In some ways, the Wisconsin delegation to Congress has always been more pure than productive.
Badger State members such as the late U.S. Sen. William Proxmire prided themselves on exposing what they defined as federal “pork,” often to the detriment of Wisconsin’s ability to attract a fair return on tax dollars their own constituents sent to Washington, D.C.
Democrat Proxmire was only one example; the list of Wisconsin members of Congress who have objected to federal programs that can improve the state’s “tax donor” status is long and bipartisan.
Read this commentary in the Milwaukee Journal Sentinel here.
The latest example of standing on principle over pragmatism is the debate over the Export-Import Bank, a little-known federal agency that provides billions of dollars annually in loan guarantees and other financial support for U.S. exports.
Congress has declined thus far to reauthorize the “Ex-Im Bank,” as it’s known for short, mainly because conservatives believe it’s a prime example of crony capitalism, with most of the bank’s loan dollars going to a few politically connected corporations.
In Wisconsin, that decision has hit home with the announcement by General Electric Co. that it will shutter its engine plant in Waukesha, shifting 350 jobs to Canada. The company cited the end of the Ex-Im Bank as the reason for the closure, as it did with four other U.S. plants.
“We believe in American manufacturing, but our customers in many cases require Export Credit Agencies financing for us to bid on projects. Without it, we cannot compete, and our customers may be forced to select other providers,” GE Vice Chairman John Rice said in a statement.
GE is a global corporation with customers and production facilities in many places. While it’s an “American” company in its roots, it cannot afford to ignore global trends, markets or policies.
If the congressional push to abolish the Ex-Im Bank after 80 years was based on claims it’s a waste of money, the abolition push would at least make sense. But that does not appear to be the case. The Congressional Research Service reports the bank had a total budget of $90 million in 2013 (the entire federal budget was about $3.5 trillion) and that it costs taxpayers nothing to operate. The cost of running the bank is paid by fees and interest charged to its private customers. In fact, the bank returned $675 million to federal taxpayers in 2014.
The case against the bank, as stated by leading conservatives, is more about a philosophical rejection of unholy alliances between big business and big government. They see it as “corporate welfare” to be eliminated in a quest to create a more level playing field.
The problem is the real world doesn’t always work that way. Those 350 workers in Waukesha would much rather stand on a factory production floor than some politician’s idea of principle.
General Electric is only one example of the Ex-Im Bank’s role in Wisconsin. The Ex-Im Coalition says the bank supports $4.2 billion in export sales in Wisconsin, 203 companies and more than 27,000 jobs. Other examples cited by the coalition include The Oilgear Co., Scientific Protein Laboratories and The Manitowoc Co.
The bank says it provided $20.5 billion in financial support for goods manufactured in the United States in 2014, and has created or sustained 1.3 million American jobs since 2009. Supporters also contend that if the bank fails, U.S. companies will lose ground to foreign companies backed by their own export credit agencies.
Manufacturing is still king in Wisconsin, and exports are part of the royal court. Wisconsin companies exported about $23.4 billion in goods and services in 2013, according to the Wisconsin Economic Development Corp., with industrial machinery, agricultural products, medical and scientific instruments, electrical machinery and vehicles accounting for about 71% of the total.
Although the United States still rings up a massive trade deficit — meaning, it imports more than it sells overseas — Wisconsin’s export total continues to rise and is projected by WEDC to exceed $45billion within six years.
The rise of a global middle class is a major force behind the local export boom. Rather than perceive that demographic reality as a threat to American prosperity, companies and government should work together to ensure that U.S. companies have a fighting chance to bring high-quality products to markets that can finally afford to buy them.
Wisconsin’s delegation to Congress has thus far been split on the future of the Ex-Im Bank. Its four Democratic members want to save it, as do two of six Republicans. Standing up for principle has its place, but it also has its limits in a world where competition knows few borders.