WASHINGTON: It’s tempting to celebrate the demise of the Export-Import Bank, whose authority expired last week. The bank, which subsidizes American exports, is held up by its congressional critics as an example of crony capitalism.
Among the companies lobbying to keep it going were General Electric, whose revenue was almost $150 billion last year, with a profit of $15 billion. Why, opponents ask, does it need government help? Yet the odds are that the bank will rise from its death bed and be reauthorized. The congressional politics are intense — the political right has a lot vested in killing the bank — and could affect future congressional leadership. The process will be messy.
The theoretical case against Ex-Im is compelling: Corporate welfare isn’t among the more pressing claims for government assistance. In practice, the argument breaks down: The bank is a job creator at no cost to the taxpayers.
Started by Franklin D. Roosevelt, it provides direct loans and loan guarantees at low interest rates to foreign entities to buy American products.
Many countries require this kind of support as a condition for importing American goods, and in many cases these are transactions that private banks won’t undertake.
Most other nations have export credit agencies and some, especially China, are much more aggressive about selling abroad than the United States.
Last year, the bank returned $675 million to the United States Treasury, mostly from the fees and interest it charges on loans. The deals it underwrote helped create more than 160,000 jobs. The default rate was less than 1 percent.
Critics contend that a big chunk of Ex-Im’s lending goes to a few large companies such as Boeing and G.E. There is some truth to that claim, though Commerce Secretary Penny Pritzker says, “They’re forgetting about the supply chains, the thousands of small- and medium-size companies that benefit.” G.E. gets Ex-Im Bank assistance for projects such as locomotives for Angola or a water project for Cameroon, which are among the dozens of countries that require export credit funding, and where private financing wouldn’t be available.
Nonetheless, killing the bank has become a cause célèbre for conservative policy institutions and some politicians, who oppose a government program that benefits big business and is supported by President Obama.
The presidential candidate Ted Cruz and other Republican leaders are making defunding the bank a conservative litmus test. Last year, Gov. Rick Perry of Texas was a big promoter of the bank, which he called a job creator in his state. In May of this year, as a presidential candidate, he came out against reauthorization.
The congressional politics are byzantine. A solid majority in both houses of Congress supports the bank. In a procedural vote last month, it was backed by 65 senators, enough to overcome any filibuster; opposition came from mainly conservative Republicans and Bernie Sanders, the independent Socialist from Vermont who is running for president.
In the House, opponents, led by the Financial Services Committee chairman, Jeb Hensarling, don’t want a floor vote, arguing that a majority of the Republican caucus wouldn’t stand with Ex-Im.
Mr. Hensarling has leadership ambitions and, hearing his footsteps, other party leaders have flipped and now oppose defunding; The House speaker, John A. Boehner, is waffling. Associates say he doesn’t relish a fight with his caucus’s right wing, especially as similar battles are likely later over issues such as raising the debt ceiling.
Senate supporters of the bank will meet with the president this week to map strategy and what changes in the authorization would be acceptable. The most likely course is to attach Ex-Im to a “must pass” bill, likely the highway authorization, and send it to the House where there are enough votes to pass it.
If that succeeds, the critics of crony capitalism can easily find new targets. The United States tax code is a gold mine of corporate welfare.———— (The New York Times)
