Senator blocks trade riches
There are two ways to attack a trade deficit, by reducing imports or increasing exports.
GOP Sen. Pat Toomey of Pennsylvania has tied one of America’s arms behind its back.
The U.S. trade deficit with China set a record in 2017, with Americans importing goods worth $375 billion more than what they exported, the Commerce Department reported last week. Globally, the U.S. trade deficit was $566 billion, the highest in nine years.
Some believe the solution is to impose tariffs or construct legal barriers to discourage imports. But that will only drive up consumer prices, and history shows that once an industry is lost to another country, it rarely moves back.
The best way to overcome a trade deficit, and promote prosperity for all, is to increase exports. And governments around the world make it cheaper to export goods through export credit agencies, like the U.S. Ex-Im Bank.
For the last four years, I’ve detailed how the Ex-Im Bank provides loan guarantees and insurance products that help reduce the risk of shipping high-
value capital goods to foreign countries, where oftentimes the legal and banking systems are unreliable.
The bank costs the American taxpayer nothing and actually makes money for the Treasury most years. But Toomey opposes the bank’s mission. When his choice to lead the bank was voted down by fellow Republican senators, he vowed in December to stop President Donald Trump’s nominees to the Ex-Im Bank’s board from getting confirmed.
By placing a hold on all four nominees, Toomey has cost the United States $10 billion in export deals. His continued obstinacy is putting 250,000 American jobs at risk, many of them in the Houston area.
To learn more about the missed opportunities, I spoke with Scott Schloegel, the acting first vice president at the bank. The problem is that without a quorum on its board, the bank cannot approve transactions worth more than $10 million. Opposition by Toomey and his allies have blocked the bank from getting a quorum for 2½ years.
“We have roughly $35 billion in transactions in the pipeline right now, and that represents roughly a quarter of a million jobs,” Schloegel told me. “We want to get moving on that.”
Time is of the essence because export deals are perishable, which is why $10 billion in deals have already died, including a $1.4 billion petrochemical deal that left the U.S. for Germany and Canada last week because the bank could not commit.
“U.S. jobs were lost,” Schloegel said. “There have been some aircraft we haven’t been able to do financing on. There have been satellites that have gone by the wayside, satellite launches that have gone to the French.”
Many of the pending transactions would benefit Houston, he said. They include $16 billion for the electric power business, $14 billion for oil and gas, $4 billion for transportation, nearly $2 billion for infrastructure.
Houston-based Thrustmaster of Texas is one example of the difference the Ex-Im bank can make. The company manufactures marine thrusters to maneuver ships and offshore platforms. The bank provided repayment guarantees and performance bonds worth $82 million, which backed contracts that added 20 jobs, boosting Thrustmaster’s workforce to 230 Texans.
All without costing the taxpayer one red cent. That was before the bank’s board lost its quorum.
“Ex-Im helps us compete on a level playing field with larger multinational competitors by facilitating our access to working capital to fulfill multimillion-dollar international contracts that enable us to sustain and add jobs in Houston,” said Joe Becker, the company’s president.
The competition is undoubtedly fierce. China’s export credit agencies pledged more money in two years for their exporters than the U.S. Ex-Im has pledged in its 84-year history.
“When we do these large sales, people will rail against these big companies that we do financing for,” Schloegel said. “But take Boeing, for example. It purchases from tens of thousands of small-business suppliers ... so when these sales are lost, that means jobs are supported in other countries. People don’t understand the ripple effect.”
Trump’s four nominees to the bank’s board were approved by the Senate Banking Committee in December and only need a single vote by the full Senate to take their posts. The bank has broad bipartisan support, but Toomey is blocking a vote.
Would I prefer that no country in the world used export credit agencies to boost their private businesses? Of course. But that’s not the way the world works.
Toomey’s misplaced idealism is costing Texans jobs and profits. Our senators, including his close friend Sen. Ted Cruz, need to make sure he knows that makes us very, very unhappy.