>> if i'm lucky enough to get one of those up rights, i recline. but if i'm back here and it's a sardine. maybe a touch or two. just a thought. inside story is up next on inside stor al jazeera america. >> when you got up this morning you weren't thinking about the import-export bank. it's a small government agency that tells you blendy about how government works in 2014, and it's the inside story. >> hello, i'm ray suarez.

fights in washington often involve big binary questions about the future. axis, war and peace, healthcare. some washington fights go on below the public radar but carry with them the ability to explain a lot about how the u.s. government works and how the tug-of-war between the political schools of thought go on. we'll look at the debate over the export credit agency, the export-import bank of the united states. what it's for, how it works, and whether it should continue to exist at all. >> more small businesses are selling their goods abroad more than ever before. nearly 300,000 last year alone. we should be doing everything we can to excel rate this process, not stall it. >> a little known washington

agency topped president obama's weekly address saturday. the bank provides loans and insurance to foreign purchasers of u.s. products. it gets companies like boeing to get more foreign companies to buy their planes. and it helped solidify a deal between caterpillar and australian mine company. but critics say the bank is a form of crony capitalism that picks winners and losers. delta airlines can't get the bank's help to buy boeing planes because it's a u.s. company, but it's competitor british airways can. it supported $37 billion in transactions, which helped create 200,000 jobs. at 80 years old the bank traditionally won support from both sides of the aisle in congress until now.

>> the charter of the export-import bank expires in a few weeks. and the debates swirling around it's future has created unusual allies and unusual enemies. republicans who insist they're the fast friends of business don't support the bank. while democrats often described as hostile to free enterprise want to renew the charter. politics, economics, and ideology are crashing at the bank's front door. here with us to discuss the banks future. our guests. >> george munoz, i'm asking to ask you to pretend you're in a tenth grade civics class.

how does it work? >> it works where a manufacturer wants to sell it's goods to markets overseas, and the local bank says i don't want to take that risk, i don't know that company overseas so they'll finance the purchaser of those goods so the u.s. seller can sell their products overseas. >> the bank originates the loans. gives the funds to the overseas purchaser which uses that loan money to buy goods from the u.s. corporation. >> it is conditioned on them buying u.s. goods. >> do they underwrite, guarantee or back up the loan? who holds the bag if something goes wrong? >> they can give a direct loan to the buyer of the u.s. products or guarantee a bank in the local country that lends the money to the buyer and the u.s. import-export bank can guarantee that loan. but it is the u.s. import-export bank that takes the risk. it's a calculated risk.

in its total loss it has had more gains than losses and losses are less than 1% in terms of default. >> if people barrow usin using using this mechanism, they're likely to pay back. what is the problem? >> saying that it's taking the risks, it's the u.s. taxpayers are taking the risk. >> well, it doesn't sound like a risk. >> well, if fannie and freddie were profitable until it isn't. if you look closely to what he says. these are loans in places where private capital would not ordinarily provide loans. what he's say something these places are so risky that the market won't provide the capital. so therefore the tax payers should. now if you're sitting at home wondering does that make sense, the answer is no, it doesn't make sense. what the bank is really just a politically connected slush fund

for crony capitalism that benefits just a few companies that can hire the best lobbyists, in the last six years one-third of its loan guarantees went to one company, boeing, which is why the bank in washington is referred to as the bank of boeing. how come there is one company getting a special benefit from the federal government and really the tax payers. we're wondering the same thing. that's why we r oppose it's authorization. >> there has been a vestigial banking system, an infant banking system still trying to find its feet. if you want to buy chemicals for power plant or feed stock to start your own processed goods onshore. would those buyers in africa, asia, parts of latin america

find it easier to turn to germany or swedish manufacturers instead of americans if they can't get these guarantees. >> of course they probably would. just because other countries are subsidizing their experts doesn't meaexports doesn't mean that we should, too. we should take the benefits of cheap exports. if other countries want to shoot themselves in the foot, they should do that. if you look at these foreign lending agencies when they say we're going to say i, they decided to reinvest in africa. some of these country may not be ready to electrical infrastructure and it's massive corporations that are making profits off of this. we think that the market should decide if a country in africa is ready to build an electric grid, they're going to find the

capitol, they'll take the loans and take the risk and that's how it works. >> if your' making a turbines at a plant in g.e. in the united states, and that country in africa goes to a swedish manufacturer instead because the supportive government would not loan them money, that's a good deal for you, why? >> there are seen and unseen costs. with the roy hill mine you have caterpillar. they're getting a loan guaranteed to export their mining equipment to australia. now he'll get those savings from the tax payers she is now able to better compete with american miners here in minnesota and michigan. there are seen and unseen costs. but really what we have here in the export import bank is something that we've seen a lot in washington where there is a concentration of benefits but a dispersal of costs. it's similar to the sugar program where few people understand how it works. they get the benefits. americans don't see the costs. but it's there.

it exists. when you push on something there is an option reaction at the same time. >> george munoz, if this is inseed a subsidy, that's a compelling argument. >> well, the problem is jason is talking about theory and not practice. the fact is when he's saying that it's costing the taxpayer, it's not costing the taxpayer. when you sell something people will buy on credit. when the buyer is a worthy buy buyer, because the bank has not lost money on it. it has contributed to the u.s. treasury profits from financing these transactions. in fact, our manufacturing operations have gone down in this country because of certain kinds of policies that the u.s. has such as our tax code and this is one of those areas that is helping u.s. be more competitive globally to take this away is really foolhardy because it really is not a subsidy. it's not giving anybody any money. it's going to make sure that the buyer has financing available to

buy american products. >> jason johnson, in north carolina, where the speaker of the house, mr. till his tillis, is running. there are two different sides of this question in louisiana. the very, very risky seed of mary landrou, she wants to hold onto it. she's for reauthorization. one of her republican opponents is against it. is the public in these states and others like it going to pay attention to the argument over the ex bank? xm banks? >> nobody really cares. first off, you got to remember this is an agency that most voters haven't even heard of until the applications turned it into an issue. they've been priming people to pay attention to this so the

democrats can work defense their bad brand and say hey, i'm pro business and the republicans with that tea party populist core can say look, no more bailouts, no more paying money to big business. whether or not it will move the needle in an election where nobody is really driven by anything that's not clear yet. but i don't think this is something that most voters are waking up in the morning, going on yahoo and saying my gosh, i hope this is reauthorized because it's not moving people. >> who would do the work currently being done by the import expert bank if it went away? would private industry want to take on this specialty portfolio in international lending? stay with us.

>> welcome back to inside story on al jazeera america. i'm ray suarez. in just a few weeks the federal charter that authorizes the work of the export import bank of the united states will expire. as with any policy topic in washington there are people who would love to see it disappear, and those who want it renewed for that country's credit agency to continue its work. if it is not renewed will the big international banks of the world step in and do that kind of work and do it at the same level that is booking done well?

>> well, according to george they will. the reason for that is that the bank makes money. every year. it has never had losses. it can never have losses. that's george's argument of the bank. if it's makes money every year, if it's profitable every year, why can't the private sector take care of it every year. but what goes up must come down and the taxpayers will be an on the hook for this. either the bank is going to be profitable in perpetuity and should be privatized or the bank will have losses at some point in the future and therefore you know, it's really kind of silly to say that it's going on in i am per to youty. >> i think he's talking about theory. the taxpayer has not picked up

any bill of the bank and it's for 95% of the transactions that the bank does is medium business. >> let me clarify if you're talking about transactions it's heavily skewed to small business. >> like giving everyone a penny. >> but in volume it's big business. >> number one, is it good for america to create jobs and manufacturing in industries that we need so they can sale overseas. the answer has to be yes. number two, has it cost the taxpayer anything? no, it hasn't. if the xm bank go away? will the private sector step in? it will only step in for a small fraction of the purchases, that's why the government got involved in the first place. the reason why the government

can make money where a commercial bank can't because the government has built in systems and structures to know what the political risks are, do-to-deal with currency fluctuations that the private sector has to charge a large amount of money but not everyone wants to be in that arena. >> there are some things that the government does only because the private sector doesn't choose to do it. the governments of the mid 20th century were not rubbing their hands together excitedly saying let's build housing units in big american cities. the market police similarly was not supplying housing for working class people who were a big chunk of the population, so the government did it. it has problems with its legacy, but it did it because the private sector which now says yes we can do this wasn't doing it. >> they were doing it because people were asking for it. i kee hate to keep comparing it

to fannie and freddie, but the best way to do that is not to subsidize, but to lower tax rates with loopholes and reductions. i go back to the businesses that are hurt by the unseen costs of the foreign competitor. if other countries want to subsidize their experts, that's their business but we should not be doing the same thing. you can't have it both ways. if the bank is privatible in imperpetuity. private sides it. ize it. earn was talking about the theory that it could at some point have it could have just like fannie and freddie and the housing bubble j he keeps

talking about subsidizing. nobody is subsidizing. every transaction occurs there it interests charged for it. that's where the profit comes back into the u.s. treasury. it has been reducing the deficit of this country through the gains of financing these transactions. had it not done it, those sales would not have occurred. >> it is a subsidy. you can't say that well these things wouldn't occur unless the government got involved. it is a subsidy. if isn' something doesn't occur then the government does it and then it's a subsidy. >> let me bring jason johnson in here. you said the public is not aware. doesn't care, not paying

attention to this issue unless politics bring it up. isn't there enough at take to create a teachable moment? should hagin and tillis be talking about the import and expert gam bank and on and on. there are enough republican primaries to decide who the number kne nominees are going to be. but maybe they're not being told about this. >> there are two things to turn the public off, foreign policy issues and economics. i think politicians are careful. an argument could be made for both sides. if you're against the bank you simply say we don't want any more bailouts. if you're a democrat and in favor we say if we leave this to the private sector we never would have gotten roads or the national highway system and the internet either. i will say this in the context of finding out just this week

that burger king is about to ditch this country and go up to canada to pay lower corporate taxes i think this is something that a republican could make serious head way with when we find out the king of burgers doesn't want to be in the united states any more. if you can link that about foreign companies coming in and taking advantage of business, you could make this a teachable moment. i don't think you're going to make that much head way with people who have an ideological belief. >> are there an any ancillaries? feedback loops? if a job goes to central illinois instead of norway isn't there a benefit to the american taxpayer that is hard to show up on the sheet of the import expert bank? >> the problem with all of this stuff is that it's flawed trade policy. look at the sugar quota. the sugar quota arguebly keeps

and benefits sugar producers and keep sugar jobs in the united states. really what you're doing is paying an extra cents per cupcake as a cost of keeping the american jobs here. but over the years that adds up to big tax on american consumers. why shouldn't american consumers get the benefit of cheaper sugar from a foreign country. we should look at what the consumer wants. when you subsidize experts whether it's been boeing planes that competes with delta or caterpillar equipment which helps them to compete, that's where you see winners and losers and that's why it should be eliminated. >> when we return we'll look at the interests at stake and whether the combatants want to take this particular d.c. debate public. this is inside story.

stay with us.

>> you're watching inside story on al jazeera america. i'm ray suarez. the export import bank of the united states this time on the program. not necessarily a topic that has you gathering the rest of the family around the television but one we choose in part because it tells the bigger story about the way government, politics and economics work in washington. still with us, barney keller, director of the club for growth. in atlanta, jason johnson, politics analyst, and george munoz, former assistant secretary of the clinton corporation. jason johnson, you talked about democrats being able to work against their brand problems with this as an issue. why aren't they all talking about this, then, if they're for the reauthorization of the bank. nothing goes inside campaign

commercials better than smiling guys in hard hats, people at the factory gate opening and closing time, and it seems like a natural. >> it should be, but you got to remember these democrats they're avoiding tomatoes being tossed in 20 different directions. they're atoday muched to a president who is extremely unpopular. you still have discussions about the obamacare and isis. and any discussion about jobs you have to be able to demonstrate something on the ground for it to be of value. so i think a lot of democrats are really scrambling around. they're not making the kind of use of this issue that they should which is very typical of democrats because they tend to have a lot of trouble branding. >> during the 2008 national community there was one candidate in particular in renewing the charter from the expert and import bank.

senator barack obama of illinois, changed his mind and renewed it. are there those who respect so sure? >> it's an important lesson to think about. president obama today as a president said we have to have this. you know why? he has to speak about what is in everyone's best interest. whether it's ronald reagan or both president bushes supported this, and democrats have done that. we have to ask this question, ex-im bank this is a job creator, not a job loser. if we go in theory and say let's have a libertarian point of view and let there be no role for the government, we're going to be in a very problematic situation. that's why today the democrats are supporting the ex-im bank because they are in charge of the senate and they will vote

for this. i do believe we will have import export game, that's what it will take to stay competitive and we have always come back to the reality of the situation which is let's do what is good for the taxpayer. there has not been any losses as in theory predicted. what has been working we should hereof and let continue to work. >> the chamber of commerce is very much in favor of reauthorization and maintained their support for republican candidate who don't want to reauthorize the bangs. there has not been a cost when it comes to that endorsement. what about club for growth, will you make things uncomfortable, would you say yes, they're doing a good job for the bank? >> we just called off strikes. we look at issues as they come and say this is good. this is bad. we think w you should vote this way or that way and we provide results on a score card for our

members. the reason why this has been authorized every year is because the people who benefit from the bank can afford lobbyists, bogey boeing has spent the most money on lobbying. the head of boeing sits on president obama's export council. it would be an interesting political dichotomy if the president was saying we must shut down. >> i predict that the head of brazil and the multi national consortium that runs airbus would love nothing more than to have boeing not have the financial benefit. >> that's the beauty of cap

tammismcapital capitalism. instead of subsidizing our exports for a few politically connected industries. >> gentlemen, thank you all. good to see you. that brings us to the end of this edition of inside story. thanks for being with us. from washington, i'm ray suarez.

>> hello and welcome i'm phil torres here to talk about invocations that can change lives. the intersection of hardware and humanity and we're doing it in a unique way. marita davidson is a biologist specializing inning innings innd evolution. kosta grammatis is an engineer