Congress Leaves On Recess Without Re-Authorizing Export-Import Bank

30 Jun 2015 | Author: | No comments yet »

Congress Leaves For Recess Without Re-Authorizing Export-Import Bank.

An agency of the federal government will have to stop doing business today. WASHINGTON (AP) — The Export-Import Bank expires Tuesday at midnight for the first time since the small federal agency was created during the Depression to help U.S. businesses export their products. Jeb Hensarling, one of the bank’s leading congressional critics, said in a press release. “Now the challenge for supporters of a competitive free-market economy is to make sure Ex-Im stays expired.” (RELATED: Hensarling: ‘Momentum is in Our Favor’ for Ending Ex-Im) Ex-Im is a New Deal-era government agency that provides financing assistance to American exporters, and while supporters claim the bank is vital to ensuring American competitiveness abroad, many conservative lawmakers and interest groups see the bank as a form of corporate welfare that creates more costs than benefits. Although opponents in the House managed to prevent a vote on reauthorization ahead of the June 30 expiration of Ex-Im’s charter, the bank will continue to operate until its existing deals run their course, meaning backers will still be able to restore its lending authority in the future, according to Insurance Journal. That means U.S. taxpayers would pick up the tab if, say, a company in South America defaulted on a commercial bank loan it got to buy a Caterpillar tractor.

The next attempt to reauthorize Ex-Im is generally expected take place next month, when supporters will most likely try to attach it as an amendment to a bill funding the Highway Trust Fund, which is projected to run out of money July 31. (RELATED: Sens. Over the past several years, Ex-Im has emerged from relative anonymity to become a top target for conservative Republicans, who say the bank’s loan guarantees for U.S. exporters amount to corporate welfare. Graham, Cantwell Threaten to Torpedo TPA Over Ex-Im) Whether such efforts are successful could depend on how lawmakers interpret the immediate effects of Ex-Im’s expiration—particularly with respect to whether exporters are able to find alternative sources of financing. Congressional Democrats and many Republicans remain determined to reverse that step this month, launching a messaging blitz focused on potential job losses and international competitiveness. Bank supporters are hoping to engage in parliamentary maneuvers calibrated to overcome the opposition of key GOP leaders even as a solid majority of lawmakers appear to believe the bank should continue its work. “They are bending to the hard right,” Sen.

The seller wants to know that you have financing and can close the deal — so typically you come with a letter from a bank that says you can get a mortgage. Meanwhile, House Speaker John Boehner (R-Ohio) hasn’t stopped his two top deputies from plotting to eliminate the agency, as the right has made the issue a reliable litmus test for presidential hopefuls and congressional candidates. Chamber of Commerce, argue the agency helps many smaller companies and is necessary to keep U.S. businesses competitive — especially in the face of competition from China and other countries that have generous export credit agencies boosting their homegrown industries. Despite the conservative excitement, Democrats are about to cash in on a promise from Senate Majority Leader Mitch McConnell (R-Ky.) that the chamber will vote on renewing the bank this summer. While much of the business community and Democrats say it’s critical to reauthorize the bank, conservative critics say the agency provides “corporate welfare” for big businesses. “I do understand one person’s corporate welfare and politically-driven capital allocation is another person’s vital export support program and level playing field,” he said.

Transportation funding runs dry on July 31 and Republicans are loath to miss that deadline in the middle of the summer construction season, particularly after they blew a deadline earlier this spring and allowed key provisions of the PATRIOT Act to lapse for two days. And they say the bank amounts to “crony capitalism” and the government picking winners and losers. “Where is the fairness in giving Washington politicians and bureaucrats the power to pick who gets helped and who gets hurt?” asked GOP Rep.

On the foreign side, the cheap loans go to state-owned companies like Pemex, the Mexican government’s oil and gas giant, or Air Emirates, the airline of the wealthy United Arab Emirates. At a recent Christian Science Monitor breakfast, he said that just the threat of Export-Import’s charter expiring is already hurting small businesses like Ellicott Dredges that depend on it for credit insurance for overseas sales.

But that was before a fierce lobbying campaign by some of the most formidable forces in conservative activism, including Heritage Action for America, the Club for Growth and the industrialist billionaires Charles and David Koch. Its records suggest that less than 0.3 percent of small business employees and less than 0.04 percent of small business establishments benefit from the Ex-Im Bank annually. Hochberg laid out a dire scenario if the bank stops lending: “You will see layoffs, you will see lost business — and we are already seeing foreign governments and foreign companies start taking advantage of the uncertainty.” But Boehner has resisted drawing lines in the sand, committing instead to House Financial Services Chairman Jeb Hensarling (R-Texas) that the House will be allowed to amend any Export-Import Bank revival that clears the upper chamber. “The only commitment the speaker has made on the Export Import Bank is to Chairman Hensarling, who asked that — if the Senate attached Ex-Im to a ‘must pass’ bill and sent it over to the House — he be allowed to offer amendments under an open process,” Boehner spokesman Kevin Smith said Monday. And considering who the beneficiaries of Ex-Im on the domestic and foreign sides are, there’s no chance that all Ex-Im supported exports will disappear.

David McKinley (R-W.Va.) said he wants to modify the bank so that it isn’t used as often for large corporations’ benefit and it backs off its “ideological warfare” on his state’s coal industry. Of the $20.5 billion in financing and insurance authorized by the bank in 2014, just over $5 billion of that was for small business exporters, according to bank officials.

Cantor was dispatched last year by an anti-Ex-Im conservative primary challenger, and McCarthy, upon assuming the majority leader post, quickly announced his opposition to another renewal. But the Government Accounting Office criticized the bank’s job calculation methodology for failing to consider how many jobs would have been created without Ex-Im, among other flaws. But at the end of the day we just didn’t have the reforms that we thought were meaningful.” That queasiness will make it difficult for many Republicans to resurrect the bank without a significant overhaul to how it operates. Also, top Ex-Im beneficiaries have billions of dollars in backorders, which will keep their workers and small business suppliers busy for years to come.

Supporters warn that even a short-term shutdown could disrupt some deals that are in the pipeline, but any impacts would likely go unnoticed by the vast majority of the public. Boeing, for instance, has a backlog of $441 billion, meaning it will have years to arrange alternative, private, financing (as, of course, small and large borrowers do every day). Bank supporters cite 2014 statistics showing Ex-Im loans supporting $27.5 billion worth of exports and 164,000 U.S. jobs, but detractors say private lenders will step up to fill the void. “You’ve got to start somewhere,” said Rep. The group’s vice president of grassroots outreach, former Hensarling aide Russ Vought, helped coordinate the effort through weekly phone briefings with the network.

The lapse in the bank’s charter also represents a win against what many conservatives view as an old, bloated Washington influence machine — in this case, represented by the U.S. Economists have shown that while export subsidies boost the profits of the recipients, it tends to have a negative impact on economy as a whole by shifting capital, economic growth, jobs and profits from unsubsidized firms to subsidized ones. Dick Durbin, the second-ranking Senate Democrat, was recently pessimistic on the chances of reviving the bank, noting that the task gets “increasingly difficult” once the charter has expired.

Lindsey Graham (R-S.C.) refused to vote for that fast-track trade bill until McConnell reassured them that there will be an opportunity for the Senate to revive Ex-Im by attaching it to a mutually agreeable legislative vehicle. But that vote has caused tension between McConnell and Democrats like Cantwell, who has suggested that was not what she had in mind when she voted to advance the trade legislation over a liberal-led filibuster. They not only pay higher financing costs but also lose out when private capital flows to politically privileged firms regardless of the merits of their projects. Heidi Heitkamp (D-N.D.) and Majority Whip John Cornyn (R-Texas) had an animated discussion during the Senate’s second trade vote last week, with Heitkamp arguing that the Ex-Im clearly has the votes to pass the Senate. “We know that there were commitments made, or understandings, that weren’t necessarily carried through on,” Heitkamp fumed late last week as GOP leaders pointed to that nonbinding vote. “I don’t know how anyone can look at that and say that was a fulfillment of a commitment.” “Sen.

Tim Huelskamp (R-Kan.) said Thursday. “It is a small issue in terms of the dollars, but it is a big issue in that if we can’t take this out, you wonder if we can take anything out as a Republican majority.” Heritage Action and the Club say the only way Republicans can shrink government is to let the bank expire altogether — and the wind is at the GOP’s back if they choose to do so. “Everything that proponents of the bank say is harder than they say … they are trying to make it sound like a foregone conclusion that it will be on this highway bill,” Holler said. “Literally, all the Republican leadership in both the House and the Senate has to do is clock a win on this.”

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