If Congress fails to act, no state will be harder hit than Washington, one of the bank’s biggest beneficiaries and the nation’s most trade-dependent states, where one of every three jobs is tied to international trade.
That’s according to Washington Democratic Sens. Maria Cantwell and Patty Murray, who are pushing hard to keep the bank alive, saying 83,000 jobs are at stake in their home state.
They fear the bank’s demise would hurt the state’s exports, which increased by 21 percent last year and hit a record high of nearly $65 billion. Moreover, they say, the bank – which plans to open a new branch office in Seattle this summer – has proved to be a moneymaker for the federal government.
The bank, which is informally known as Ex-Im, boasts that its overall financing exceeded $32 billion for the first time last year. And the bank’s lending and guarantees totaled more than $7 billion for Washington companies in 2011.
No company has benefitted from the bank’s existence more than Boeing, which has its largest manufacturing plants and more than 300 suppliers in Washington. Its customers have received nearly half of all the loans made by the bank since 2007.
In van Well’s case, the bank provided “accounts receivable insurance,” where the company pays a monthly fee to receive protection from bad debts. She said last year marked the first time that her company, which has about 20 full-time employees, signed up for such an insurance plan.
“Our business has always been done on a handshake,” she said. But with the uncertainty in the economy, she said, she and her husband decided it was time to get insurance.
Cantwell said the bank also has helped pay for the construction of one of every three Boeing planes built in the state in the past three years, or about 450 commercial aircraft in all.
That point is not lost on critics. In a statement, Chris Chocola, president of the Club for Growth, a political advocacy group in Washington, D.C., called the bank “a corporate welfare slush fund” that distorts trade flows by having the government pick winners and losers in the private sector. He said the bank should be renamed “the Federal Bank of Boeing.”
Many conservatives are moving to put an end to the bank, saying it has done little more than reward the companies with the best lobbyists on Capitol Hill.
“Boeing spent over $12 million lobbying Congress last year and, in return, is getting billions of dollars in Export-Import Bank financing,” Chocola said. “Congress should end the Federal Bank of Boeing and instead promote more international trade through corporate tax reform and lower tariffs.”
Republican Rep. Dave Reichert of Auburn, a member of the House Ways and Means Committee and its trade subcommittee, said he has been urging House leaders to schedule a vote quickly on the proposed extension.
But three of Reichert’s GOP colleagues – Reps. Justin Amash of Michigan, Tom McClintock of California and Jeff Flake of Arizona – have introduced the Export-Import Bank Termination Act of 2012. It would stop the bank from issuing any loans, loan guarantees or insurance within 30 days of enactment, and the bank would be abolished within three years.
Eric Schinfeld, president of the Washington Council on International Trade, an affiliate of the Seattle Metropolitan Chamber of Commerce, said the bank does not aid Boeing directly because the money goes to its customers.
“It’s allowing other companies to be able to purchase Boeing airplanes, which frankly is great, because that’s supporting hundreds of thousands of jobs,” Schinfeld said in an interview. “And the idea that it is bad for our tax dollars to be used to help support American companies creating jobs and selling their products internationally doesn’t make any sense to me whatsoever.”
According to Schinfeld, the loans made in Washington last year included aid for 56 small businesses. He said most exporters in the country are small businesses that need a source of up-front credit to finance their costs because they’re usually not paid for their products until they arrive overseas. And, he said, the government can help because banks are more risk-averse and have implemented tighter credit policies during the economic downturn.
John Kvasnosky, a spokesman for Boeing Capital Corp., the company’s aircraft financing and leasing unit, said the bank allows Boeing to compete with foreign rivals who have “aggressive levels of export finance support” from their respective governments. He noted that Airbus, Boeing’s chief European rival, benefits from export credit agencies in France, Germany and the United Kingdom.
Cantwell, a second-term senator and a member of the Senate’s finance and commerce committees, has introduced legislation that would extend the bank’s charter through 2015 and increase its lending portfolio to $140 billion.
In the House, Democratic Rep. Rick Larsen of Lake Stevens and Republican Rep. Don Manzullo of Illinois have introduced a similar bill to extend the bank.