The South Carolina congressional delegation is firmly split over the future of a federal bank that has pumped billions into financing the state’s exports.
The fate of the Export-Import Bank, which backs loans to international companies who buy American-made products, hung in the balance this week as Congress considered prolonging its life past a Sept. 30 charter expiration date. In a whirlwind voting session, both chambers voted to at least extend it to June 2015, bypassing the upcoming lame duck session and leaving time for lawmakers to consider reforms.
South Carolina politicians, though, were split on the vote to extend the bank’s charter; the amendment to do so was wrapped up in a budget bill to keep the government running. But even though its lifeline has been pushed to next year, the state’s Republicans don’t agree on the bank’s uncertain future, with some firmly calling for its end and others just as firmly demanding it stays.
“It’s not a win-win. Someone’s going to lose,” Rock Hill’s Rep. Mick Mulvaney said of the bank. “(It’s) market distortion. It tips the playing field in many circumstances against domestic producers.”
Sens. Lindsey Graham and Tim Scott have both expressly supported the bank, while Reps. Trey Gowdy, Jeff Duncan, Mark Sanford and Mulvaney all voted against the resolution that extended its deadline.
Established in a post-World War I economy that saw rebuilding nations struggling to afford American-made products, the Export-Import Bank helps guarantee loans to international companies importing U.S.-goods. Put simply, the bank helps back the loans companies take out to purchase American-made commodities.
These days, most major nations have some kind of export credit agency, including China, France, Russia and the United Kingdom.
The United States’ Export-Import Bank says it has financed over $265 billion in exports and benefited over 8,600 U.S. companies just since 2007. Over 70 South Carolina businesses saw $2 billion of that help sell their products overseas.
But Mulvaney says it’s not that cut-and-dry. The numbers sound good, he said, but most of the money goes disproportionately to large corporations, despite the bank’s mantra of benefiting small businesses.
“The overwhelming share of this goes to four or five companies,” he said. “The Ex-Im bank has failed for the last couple years to meet their small business (goals).”
The numbers would tend to back that claim up. Statistics show that the bank has financed exports for 36 South Carolina small businesses, but the overwhelming majority of the bank’s investments over the past seven years $1.3 billion has gone to the state’s industrial mainstay, Boeing.
With its newest 787 Dreamliner facility located outside Charleston, the commercial aircraft giant is one of the Export-Import Bank’s most fervent supporters.
“Export credit, the availability of export credit from a government is definitely a factor for a number of airlines around the world,” said Boeing spokesman Tim Neale. “It’s really important to give our customers the confidence that (the Export-Import bank) is going to be there.”
Even the potential that the bank may be gone after next June, Neale said, is shaking up Boeing’s international buyers.
“We have been hearing from customers all year long who are concerned about the future of the (Export-Import) bank,” he said. “They need that assurance that the bank is going to be there in case they need it. Otherwise, it’s just a risk factor that might cause them to buy from one of our competitors.”
In South Carolina, in particular, the loss of the bank would hurt, he said.
“Most of the 787s that are built there are for foreign customers,” Neale said. “Most of the planes that will go out the door will be destined for foreign airlines, so most of them will need a credit guarantee.”
The competitive advantage of the export credit, lawmakers say, isn’t something that U.S. companies can afford losing.
“I would love to see us get out of this business, but if we unilaterally stop doing this, then our companies, our employers are at a competitive disadvantage,” said Myrtle Beach’s Rice, who was one of two South Carolina Republicans to vote for the House bill that kept the bank afloat. “In a perfect world, I wish it wasn’t there. And I wish that banks would step up to fill the void. But the problem is it’s not a perfect world.”
Mulvaney did say there was room for negotiation among Republicans to overhaul the bank rather than just cut it when its charter expires in June. But he says he’s concerned the bank’s track record shows it’s more likely to succumb to politics than be revitalized as a functioning, nonpartisan entity.
“The 2012 authorization (to extend the bank) required the bank to make certain reforms, and the bank has simply refused to do that,” he said. “To think it’s not political is just not a reality.”