The fight to empower a government agency that ensures U.S. companies can compete around the world, and even makes money for the taxpayer, is sadly not over.
The U.S. Export-Import Bank, an 82-year-old institution that provides loan guarantees and insurance to American exporters, can't close any deals exceeding $10 million because of conservative opposition in the Senate. Apparently an overwhelming bipartisan vote by Congress did not send a clear enough message that U.S. businesses need the bank to resume full operations.
The Ex-Im bank is the latest victim of a conservative minority refusing to compromise. The bank board needs three of five directors to reach a quorum, but the chairman of the Senate Banking Committee refuses to fill one of three open seats.
The lack of a quorum has held up six deals worth $2.6 billion so far. Companies that export expensive products - such as oil field equipment, satellites, aircraft and ships - are losing out to foreign competitors who have governments backing them.
"Given an equal footing, American companies can compete and will win a lot of orders, but they can't compete on their own against China and Japan or Korea," Fred Hochberg, chairman and president of the Export-Import Bank, told me during a recent visit to Houston.
Texas exports more goods than any other state, and Houston more than any U.S. city. Local manufacturers and bankers were stunned in June when lawmakers, under pressure from the conservative Koch brothers, blocked the bank's reauthorization.
Texas Sen. Ted Cruz adamantly opposes the bank, calling it crony capitalism, even though it is self-financed, fills in for private banks and generated $675 million for taxpayers in 2014. A condition for applying for Ex-Im assistance is proving that private banks can't legally help, or that foreign competition has government backing.
"The private sector does a spectacular job. They just can't do all of it. It's the private sector banks that bring us in," Hochberg said.
A majority of lawmakers from both parties reauthorized the bank through 2019 as part of the Highway Bill passed in December. But that hasn't stopped Senate Banking Committee Chairman Richard Shelby, R-Ala., from blocking the appointment of a new Republican bank director personally approved by Senate Majority Leader Mitch McConnell, a fellow Republican.
The bank's suspension and subsequent limitations, meanwhile, have cleared the field for 84 export credit agencies from every developed nation on Earth.
Foreign export banks routinely guarantee more trade than the U.S. bank. In 2014, the U.S. bank ranked fourth with transactions totaling $9.33 billion. By comparison, Japan's export credit agency oversaw $15.34 bil-lion in deals.
The U.S. bank was out of action for the last half of 2015, so the French led the world with $7.73 billion in deals. Germany's export bank insured $7.59 billion, while the U.S. dropped off to $5.35 billion.
Without a quorum on the bank's board of directors, foreign companies will have the advantage again over those in the U.S. in 2016. For example, Boeing depends on the bank's guarantees to bring down borrowing costs on airline deals where it faces competition from Airbus, which benefits from guarantees by France's export bank, Coface.
"It is no secret having a quorum is critical to staying competitive in the global economy," Kate Bernard, a spokeswoman for Boeing, told the New York Times.
Hochberg came to rally the Houston business community to advocate for the bank and preserve the 100,000 area jobs it supports. Exporting more high-priced goods is critical to creating more manufacturing and engineering jobs in Texas, especially after the job losses in the oil and natural gas sector.
"If we want more good-paying jobs, that means being more export-focused," Hochberg said.
Many Capitol watchers say that Shelby only blocked the nominations because he faced a right-wing challenger in Alabama's Republican primary last Tuesday. Shelby won that race and will coast to re-election in November in his predominantly Republican state.
U.S. and Texas businesses expect Shelby and other conservatives to move quickly on the Ex-Im bank's board, so that they can get back to exporting the highest-quality products in the world. Conservative politicians too afraid to stand up for American business need to stop punishing U.S. exporters now.
The Houston Northwest Chamber of Commerce, along with most Chambers in the region, supported the reauthorization of the Ex-Im Bank. For more information, contact Barbara Thomason at email@example.com