It’s unlikely many Americans have heard of the Export-Import Bank of the United States, but the obscure independent federal agency serves a crucial role in boosting American exports—and is now at the heart of an intensifying funding battle in Washington.
The Ex-Im Bank, which Franklin Roosevelt created in 1934 by executive order, provides loans, guarantees and insurance for domestic exporters in order to level the trade playing field—it is essentially a job creation tool, since it finances sales of US exports to overseas buyers. Every industrialized nation has a similar export credit agency.
The agency is funded by industry fees, not taxpayer money, but Congress does have some supervision over the agency, including setting a loan limit for the Ex-Im Bank. That loan authorization expires in seventy-seven days, at which point the agency will cease to function absent Congressional action.
Far-right Republicans in the House and Senate, and pushed by the powerful Club for Growth, are contemplating not raising that limit—and perhaps junking the agency altogether. As Greg Sargent at the Washington Post’s Plum Line noted this week, it’s becoming a huge wedge issue for Republicans—the US Chamber of Commerce and many business-oriented Republicans like the agency, but anti-government ideologues do not. Democrats have been hammering at the far-right Republicans in recent days and highlighting the split.
The Ex-Im issue is currently holding up the JOBS Act in the Senate, which eases rules on small start-up companies and has broad bipartisan support—but Democrats want to attach the Ex-Im Bank loan authorization to the package, but Republicans in the House and Senate are resisting. (On the Senate floor this morning, Minority Leader Mitch McConnell accused the Democrats of “manufacturing fights” and re-stated his opposition to the Ex-Im measure).
At The Atlantic’s US Economy Summit yesterday, I asked Fred Hochberg, the head of the Ex-Im Bank, about the funding standoff. He had strong words about the implications for US companies, and thus jobs:
“If we don’t do it, it does open the door for our foreign competitors,” Hochberg said. “Our competitors are simply licking their chops and saying ‘this is great—we’ll be able to come in, steal those sales, and there won’t be an Ex-Im Bank to support those US exporters.’ So while we’re worrying what the [loan limit] number should be, our competitors are very happy watching us in this turmoil.” (Video of the exchange is here).
Hochberg noted that the limit may have to be raised before the seventy-seven days run out—the agency is at around $90 billion of indebtedness already, and “it’s more likely we’ll run out of headroom before we run out of time,” he said.
For mainly ideological reasons, conservatives argue the Ex-Im Bank is unnecessary government intervention in the marketplace—though, again, every industrialized country does this, so ideological purity on this issue would put American companies at a distinct disadvantage.
House majority leader Eric Cantor wants to raise the limit to only $113 billion, on the condition that President Obama begin negotiations with other countries to unilaterally get rid of export credit agencies. This is pure fantasy, of course. Other Republicans in the Senate, like Jim DeMint and Rand Paul, are raising nonsensical “oversight” issues.
The Ex-Im opponents, so far, seem to be getting their way, as McConnell’s comments this morning indicate. I wouldn’t bet against the US Chamber of Commerce ultimately prevailing inside the GOP, but it may be an ugly fight—and shows yet again the sway that far-right ideology has on the party.