The Export-Import bank will not sanction any loans but will continue to …

30 Jun 2015 | Author: | No comments yet »

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

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. And it’s gotta go away.” But for Washington institutions, death can be just a first step toward rebirth: Democrats, along with a handful of GOP lawmakers, are already laying the groundwork to resurrect the bank, as soon as the end of July. So at midnight Tuesday, the bank will lose its authority to extend new taxpayer-backed loans to foreign purchasers of U.S. goods sold abroad, buoying conservatives who have mounted a years-long campaign to eliminate an institution they say represents the worst of big government. “This is a small step toward renewing a competitive free-market economy and arresting the rise of the progressive welfare state and the cronyism connected to it,” Rep.

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. 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.

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. Bowe says it’s kind of like buying a house: “Customers look at us and they say, ‘well how will I be able to afford your equipment if it doesn’t come with financing?’ It’s analogous if you go buy a house typically you’re buying it from a seller.

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. 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. Prospects in the House are less clear — though there, too, enough Republicans are thought to be willing to join with Democrats to renew the bank’s charter. 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. Yet even if we accept the bank’s questionable job claims, failing to reauthorize Ex-Im won’t disturb existing loans and, hence, the jobs they support. 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. Bill Flores (R-Tex.), chairman of the Republican Study Committee. “If you’re going to start cutting the weeds out of the federal government, this is one of the first weeds you need to root out.” Dan Holler, communications director for Heritage Action, the advocacy arm of the Heritage Foundation, said the lapse is “something that is concrete and changes the status quo.” For the fight, Heritage Action tapped its volunteer base of 10,000 “sentinels” — tea-party-elected officials, Republican activists and other conservatives — to contact lawmakers and their staff. The group’s vice president of grassroots outreach, former Hensarling aide Russ Vought, helped coordinate the effort through weekly phone briefings with the network.

Knowing that, bank proponents pushed so hard and vocally for a vote on Ex-Im before its expiration — but they stopped short of attaching it to a recently passed fast-track trade bill, which could have killed the fragile coalition that sent the trade package to President Barack Obama’s desk for his signature on Monday. 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. 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. 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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