Patrick McHenryChairman

Washington, July 14, 2014 -

July 13, 2014
Editorial
                                                         
Supporters say that killing the government Export-Import Bank would result in "unilateral disarmament" and a painful fall in U.S. exports. But consider the recent conclusions of the financial analysts at Standard & Poor's.

S&P examined what would happen to Ex-Im's biggest client, Boeing, if the bank could no longer provide taxpayer-subsidized financing. S&P estimates Boeing accounted for more than one-third of Ex-Im's financial commitments from 2007 to 2013. "We don't believe that the expiration of Ex-Im's authorization in September would hurt Boeing's credit quality or ability to make planned deliveries in 2014 and 2015," the analysts wrote, citing "the development of more and deeper sources of aircraft financing."

In other words, the private economy is ready, willing and able to provide trade financing to foreign customers to buy Boeing's jets. S&P also examined the effect of cutting off Ex-Im financing to three of the bank's other big clients— General Electric, Caterpillar and United Technologies. The conclusion? Their credit ratings wouldn't be affected because "the amounts financed are generally less than 2% of revenue."

S&P notes that Boeing might face longer-term credit risks if it has to do more of its own financing for sales, but that's still not a persuasive argument for continuing Ex-Im subsidies. Merely because Europe wants to subsidize exports for U.S. purchasers doesn't mean American taxpayers should have to return the favor for European buyers. Putting taxpayers behind a race to the bottom for subsidized export business isn't a recipe for taking prudent risks.

The battle over reauthorizing Ex-Im is turning into a political brawl in which the Fortune 500, with some exceptions, are trying to divide Republicans by fanning fears of economic harm if the bank fades away. As S&P shows, Republicans should have enough confidence in free markets to do the financing job.

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