Reagan Would Have Fought For Ex-Im Bank
June 18, 2014
A version of this article appears in the June 9 edition of Aviation Week & Space Technology and in Aviation Week online on June 17.
In the decade since Ronald Reagan’s death, appraisals of the U.S.’s 40th president have focused on his policies’ bold colorings. To help end the Cold War, he first demonstrated to Soviet leaders the folly of trying to keep up with a technologically advanced American military. Reagan’s economic policies also unapologetically advanced the interests of American workers and businesses when he saw foreign competitors had the advantage of an unlevel playing field.
As someone who proudly served President Reagan, I believe it is important to address his legacy now, precisely because some members of his party in Congress are turning their back on it. They have accepted excessive national security cuts in an increasingly dangerous world due to their stubborn adherence to fiscal austerity. And they refuse to support government institutions such as the Export Import Bank (Ex-Im) of the United States, which allows American companies to compete for business abroad and create jobs here at home.
Ex-Im goes toe-to-toe against other nations’ export credit agencies to enable American companies to compete internationally based on price, product and quality instead of favorable financing. Ex-Im supports U.S. exports when private finance is unable or unwilling to step in. During his presidency, Reagan strongly backed Ex-Im, albeit with necessary reforms. He requested an increase in Ex-Im’s lending limit on loan guarantees by more than 12% or $1.1 billion. One of his budget requests stated that supporting export financing on a “substantial scale” is “consistent with the [Ex-Im] Bank’s legitimate role in overcoming limitations in private credit markets.” That does not sound like someone who opposed the Bank.
Also consistent with Reagan’s views is Ex-Im’s critical role today in assisting Main Street U.S. businesses. In 2013, the bank aided more than 3,400 companies—nearly 90% of them small businesses—and supported more than 205,000 U.S. jobs in all 50 states. The indirect impact of the bank is also substantial when considering the small- and medium-sized supply chain companies that benefit when a product is exported. The bank evaluates all transactions it receives for potential adverse economic impact. And last year, Ex-Im earned more than $1 billion for the U.S. Treasury. In addition, a newly released Congressional Budget Office report estimates that Ex-Im would earn $14 billion over 10 years using the accounting methods currently required by law. That, along with a 0.0237% default rate, is an enviable record of achievement.
The U.S. aerospace industry, which must expand exports in order to mitigate somewhat the negative effects of excessive budget cuts, relies greatly on Ex-Im. The Bank ensures that the suppliers for manufacturers of aircraft, helicopters, commercial satellites, spacecraft and launch vehicles are able to participate in an ever-expanding global marketplace. And if you add to original equipment sales the significant orders for aftermarket parts and components generated by U.S. aerospace exports, it is clear that Ex-Im contributes significantly to the strength of our nation’s industrial manufacturing base and to our industry’s track record of generating the largest trade surplus of any manufacturing sector.
Despite Ex-Im’s positive role, the bank’s small, but vocal group of opponents in Congress seeks to block its required reauthorization this fall. They assert Ex-Im financing represents the government picking winners and losers. This is not the case: Any U.S. company that wants to compete globally can come to the bank to help turn good export opportunities into sales. If Ex-Im’s opponents are successful, their blocking move would amount to economic unilateral disarmament against 60 other nations whose export credit agencies aggressively support their businesses, often with massive subsidies. Certainly our foreign competitors would love to see it eliminated and the playing field tilted in their favor, but the job of our government is to advance American competitiveness. Who would have thought that some elected officials and “think” tanks would take foreign competitors’ side of the argument?
I urge readers to reach out to their members of Congress to call for action to reauthorize Ex-Im prior to Oct. 1. As President Reagan said in his 1983 State of the Union Address, “We must have adequate export financing to sell American products overseas.”