Hearing of the Domestic and International Monetary Policy, Trade, and Technology Subcommittee of the House Committee on Financial Services Subject

Federal News Service

May 6, 2004 Thursday

HEADLINE: HEARING OF THE DOMESTIC AND INTERNATIONAL MONETARY POLICY, TRADE, AND TECHNOLOGY SUBCOMMITTEE OF THE HOUSE COMMITTEE ON FINANCIAL SERVICES SUBJECT: OVERSIGHT OF THE EXPORT-IMPORT BANK OF THE UNITED STATES

CHAIRED BY: REPRESENTATIVE PETER T. KING (R-NY) WITNESS: PHILIP MERRILL, PRESIDENT AND CHAIRMAN, THE EXPORT-IMPORT BANK OF THE UNITED STATES

LOCATION: 2128 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

BODY:
REP. BERNARD SANDERS (At large-VT): Thank you, Mr. Chairman, and thank you for holding what is a very important hearing on a very important subject. And I thank Mr. Merrill for being with us today.

Mr. Chairman, I think nobody believes that the Export-Import Bank is a huge colossus agency upon whose success or failure will depend-the American economy will depend upon. But I think what we have got to look at is the fact that in the United States today we are seeing a collapse of manufacturing, that in the last three years we have lost 2.8 million good paying manufacturing jobs, which has resulted in a decline in the standard of living of millions of American workers. We have got to appreciate that in the United States today we have-the last that I've seen is a trade deficit of some $500 billion, including I believe a trade deficit with China alone of over $120 billion. If my memory is correct, the National Association of Manufacturers projects that that deficit will go up and up and up in the next number of years.

Now, given the fact that the function of the Export-Import Bank, as I understand it, is to create good paying jobs in America based on export-while I am not here to blame the Export-Import Bank alone for all of these issues, I think, Mr. Chairman, what is obvious to anybody who looks for three seconds at the issue is they are irrelevant in the process, that we have to rethink our entire approach toward manufacturing in America and understand why we are failing so abysmally, and that the Export-Import Bank is irrelevant in terms of the entire process.

Now, Mr. Chairman, what particularly upsets me about the Export- Import Bank, without blaming them for all of the problems, I don't mean to do that, is that year after year the Export-Import Bank provides billions of dollars in corporate welfare, taxpayer money, to the largest corporations in America.

Do you know what those corporations say, Mr. Merrill? They say, "Thanks, America. Thanks, taxpayers, for your money. We're off to China. We'll send you a postcard from China."

I would like Mr. Merrill, when he does his response, to tell me how he feels about corporation after corporation-which is very public, these guys don't hide it-who are saying, "America, good- bye. We're going to China. We're hiring people for 30 cents an hour."

I would like Mr. Merrill to tell me specifically how he feels about the head of General Electric, the CEO of G.E., a gentleman named Jeff Immelt, who says a year ago in speaking to investors-G.E. investors-and I quote. This is what he said: "When I'm talking to G.E. managers, I talk China, China, China, China. You need to be there. You need to change the way people talk about it and how they get there. I am a nut on China. Outsourcing from China is going to grow to five billion," end of quote.

And yet guess what, taxpayers of America? Export-Import Bank funds General Electric. They fund Motorola. They fund corporation after corporation that treats the American worker with contempt and goes abroad. This is absurd.

So I think, Mr. Chairman, that if we're serious-and I'm, again, not here to blame Export-Import for all of these things. They are a small part of the problem. But we've got to say enough is enough. You cannot continue to give out corporate welfare to corporations who treat American workers with contempt. It's not good enough to say, "Oh, we've saved 12 jobs over here," when the largest corporations in America that receive your funding are laying off hundreds and hundreds of thousands of workers.

REP. KING: The gentleman's time has expired.

REP. SANDERS: I hope that's an issue, Mr. Chairman, that we'll begin to discuss.

BREAK IN TRANSCRIPT

REP. SANDERS: Thank you, Mr. Chairman. Let me just read for the record something and let the American people determine how successful the Export-Import Bank has been creating-was it "jobs, jobs, jobs?" Is that your motto?

MR. MERRILL: Yes.

REP. SANDERS: Okay. Here we go: "Jobs, jobs, jobs" --

MR. MERRILL: Jobs through exports is the motto.

(Cross talk.)

REP. SANDERS: Excuse me, sir. "Since 1975, General Electric has eliminated more than 260,000 American jobs while receiving $2.5 billion in loans and guarantees from the Export-Import Bank." It doesn't sound too successful to me. "Boeing is, I believe, the largest recipient of export-import taxpayer subsidies and grants. Since 1990, Boeing has laid off 135,000 American workers, increasingly outsourcing design work to China, Russia and Japan, while receiving $18 billion in direct loans and loan guarantees."

Now, maybe the loss of 135,000 jobs doesn't concern Export- Import, but some of us worry a little bit about that. "Motorola has laid off close to 43,000 workers since 2001 and received $190 million in direct loans and loan guarantees from the U.S. Export-Import Bank." Jobs, jobs, jobs. You're right. We're losing jobs, jobs, jobs big time. Now, General Motors. Since 2001, three years ago, G.M. has laid off 37,500 workers while receiving over $500 million from the U.S. Export-Import Bank. And in fact, as you know, they are now going to be manufacturing a lot of auto supplies in China so we expect job loss to go with that.

So the first question-I'm going to ask you several questions. The first question is, why do taxpayers in this country provide billions of dollars in loans and loan guarantees and subsidies to companies that are throwing hundreds and hundreds of thousands of American workers out on the street?

Mr. Chairman, I used to be the mayor of a city and we dealt with the business community. The fallacy of the Export-Import Bank is that Mr. Merrill will come and say, "Look what we did in Erie, Pennsylvania. We created 700 jobs." But they're not looking at what General Electric did in its entirety.

The way sensible government works is you say to the business community, "We're prepared to help you. What are you going to do for workers in America? How are you going to grow jobs?" Don't tell us you're growing jobs in Erie, New York when you're laying off hundreds of thousands of people elsewhere, because we don't pay attention to that. We're just looking project by project. That is an absurd philosophy.

I think Ms. Velazquez was right a moment ago in saying job creation is taking place amongst small businesses, medium sized businesses. What about telling large corporations that if they're not interested in growing jobs in the United States of America, you're not going to support them? That if they want money from the taxpayers of this country, we'll help them when they tell us and promise us they're going to start growing jobs in America? Not one project while they're laying off hundreds of thousands of people elsewhere.

Now, to add insult to injury, I gather with a straight face, Mr. Merrill, you are telling us that the Export-Import Bank, did I hear you correctly, is the agency of last resort for loans?

MR. MERRILL: Yes, we --

REP. SANDERS: Okay. You are telling the American --

(Cross talk.)

REP. SANDERS: Excuse me, I heard what you said. Now you're going to tell me with a straight face that General Electric, which itself is one of the largest financial institutions in America, cannot get loans any place else but from the taxpayers and the workers of America, many of whom have lost their jobs from General Electric? Are you going to tell me that with a straight face, that G.E. is a struggling small business, a minority business in the Bowery of New York, that they just can't find financing? Look as hard as they want, poor G.E. You're going to tell me that and the American people with a straight face?

Last question that I would have for you. I mean, this is such an absurd argument that only in Washington, D.C., would anyone regard this as a vaguely rational argument. I would hope and appreciate your giving me a list of the top 10 recipients of Export-Import funding, and tell me how many hundreds of thousands of jobs those companies have lost-laid off. How many hundreds of thousands of American workers they have laid off. Mr. Chairman, I want you to respond.

Mr. Chairman, I mean I think the time is to end this joke of the Export-Import Bank. What we need is serious help for small and medium sized businesses in this country who want to grow decent paying jobs in America, who are proud of American workers, not companies like G.E. who are announcing to the world that they're going to China, they're going all over the world and they're going to lay off American workers.

Mr. Merrill, tell me why the American taxpayer should be supporting a company like G.E., who has laid off hundreds of thousands of workers and whose CEO announces to the world he's going to China? Tell me why?

REP. KING: The gentleman's time has expired. Mr. Merrill will have the opportunity to answer the question.

MR. MERRILL: Well, I can-it is limited time. I can only say that I agree absolutely with Congresswoman Velazquez that job creation in the United States for a very long time, quite a few years before I got here, has been mainly or almost completely small business. This is why we're so focused on small business. I could not agree more. And our object is to create as many small and medium sized business jobs as we possibly can, and support as many of the 240,000 exporters as we can. I want to put that on the record.

Second, I think the quickest answer is with a number, and I'll just leave the one number here. Thirty-five years ago the U.S. exported $42 billion worth of things. For the last three or four or five years we've exported $1.1 trillion worth of things out of an $11 trillion economy.

Roughly speaking, $1.1 trillion is about the same size as the economy of China, the entire economy of China. It is three times the total economy of Russia. It's a lot of exports. So the movement toward exports has-any way you want to measure it, has substantially created American jobs with or without Ex-Im Bank support. And I'll just stop there.

REP. SANDERS: You didn't answer my question.

MR. MERRILL: Say again?

REP. SANDERS: You did not answer my question.

REP. KING: The time of the gentleman has expired.