Would I like to live in a world where there were no Ex-Im banks?” Graham said. “Sure. But the world I refuse to live in is one where we shut our Ex-Im Bank down and China keeps theirs open. I am not doing that. That is unilateral surrender.”
Reach David Wren at 937-5550 or on Twitter at @David_Wren_