America's robust export growth has been crucial in helping our nation recover from the worst economic recession since the Great Depression. Three major factors have contributed to the United States' improved balance of trade performance.
First, the US is undergoing a high-tech manufacturing renaissance. Our superior products are highly valued in the global market.
Second, recent reforms of restrictive export controls have enabled American manufacturers of commercial satellites and commercially available parts in military systems to begin recovering lost market share.
Third, the Export-Import Bank of the United States (Ex-Im) has played an indispensable role in providing loan guarantees and financial assistance to US companies of all sizes competing for foreign sales, especially when the private sector is unable or unwilling to assume credit risk.
Indeed, Ex-Im's significance in spurring our economic recovery was tangible during the 2007-2010 credit crisis when a paralyzed banking system lacked the capacity to underwrite even low-risk loans.
In any international competition, unilateral disarmament is never a good idea. Yet the renewal of Ex-Im's authority to operate has become a victim of an ideological minority on Capitol Hill whose purist vision of keeping government out of the marketplace doesn't recognize that competing nations — including China, Russia, Japan and the major European states — offer substantially greater export credit financing assistance than the US.
Since July 1, congressional inaction has prevented Ex-Im from processing new loans, leaving American firms at a substantial disadvantage in competing for foreign sales. And after a flurry of activity in Congress in late July, attempts to move forward on the bank's reauthorization fell one vote short in the House Rules Committee following Senate passage of a favorable Ex-Im amendment.
The failure to keep Ex-Im open for business is already having a substantial ripple effect throughout our economy. US satellite sales are being threatened or even lost and American exporters are having to scramble to find private financing to replace Ex-Im programs. If those sources were readily available, the exporters wouldn't have had to go to Ex-Im in the first place.
And small and medium-sized companies in the supply chain that depend on large-scale projects financed by Ex-Im are rightfully concerned about what will happen next in a post-Ex-Im marketplace.
Shutting down Ex-Im would also threaten American national security interests. American aerospace and defense companies have relied on overseas markets, particularly commercial markets serviced by Ex-Im loans, to keep the defense industrial base healthy as US defense spending has declined. Without Ex-Im, US industrial production will decline, reducing revenue and jobs throughout the aerospace and defense supply chain, leading to higher unit costs for the military systems our armed forces buy.
The same dynamic occurred in the shipbuilding sector in the 1980s with devastating results that continue to be felt today.
A final, often overlooked point in this debate is that Ex-Im allows our companies to bolster America's presence abroad and draw developing countries closer to our values through its financing of projects such as water filtration, solar power and transportation infrastructure development. Do we really want to undermine the usefulness of US-manufactured exports in helping us build long-term strategic relationships when countries like China use their support of overseas trade to bolster their political and diplomatic interests abroad?
The Senate and House of Representatives now need to refocus on this pressing issue. Ex-Im financing has helped America boost its economic prosperity and strategic influence at a critical time in our history. We must keep Ex-Im's doors open and use this important tool to advance our national interests.
Melcher, is a retired Army lieutenant general and president and CEO of the Aerospace Industries Association. Hamre is a former US deputy secretary of defense.