As Washington factions argue over whether to continue funding the Export-Import Bank, it’s useful to note that U.S. exports are running at a good clip, and are way ahead of the paltry levels seen right after the recession.
According to the U.S. Commerce Department, the United States exported $195.5 billion of goods and services in May 2014. Over the past 12 months, the value of U.S. exports of goods and services totaled $2.3 trillion.
Commerce said this 45.7% above 2009’s level of exports.
This is all great news, but is it a good reason to continue funding the Ex-Im Bank, which was set up to fill gaps in private export financing?
Ex-Im said it approved more than $27 billion in total authorizations to support an estimated $37.4 billion in U.S. export sales during fiscal 2012. They claim that this supported 205,000 American jobs.
Critics of the bank don’t really argue against those figures, but say that the government should not be involved in backing loans extended to fund exporting deals. They say that the private sector should perform this task.
The bank argues that private lenders often turn down small businesses that seek loans to fund export deals in the pipeline. Critics then counter that most of Ex-Im’s funding volume supports big exporters like Boeing or Caterpillar.
From the data available it is clear that there are merits to both sides of the argument. Right now, things are fine since the global economy is running strong, and few of these export loans are in default. But if the economy were to turn sour fast, U.S. taxpayers could be on the hook for “backstopping” some of this lending.
Supporters of the bank point out that many of these export deals have only gone through because of this backstopping, and that the economic benefits to the U.S. exceed the potential risks of loan defaults in a recession.
Whichever side wins this argument, what’s clear is that – for now – the U.S. economy is benefitting from the steady growth of exports that has occurred during the past five years.
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