Perhaps the Export-Import Bank is a relic from the New Deal era, but that doesn’t mean that Republicans are opposed to it. The Ex-Im Bank has served a purpose for around three quarters of a century and has benefited small as well as big businesses and it is about to expire at the end of June if the Democrats and Republicans can’t agree on how to pass a reauthorization.
For the political layperson who may not be familiar with what the Ex-Im Bank does, it does what a typical bank does: lend money, guarantee loans, or provides insurance. In this case, it lends money to foreign governments and corporations to purchase U.S. exports. It enhances the “made in America” brand outside of the U.S. while helping U.S. companies, both large and small, deal with international competition.
(The Ex-Im Bank) lends money to foreign governments and corporations to purchase U.S. exports.
The current debate can best be characterized by the term, “kicking the can down the road.” The last extension, which commonly lasts two years, came in September 2014, prior to the beginning of the new fiscal year. More importantly, it came before the midterm elections. The extension was short-term at best and left the decision to the new Congress. It is just another agency that is being held up from developing plans for the future.
That is the same type of needless uncertainty that corporations fear Congress is creating.
In a relatively weak rebound from the Great Recession, the economy can’t afford to take a hit on the unemployment figures or have businesses — big and small — fall behind their international competitors. There are nearly 60 versions of the Ex-Im Bank in other countries like China and Europe that could very well take advantage of the short-term extensions. That alone is evidence that the bank does work. Even the controversies or conservative talking points can’t derail the agency for long and it does generate revenue, $674 million to the Treasury in FY 2013.
Republicans, who regained the majority in the Senate after the November elections, are divided on the bank. Some view it as wasteful spending, while others see the benefits it has on small businesses, employment, and point to the success stories.
The Ex-Im Bank falls under the jurisdiction of the House Financial Services Committee and its chairman, U.S. Rep. Jeb Hensarling (R-Texas). Texas is a hotspot in exporting activities, totaling $4 billion in insurance and including 332 small businesses getting assistance from the Ex-Im Bank. That didn’t stop Hensarling from characterizing the bank as “crony capitalism” and “corporate welfare.”
“I just don’t think, ultimately, you can ever deal with the social welfare state unless you first deal with the corporate welfare state… On a macro-economic level, the bank is of little consequence. But what is important is what direction we take as a nation.”
Backing the chairman are fiscal conservative groups such as the Club for Growth. An ad war with lobbyists as soldiers is already taking place, costing millions.
On the opposite side are groups like the pro-business U.S. Chamber of Commerce, which has a countdown to the bank’s expiration date on its site. The Chamber has supported Republicans in the past and is quick to point to the jobs the agency helps create. There are still pre-existing loans and payments coming in. As a matter of fact, the vast majority – approximately 90% – of the bank’s customers are small businesses.
Obama may have called it “corporate welfare” in his 2008 campaign, but small businesses like Aquatech International Corporation in Pennsylvania or California’s Capstone Turbine Corp. rely on the bank for help with their exports.
A recent attempt by congressional Democrats to attach the reauthorization to Obama’s grand trade deal failed, but there is still hope.
The next step may be to work a reauthorization amendment into July’s transportation funding bill. That would entail the bank’s charter lapsing, but the 400 or so employees working will not lose their jobs right away.
There is still controversy amid the Democratic support. Critics have labelled the Ex-Im Bank the “Bank of Clinton” due to the revolving door between Clinton’s friends and bank officials.
Madeleine Albright, who served as secretary of state under Clinton, is now a chairwoman at the corporate consulting firm, Albright Stonebridge Group. One of its clients is Siemens, one of the bank’s big multinational clients.
Alice Albright, the secretary’s daughter, was the Ex-Im Bank’s COO from 2009 to 2013, overseeing $772 million to Siemens.
On top of that, one of the bank’ former employees was charged with accepting bribes over a 7-year span. The crony capitalism claim is supported by Boeing receiving nearly 30% of the bank’s authorizations.
Perhaps the Ex-Im Bank has been around long enough to accrue controversies. Perhaps its past reauthorizations have been bipartisan and now the agency is targeted for deletion by staunch fiscal conservatives. Perhaps there is a benefit to both small and large businesses and in promoting the “made in America” brand around the world, but the bottom line is that the Export-Import Bank has become one of those cans getting kicked down the road at the expense of taxpayers.