US export bank: vital trade tool or costly albatross?
Is it good business for the Reagan White House to slash funding for the Export-Import Bank, an agency which boosts the export of American goods? Critics say no, claiming it is penny wise and pound foolish to trim the sails of an organization that helps US businessmen compete with their foreign counterparts in markets overseas.
President Reagan would slice the bank's lending capacity by $410 million in fiscal 1982, by more than double that amount in 1983, and by well over $1 billion yearly beginning in 1984. Thus, says a White House report, "federal outlays and the federal deficit can be reduced by more than $6 billion over the next five fiscal years."
Presumably, few Americans will spill tears over the fate of a little-known bank designed to help businessmen, when millions of Americans face losing food stamps and cash benefits from other Reagan cuts. But supporters of the Export-Import Bank say it is not as clear-cut and simple as the White House makes it sound and that the bank in fact creates jobs by fostering export sales.
Other governments give subsidized credit to their exporters to promote sales in fiercely competitive world markets. Many American exporters might be frozen out if the US government did not step in with a helping hand. That hand is the Export-Import Bank, founded in 1945 to finance the export of American goods and services in situations where commercial financing was unobtainable.
A 1978 US Treasury study, says former Assistant Treasury Secretary C. Fred Bergsten, "suggests that about two-thirds of total US exports financed directly by the [Export-Import Bank] represent additional sales that might not have been made otherwise." If that is true, a lot of US jobs have been created, or sustained, by Export-Import Bank activities.
Reagan aides claim, however, that a major part of the bank's loans go to large US corporations, such as Boeing and General Electric, which can hold their own in world markets without help from the Eximbank.
Normally the agency, which borrows its funds from the US Treasury and then loans them out, earns a bit of money and costs neither the federal budget nor the taxpayer anything. Now, however, with interest rates so high, the Eximbank pays the Treasury more for its capital than it can charge its customers if they are to compete with subsidized exporters from other lands.
That is where the budget drain arises. The Reagan administration would like to plug that drain by reducing the bank's activities and targeting its loans more carefully.
White House officials acknowledge that US exports have grown in recent years, increasing the US share of world trade. And they say Eximbank activities played a role in this. But the main cause of "this excellent US export performace," says a White House report, has been changing relationships between the US and foreign econom ies, not direct lending by the Export-Import Bank.