The Export-Import Bank, created by President Franklin Roosevelt in 1934 to boost U.S. exports during the Great Depression, needs its charter to be reauthorized by September’s end if it is to continue providing loans to U.S. exporters and overseas companies.
The bank has the support of House Majority Leader Eric Cantor, so it sounds like an easy vote.
But Cantor was recently defeated in his primary by David Brat, the libertarian college professor who portrayed the soon-to-be-ex-majority leader as a shameless tool of big business.
That’s the most important thing to know to understand why, during an election year, the Ex-Im Bank’s political position is eroding, at least outwardly.
Right now, reauthorization seems rather iffy.
On Tuesday, Speaker John Boehner wouldn’t tell reporters whether he supported reauthorization, saying instead, “We are going to continue to work with our members” and “We are going to work our way through this.”
Boehner indicated he would wait for a Wednesday hearing of the House Financial Services Committee and would listen to Rep. Jeb Hensarling, the committee’s chairman, for a proposed way forward. Hensarling opposes reauthorizing the bank, so that message from the speaker wasn’t likely to perk up the bank’s supporters.
The title of Wednesday’s hearing, by the way, is, “Examining Reauthorization of the Export-Import Bank: Corporate Necessity or Corporate Welfare?”
The witness list, incidentally, gave a sense of the complexity of the support for or opposition to the bank.
The leadoff panel was scheduled to include the president of the Air Line Pilots Association and the CEO of Delta Air Lines. The union hasn’t been against the bank per se, but it does oppose bank support for non-U.S. airlines that are purchasing wide-body airliners when U.S. carriers can’t get the same favorable financing. Delta Airlines’ CEO has had a similar criticism but is making it clear he supports the bank in principle.
Providing less ambivalent support for the bank will be the CEO of FirmGreen, a clean-energy technology company that has said uncertainties over the bank’s future have already cost it overseas business. Clearly opposing the bank will be a scholar with the libertarian Mercatus Center at George Mason University, who argues that corporate behemoths like Boeing and General Electric get the most benefit and that their political contributions purchase support for the bank.
Boehner’s cryptic comments were especially unpromising for the bank, since the new House majority leader, Rep. Kevin McCarthy of California, was a lot less sphinxlike than Boehner, saying over the weekend that he opposes reauthorizing the bank.
Asked directly by host Chris Wallace during a Fox News Sunday interview if he would “allow the Ex-Im Bank to expire in September,” he said: “Yes, because it’s something that the private sector can be able to do.”
For conservatives who consider themselves free-market purists, the bank is the epitome of their despised “crony capitalism,” like the bailouts of Wall Street that occurred at the start of the Great Recession in 2008.
It was anger over those bailouts and other Washington spending that put taxpayer money in the service of big business that fed much of the anger that gave birth to the Tea Party movement.
McCarthy channeled that sentiment when he said on Fox News Sunday, “One of the problems with government is it’s going to take hard-earned money so others do things that the private sector can do. That’s what Ex-Im Bank does.”
Whether the private sector can or will actually take up the slack that would be left if the bank can’t continue on is a debate for a different blog post. It’s sufficient to say the bank’s supporters assert that the private sector won’t, because the risks are just too great. This would leave many U.S. exporters at a disadvantage, with overseas competitors helped by governments with few to no qualms about subsidizing their own industries.
The bank fight is the latest example of an economic issue breaking down the usual partisan barricades in Washington. The White House and congressional Democrats are joined by dozens of House Republicans and business groups like the U.S. Chamber of Commerce in pushing for the bank’s reauthorization. The bank pays for itself out of the fees it collects, they say, so taxpayers don’t pay anything. It’s also a matter of supporting U.S. jobs.
Cantor, too, said it was about supporting American jobs — before he lost his.