A battle over reauthorizing the U.S. Export-Import Bank (Ex-Im) is pitting conservative groups against big business and could lead to an insurrection against GOP leaders in the House this month.
The bank could hit its $100 billion loan limit at the end of March, making reauthorization a top priority for business groups such as the U.S. Chamber of Commerce, the National Association of Manufacturers and the Aerospace Industries Association.
But conservative groups such as the Club for Growth and Heritage Action say the Export-Import Bank subsidizes politically favored companies with taxpayer dollars and argue the services should be left to the private sector.
Caught in the middle are House GOP leaders.
House Majority Leader Eric CantorEric CantorRyan reelected Speaker in near-unanimous GOP vote Financial technology rules are set to change in the Trump era Trump allies warn: No compromise on immigration MORE (R-Va.) plans to bring a bill to the floor by the end of March that could eventually end Ex-Im “subsidies.”
“We are working toward a bipartisan solution for the Export-Import Bank that will include reforms and begin to set a long-term policy goal to eliminate these subsidies going forward,” a GOP leadership aide said. “The legislation continues to be developed and we hope to consider it on the floor by the end of March.”
Business groups and Ex-Im strongly dispute the notion that the bank provides subsidies.
“No one is being given anything for free,” said Ex-Im spokesman Phil Cogan. “The buyers are paying for the financing they are receiving. The bank is paying a fee.”
One lobbyist was aghast to hear that a GOP aide used the term “subsidies” in describing the reauthorization bill.
“Wow, that is a Republican Study Committee [RSC] talking point,” the lobbyist said, referring to the large bloc of conservatives in the House. “They have never used that term with us before.”
“This is red meat to RSC members, who believe it is corporate welfare,” the lobbyist said.
RSC spokesman Brian Straessle said that the 165 member RSC does not have a consensus position on the Ex-Im Bank, though RSC staff did prepare a background memo for members on Feb. 8 highlighting arguments against the bank, to balance the business lobbying push. RSC Chairman Rep. Jim Jordan (R-Ohio) is still studying the issue, his office said.
The Export-Import Bank guarantees private-sector loans for foreign transactions involving U.S. products and services. Banks pay user fees to obtain Ex-Im backing, and it routinely makes money for the government.
Nearly half of Ex-Im’s work involves airplane sales. Foreign airlines can get easier access to credit when buying U.S. aircraft because Ex-Im promises banks that the loans to the airlines will be repaid.
Aerospace giants such as Boeing say the bank is crucial for sales because it helps level the playing field against foreign competitors that receive government subsidies. The bank is also a major force in the nuclear power, oil and gas, heavy machinery, construction and chemical industries.
Conservative activists are unmoved by the business arguments and are girding for battle to stop what they see as an intrusion in the free market.
“The Ex-Im Bank is a federal subsidy. Conservatives have always been, and remain, opposed to these kinds of subsidies on principled grounds,” said Dan Holler of Heritage Action for America.
Club for Growth, which is active in GOP primaries, has said it will use its annual scorecard to punish conservatives who vote for the Ex-Im bill.
“Market forces should dictate trade flows, not bureaucrats and politicians,” the Club said in a statement earlier this year.
The Club and Heritage Action proved their influence last month when their opposition to an energy and transportation bill fomented a rebellion that forced GOP leaders back to the drawing board.
The Wall Street Journal’s editorial page joined opponents of Ex-Im in an op-ed over the weekend. “The way to fight subsidies provided by other countries is through diplomacy and new trade deals, not by imitating their subsidies,” the Journal wrote on March 3.
Michael Berger of the Aerospace Industries Association said the impact of failing to reauthorize Ex-Im would be “astounding,” and businesses are mobilizing to make sure the bank doesn’t fall victim to an ideological clash in the GOP.
“This is a real key priority for the Chamber,” said Christopher Wenk of the U.S. Chamber of Commerce. “We have really been ramping up our outreach. There are a lot of misconceptions and misunderstandings about the bank.”
Ex-Im cannot say exactly when the $100 billion cap will be reached because it depends on projects in the pipeline, according to Cogan. But the bank says the limit will likely be hit before May 31, when the charter expires.
The biggest sticking point for the reauthorization bill is likely to be the language about ending subsidies. Business might accept non-binding language that describes Ex-Im’s guarantees as subsidies, according to one lobbyist, but provisions that would lower the bank’s loan cap would be a major problem.
Sources also said Senate Democrats would work to strip subsidy language from any bill that passes the House.
The Obama administration is seeking a four-year reauthorization of the bank and wants to increase the cap on outstanding loan guarantees from $100 billion to $140 billion.
Staffers from the House Financial Services and Senate Banking committees had a tentative handshake deal earlier this year to raise the Ex-Im’s loan cap to $135 billion, but House leaders tapped the brakes. They said the increased limit couldn’t be brought to the floor until lobbyists and Ex-Im brought the GOP’s rank and file onboard.
Cogan said it is important for lawmakers to understand that Ex-Im does not cost the government money. The bank generated more than $2 billion over its operating costs in the past five years, and the Congressional Budget Office scored a bill raising the loan cap to $140 billion as generating $900 billion for the government.
“Not only is it not costing us, we have earned far, far more than it has cost us,” Cogan said.