Ex-Im Bank isn’t needed, Kasich now agrees

29 May 2015 | Author: | No comments yet »

Don’t lose Exim dividends.

America has never shied from a fight — and we know the folly of letting down our guard or accepting false “peace dividends” and unilaterally disarming while our enemies gather strength.We were heartened when he predicted the 2014 elections would “end the gridlock” so Congress could get to work strengthening our economy and helping create jobs.

As Russia continues its regional aggression and steps up exports of its most dangerous weapons, North Korea develops nuclear weapons and the means to deliver them, and Iran uses the cover of peace talks to step up military activity in the Persian Gulf, we would never think to disarm or stand down. John Kasich among the GOP presidential contenders lining up to call for elimination of the Export-Import Bank, a small agency created to help U.S. companies sell products abroad.

The bank is a lynchpin of America’s export economy, providing loans and insurance to help American business sell their products overseas – supporting nearly $30 billion in sales and over 150,000 U.S. jobs each year, including a billion dollars of Pennsylvania exports alone last year. But arguments against Ex-Im do not stand up to careful scrutiny, and of all the many examples of market distortion in which the U.S. government engages, it is probably the least significant. Most years the Bank pays for its own operations out of interest and fees paid by its customers and it often runs a surplus that is returned to US Treasury – $7 billion in total over the past two decades. It has quietly gone about its work helping American manufacturers open foreign markets for more than 80 years, under Administrations of both parties during good economic times and bad. Annie Kuster and Export-Import Bank chief of staff Scott Schloegel on Thursday. “So if we don’t have one of the reauthorization bills passed by then, then we would have to stop issuing any new transactions of any kinds,” Schloegel said.

For this reason, most nations heavily subsidize their own industries to make their products cheaper and more appealing in the international marketplace. That effort was a part of a larger attempt at what Kasich called “corporate welfare reform.” Even then, the bank was targeted by critics who said it focused too heavily on helping big corporations and not enough on small ones. And indeed, 9 of our state’s 12 Republican Congressmen and all of its Democrats have urged that the Bank be reauthorized again before its charter expires at the end of June. Jeb Hensarling, chairman of the House Financial Services Committee; the House majority leader and majority whip; and groups including the Heritage Foundation and the Club for Growth. Kuster, who is calling for the bank’s immediate reauthorization, hosted a roundtable discussion with local business leaders Thursday at New Hampshire Ball Bearings in Peterborough. “My intention in all of this is to bring attention to all these companies that are making things from the most sophisticated ball bearings to T-shirts and everything in between,” said Kuster, a Democrat who represents District 2. “You’re what we call hidden exporters,” Schloegel said. “Being from Michigan, we always said: ‘When the auto industry sneezes the rest of the state gets a cold.’ And when you get those big industries like Boeing and GE that sneeze, it trickles down.” The expiration of the bank has been causing concern for Marlborough T-shirt company The Mountain Corp., said Kirianna Howard, director of international sales and exports.

Instead, it provides financing and insurance, services that are paid for at market rates, to U.S. manufacturers and their customers to export goods to foreign buyers. Still, Kasich months later joined 377 House colleagues once again in voting to reauthorize the bank. “If a bank doesn’t want to make a loan to a big company, I’m not so sure that the lady who cleaned my room today should,” Kasich said as he campaigned Wednesday in South Carolina. Michael Boyle, CEO of Boyle Energy Services & Technology Inc. in Manchester, said his company has close to 60 employees in New Hampshire and is buying a 70,000-square-foot facility in Merrimack this week. “We have lots of concerns about our ability to go forward because almost all of our relationships are all off-shore, are tied to our ability to maintain support credit and support the insurance facility that we have currently through Ex-Im Bank,” Boyle said. “The jobs that I have added in the last six months were all predicated on this, and we were going to continue on.” Boyle told Kuster he is a “highly active conservative Republican … but I love the fact that you are a patriot for New Hampshire, and I fully support you as our representative.” Asked about his past support, Kasich acknowledged, “maybe I did” vote for the bank while in Congress. “I was involved significantly in corporate welfare reform,” he said. “I can’t tell you why we missed the EXIM bank. Without the Ex-Im, there would be a ripple effect as some firms closed or downsized and foreign goods and services replaced them in the U.S. marketplace.

It is a lender of last resort that provides loan guarantees where they are not otherwise available, filling in banking gaps so that U.S. goods can be exported to nations where commercial financing is unavailable. The recently published “Bailout Barometer” of the Federal Reserve Bank of Richmond says that the federal government stands behind (and therefore subsidizes) $26 trillion of the liabilities of U.S. financial institutions, about 60 percent of the total. It doesn’t interfere in the market, it makes the market work better, creating an avenue for these fully private sector deals to proceed and leveling the market playing field because so many of our foreign competitors get direct government aid and government financing.

Consider my company, R&M International, a family-owned business in Fort Washington that exports Pennsylvania-made textiles and plastics to 40 countries around the world. This includes federal deposit insurance for banks, pension benefit guarantees and about $6 trillion in federal guarantees for the housing industry, including loans by Fannie Mae and Freddie Mac.

Many of the strongest advocates for Ex-Im are small suppliers that have never used the Bank themselves but do work that wouldn’t exist but for Ex-Im support further up the chain. Toomey once recognized the danger of unilaterally disarming by shutting down Ex-Im while our rivals are doing more and more – offering legislation in 2012 to keep the Ex-Im Bank open as long as our competitors offer export credit of their own. China, France, Brazil, Russia and many other nations provide large subsidies and promise below-market financing to buyers to undercut American businesses and workers.

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In an ideal world, we’d have free trade agreements across the globe, and other nations would not use industrial policies to tilt the playing field in their favor.

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