Trading Blows

In a political tug-of-war, the flag in the middle gets muddied.

   U.S. firms sold more stuff overseas than customers bought from foreign companies in June, trimming the trade deficit once again, according to new statistics.
   So why the stiff opposition to the agency that helps American firms finance foreign trade? Go figure.
   Here are the numbers: Exports in June totaled $195.9 billion, up $0.3 billion from the total in May, and imports were $2,9 billion less in June than the previous month. The Bureau of Economic Analysis and the Census Bureau jointly reported that this resulted in a trade deficit of $41.5 billion, down from $44.7 billion.
   This may not be much in an economy totaling $16 trillion, but it shows progress, as stuff made in America increases worldwide sales.
   Meanwhile, the Ex-Im Bank, which provides loans to American firms that have trouble getting it from private sector financial institutions, is facing a vote in Congress to extend its charter beyond its Sept. 30 expiration date.
   If that happens and the Ex-Im Bank shuts down, American firms would lose sales and workers lose jobs. Unless American banks step up their financing of overseas business at reasonable loan rates.
   Will that happen? Or will political thoughtlessness and financier greediness win the day as firms lose business?
   Governments around the world give strong support to international trade through loans to help finance export and import transactions, but oppositionists in America continue their campaign to abolish the Ex-Im Bank, claiming that it loses money and is a burden on taxpayers.

   Oppositionists cite a loan of more than $640 million to build a petroleum refinery in Turkey. What they do not say is that the refinery equipment is made in America, supporting 3,000 U.S. jobs in doing so.
   They also argue that the Ex-Im Bank operations will cost taxpayers $2 billion over the next ten years. The bank, on the other hand, points out that it is an independent federal agency that "creates and maintains U.S. jobs by filling gaps in private export financing at no cost to American taxpayers." It provides financing where others do not. And not only does the bank turn a profit, but last year alone it forwarded more than $1 billion to the Treasury.

   Economist Robert J. Samuelson has written that conservative charges of "government bloat that's bleeding taxpayers ... is, charitably, wildly misleading." The bank's expenses are "fully paid by fees and interest" from its customers.

   In addition, the National Association of Manufacturers has come out in favor of renewing the Ex-Im Bank's charter, which will expire Sept. 30 unless Congress acts. In a larger context, the bank's operations are chump change compared to the financing activities of other nations. The Ex-Im Bank supports about 2.4 percent of all U.S. exports, compared to 12.5 percent by China and 20 percent by Canada.
   So the political tug-of-war continues, with a showdown in September between political oppositionists and pro-business and labor supporters.
   Who will lose? Stay tuned.