Export-Import Bank to halt lending

30 Jun 2015 | Author: | No comments yet »

Conservatives claim big win on Export-Import Bank. But will it last?.

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.WASHINGTON — The supporters of the federal Export-Import Bank have the Senate votes to revive it and will get a chance to do so, Majority Leader Mitch McConnell said Monday. “Looks to me like they have the votes, and I’m going to give them the opportunity,” McConnell, who opposes the bank, said in a telephone interview from Kentucky, where he is spending Congress’ July 4 recess. The Long Island, New York, housewife began making quiches in her home kitchen in 1973, and grew her company, Love & Quiches Gourmet, in part by exporting her products to places such as Qatar and Japan. 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. 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.

If the bank’s charter is not reauthorized, “the U.S. is going to lose our exporting power,” Axelrod said. “China and other exporting countries are chomping at the bit to take that business.” She said as much as 30 percent of her business comes from international markets. That figures includes more than $5 billion in financing and insurance for small businesses that make up $27 billion in U.S. exports and 164,000 American jobs. 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. Spokespeople for both corporations were not immediately available for comment. “Most of this goes to very successful, well-heeled companies that don’t need the help in the first place,” says Rep. 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. 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. 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. 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).

But recently, the obscure agency has become something of a conservative purity test, with tea party-backed lawmakers and groups attacking it and rallying fellow Republicans to defy the business community and turn against it. 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. 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. McConnell has refused to discuss details of any deal but said Tuesday the transportation bill soon to be that considered “will be open for amendment, and it’s pretty obvious that that would be a place for this vote to occur.” Should the Senate vote to attach an extension of the bank’s authority to the highway bill, it would go to the House, where Boehner has pledged an “open amendment process” that would probably include a floor vote to strip it. “If we can’t get rid of this one, then Republicans have jettisoned their ability to speak out on any fiscal matters,” Rep. 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.”

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