Because Congress Failed to Act, the Export-Import Bank’s Authorization Lapses at Midnight for the First Time in History, Hurting Businesses and Workers in Every State
The Export-Import Bank, or “Ex-Im,” is a critical tool in the bipartisan trade agenda that helps U.S. businesses succeed in global markets and grow their exports. Ex-Im equips companies with financing they need to go toe-to-toe with foreign rivals, resulting in more exports and more well-paying jobs in cities and towns here in America, rather than overseas. The Export-Import Bank:
Boosts Exports that Support Well-Paying American Jobs. The Bank has financed the sale of more than $200 billion in U.S. exports over the last six years, supporting over 1.3 million private-sector American jobs, including 164,000 jobs in Fiscal Year 2014 alone. Last year, Ex-Im financed the sale of $27.5 billion in exports through more than 3,700 transactions, including nearly $16.6 billion in manufacturing exports—and jobs supported by exports are good jobs, paying up to 18 percent more on average than other jobs.
Is a Vital Tool for Small Businesses. In FY 2014, nearly 90 percent of Ex-Im’s transactions—more than 3,340—directly supported American small businesses. That does not include the vast number of small businesses benefiting indirectly as suppliers to Ex-Im’s larger customers.
Doesn’t Cost Taxpayers a Penny. Ex-Im doesn’t cost taxpayers a penny. In fact, due to fees and interest, the Bank generated $675 million in returns for taxpayers last year. Default rates on Ex-Im loans were tiny, at just 0.175 percent. Over the last two decades, the Bank has wired $6.9 billion to the U.S. Treasury to support deficit reduction.
Has Strong Bipartisan Support. Ex-Im has earned the support of the last 13 U.S. presidents, Republicans and Democrats alike. Recently, 65 senators from both parties expressed support for Ex-Im’s reauthorization; in the House, a strong bipartisan majority of about 250 members have put their names onto bills reauthorizing Ex-Im. Ex-Im was reauthorized with substantial majorities of support from each party in 2002, 2006, and 2012.
Congress Allowing Ex-Im to Lapse for First Time in History on July 1
Despite the strong bipartisan support for reauthorization, the Republican-controlled Congress has gone into recess without holding a meaningful vote on Ex-Im, allowing Ex-Im to lapse on July 1 for the first time in history—after 16 reauthorizations, 81 years of continuous operation, and a record of supporting a level playing field for American businesses and American workers.
Unfortunately, a vocal minority in Washington is putting ideology ahead of American workers. That puts real American jobs at risk—at businesses small and large—and harms our global leadership. Businesses ready to make a sale abroad will not be able to get the new financing they need to close the deal. Workers—ready to produce the Made-In-America goods to meet that sale—will have to stand idle, take fewer hours and a pay cut, or lose their jobs.
Last year, Ex-Im supported $27.5 billion in exports through more than 3,700 transactions—an average of roughly $2.3 billion and 300 transactions each month. While the Bank will continue to service existing loans, guarantees, and insurance policies, with Ex-Im unable to offer new financing starting on July 1, American businesses and workers are missing new opportunities right away.
Our Competitors Will Fill the Void Left By Ex-Im’s Expiration
When Ex-Im lapses, China and other foreign rivals will pick up the slack, putting American businesses and American workers at a disadvantage. In fact, a senior official from one of China’s versions of the Export-Import Bank told reporters recently that Ex-Im going away would be “a good thing” for China.
There are 85 export credit agencies like Ex-Im in nearly 60 countries around the world fighting for sales and export-backed jobs—and starting on July 1, none of them will be in the United States. All American small business owners and workers are asking for is a level playing field. When U.S. exporters go into global markets armed with financing from Ex-Im, they have an opportunity to compete on their merits; when they do, they win. When they don’t, they have to fight an uphill battle. Now is not the time to pull the rug out from under them.
Nearly every developed country and all the major emerging economies have an export credit agency. And while the majority of global official export credit agency activity remained flat in 2014, China’s grew by over 40 percent. Ex-Im estimates that Chinese institutions supported roughly $58 billion in “standard” export credits in 2014—exceeding the medium- and long- term support from all of the G-7 countries combined (a total of $50.9 billion in 2014).
Businesses and Workers in Every State Stand to Lose from Ex-Im Expiration
Over the last six years, Ex-Im has supported a total of $235 billion of exports from more than 7,500 businesses—about 5,000 of whom, or two-thirds, are small businesses. As the tables below show, businesses and workers in every state benefit from the support of Ex-Im, so every state economy stands to lose every month Ex-Im is not reauthorized.
|
State |
Total Exporters Directly Supported, (2009-2014) |
Small Businesses Directly Supported, (2009-2014) |
Exports Supported, (2009 – 2014) |
|---|---|---|---|
| Alabama |
71 |
49 |
$690,628,669 |
| Alaska |
6 |
5 |
$161,031,045 |
| Arizona |
119 |
92 |
$1,137,277,605 |
| Arkansas |
32 |
24 |
$629,840,301 |
| California |
954 |
702 |
$18,651,870,680 |
| Colorado |
91 |
63 |
$648,244,852 |
| Connecticut |
97 |
61 |
$2,976,054,380 |
| Delaware |
12 |
7 |
$133,367,634 |
| District of Columbia |
23 |
4 |
$135,009,096 |
| Florida |
719 |
569 |
$6,967,920,850 |
| Georgia |
181 |
129 |
$4,304,343,750 |
| Hawaii |
5 |
4 |
$6,177,912 |
| Idaho |
28 |
20 |
$169,236,309 |
| Illinois |
322 |
209 |
$5,177,884,154 |
| Indiana |
118 |
82 |
$3,129,181,774 |
| Iowa |
46 |
32 |
$218,065,217 |
| Kansas |
64 |
34 |
$1,729,202,718 |
| Kentucky |
47 |
30 |
$486,716,347 |
| Louisiana |
141 |
88 |
$1,072,038,119 |
| Maine |
12 |
11 |
$120,352,679 |
| Maryland |
68 |
46 |
$1,298,357,054 |
| Massachusetts |
134 |
90 |
$3,078,494,725 |
| Michigan |
192 |
143 |
$10,095,755,953 |
| Minnesota |
179 |
114 |
$2,529,706,854 |
| Mississippi |
28 |
18 |
$282,086,431 |
| Missouri |
111 |
75 |
$1,316,321,201 |
| Montana |
14 |
11 |
$6,190,199 |
| Nebraska |
51 |
26 |
$711,775,947 |
| Nevada |
30 |
19 |
$153,206,703 |
| New Hampshire |
27 |
21 |
$329,186,304 |
| New Jersey |
203 |
153 |
$3,729,050,969 |
| New Mexico |
14 |
11 |
$55,988,999 |
| New York |
294 |
174 |
$7,871,670,443 |
| North Carolina |
180 |
130 |
$2,670,626,309 |
| North Dakota |
22 |
17 |
$63,603,030 |
| Ohio |
305 |
201 |
$2,239,369,196 |
| Oklahoma |
106 |
73 |
$1,066,237,947 |
| Oregon |
83 |
62 |
$977,310,888 |
| Pennsylvania |
260 |
168 |
$5,320,535,361 |
| Puerto Rico |
28 |
22 |
$420,929,003 |
| Rhode Island |
16 |
10 |
$76,318,258 |
| South Carolina |
67 |
35 |
$2,609,326,242 |
| South Dakota |
15 |
7 |
$32,966,518 |
| Tennessee |
95 |
64 |
$1,208,917,250 |
| Texas |
1330 |
730 |
$23,415,825,050 |
| Utah |
47 |
26 |
$302,114,300 |
| Vermont |
10 |
8 |
$106,592,755 |
| Virginia |
104 |
55 |
$1,584,797,797 |
| Washington |
207 |
135 |
$108,847,783,596 |
| West Virginia |
14 |
8 |
$80,819,255 |
| Wisconsin |
190 |
110 |
$4,315,079,730 |
| Wyoming |
6 |
5 |
$62,736,451 |
| Total |
7518 |
4982 |
$235,404,124,808 |
Additional Background on the Export-Import Bank
The Export-Import Bank is an independent federal agency that fills gaps in private export finance in order to bolster U.S. job growth at no cost to American taxpayers. Ex-Im provides trade financing solutions—including export credit insurance, working capital guarantees, and guarantees of commercial loans to foreign buyers—to empower exporters of U.S. goods and services.
Because it is backed by the full faith and credit of the United States, Ex-Im is able to assume credit and country risks that the private sector is unable or unwilling to accept. The Bank’s charter requires that all transactions it authorizes demonstrate a reasonable assurance of repayment; the Bank consistently maintains a low default rate—in Fiscal Year 2014 it was a mere 0.175 percent—and closely monitors credit and other risks in its portfolio. The bank has also generated nearly $7 billion for the taxpayers over the past two decades. Ex-Im Bank offers four financial products:
Direct loans and loan guarantees. Loans and guarantees extended under the medium-term loan program typically have repayment terms of one to seven years, while loans and guarantees extended under the long-term loan program usually have repayment terms in excess of seven years. Generally, both the medium-term and long-term loan and guarantee programs cover up to 85 percent of the U.S. contract value of shipped goods.
Working capital guarantees. Under the Working Capital Guarantee Program, Ex-Im Bank provides repayment guarantees to lenders on secured, short-term working capital loans made to qualified exporters. The working capital guarantee may be approved for a single loan or a revolving line of credit. Ex-Im Bank’s working capital guarantee protects the lender from default for 90 percent of the loan principal and interest. The Bank also has a Supply Chain Finance (SCF) Guarantee Program to support U.S. exporters and their U.S.-based suppliers, many of whom are small and medium sized companies. Under the SCF Program, lenders purchase accounts receivable owned by the suppliers and due from the exporter. Ex-Im Bank provides a 90 percent guarantee on the repayment obligation of the exporter. The purchase of accounts receivable allows suppliers to receive immediate payment of their outstanding invoices, decreases their cost of financing, and enables them to better fulfill new orders and maintain and/or add jobs. The exporters benefit by having the option to extend payment terms without imposing undue financial hardship on their suppliers.
Export credit insurance. Ex-Im Bank’s export-credit insurance policies help U.S. exporters sell their goods overseas by protecting them against the risk of foreign-buyer or other foreign-debtor default for political or commercial reasons, allowing them to extend credit to their international customers. Insurance policies may apply to shipments to one buyer or many buyers, insure comprehensive (commercial and political) credit risks or only political risks, and cover short-term or medium-term sales.
The Export-Import Bank Has a Long History of Bipartisan Support
Ex-Im has earned the support of the last 13 U.S. presidents—Republicans and Democrats alike:
President Dwight D. Eisenhower, February 12, 1959: “[Ex-Im’s] record of repaid loans and repayable loans, your infinitesimal portion of written-off loans is one that I can do nothing except to say congratulations to your Directors, the President, and to all of you.”
President John F. Kennedy, July 18, 1963: “…the Export-Import Bank has created a wholly new program of export financing which now provides U.S. business with credit facilities equal to any in the world.”
President Gerald Ford, November 18, 1974: “In order for the United States to maintain its strong position in foreign markets, it is important that the Congress pass the Export-Import Bank bill and avoid attaching unnecessary encumbrances.”
President Ronald Reagan, January 30, 1984: “Exports create and sustain jobs for millions of American workers and contribute to the growth and strength of the United States economy. The Export-Import Bank contributes in a significant way to our nation’s export sales.”
President William J. Clinton, May 6, 1993: “Export expansion obviously encourages our most advanced industries. I am committed to promoting these exports, and what’s where the Ex-Im Bank plays an important role.”
President George W. Bush, June 14, 2002: “I have today signed into law S. 1372, the Export-Import Bank Reauthorization Act of 2002. This legislation will ensure the continued effective operation of the Export-Import Bank, which helps advance U.S. trade policy, facilitate the sale of U.S. goods and services abroad, and create jobs here at home.”
And Ex-Im has been reauthorized 16 times, with strong bipartisan support, including the last three reauthorizations, which all earned majority support in both parties in both houses of Congress:
In 2002, Ex-Im reauthorization passed with 344 votes in the House, including more than 75 percent of both Republicans and Democrats who voted. The reauthorization passed unanimously in the Senate.
In 2006, Ex-Im reauthorization passed by voice vote in the House and unanimous consent in the Senate.
In 2012, Ex-Im reauthorization passed with 330 votes in the House and 78 votes in the Senate, including about 60 percent of Republicans in both the House and Senate and unanimous support among Democrats.
Ex-Im Supports Exports from a Variety of Sectors
Ex-Im Bank has identified key industrial sectors with high potential for U.S. export growth. These sectors include agribusiness, aircraft and avionics, satellites, mining, oil-and-gas development, and power generation, including renewable energy. Competitive financing is a necessary component for U.S. exporters to succeed in these sectors abroad, particularly when foreign competitors are backed by financing and other aid from their respective governments. By equipping U.S. businesses with financing tools, Ex-Im Bank levels the playing field for large and small exporters alike.
In 2014, Ex-Im supported exports from a variety of industries, including:
Manufacturing (non-aircraft) – $8.1 billion authorized in support of U.S. manufacturing other than aircraft, including other transportation vehicles, large agricultural equipment, product manufacturing machinery, consumer products, and much more. 43 percent of the dollar value of non-aircraft manufacturing-related authorizations directly supported small business exports.
Services – $1.1 billion authorized to finance exports of all types of U.S.-produced services, including engineering, design, construction, aircraft engine maintenance, computer software, oil and gas drilling, architecture, transportation services, legal services, training, and consulting.
Satellites – $941 million authorized to support exports of U.S.-manufactured satellites and launch services
Agribusiness – $501 million authorized to support more than $1.2 billion of U.S. exports of agricultural goods and services, including commodities, livestock, foodstuffs, farm equipment, chemicals, supplies, and services. 83 percent of the dollar value of the Bank’s agribusiness authorizations directly supported small business exports.
Aircraft and Avionics – $8.4 billion authorized to support exports of U.S.-manufactured large commercial aircraft, business aircraft and helicopters, aircraft engines, avionics, and related services provided by American workers
Oil and Gas – $1.3 billion authorized to support U.S. goods and services exports related to the development of onshore and offshore oil- and gas-field projects
Power Generation – $462 million authorized to support U.S. exports related to power-generation projects
Mining – $746 million authorized for U.S. exports of mining-related equipment and services