Critics of the Export-Import Bank are hoping for a chance to reform it before September, when the bank’s existing charter runs out.
Free market critics of the government bank, which provides loans and credit guarantees for purchases of U.S. products, are looking to rebound after suffering a defeat in early May, when the Senate approved three new members to the bank’s board, ending a four-year period where it was effectively shut down for lack of a quorum.
Conservatives who deride the bank as a form of corporate welfare have seen the political landscape shift now that the Trump administration supports it, causing Republican opposition to the bank to ebb.
Reform may still be possible in the legislation that will be needed to keep the bank open after September. Democrats in the House of Representatives are not likely to go along with such measures, but reformers are hoping to shape the vote in the Republican-led Senate, especially by pursuing reforms to limit China’s use of the bank.
In a Senate floor speech the day prior to votes on the three nominees, Sen. Pat Toomey, R-Pa., gave a preview of that argument. “In 2014, again the last year in which Ex-Im was fully operational … there were 17 transactions where the primary borrower is the Export-Import Bank of China,” he said.
Toomey spokesman Steve Kelly says the senator is “leaving his options open on reauthorization of Ex-Im’s charter with the hopes that an agreement can be reached to adopt meaningful reforms.”
While business groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers argue the bank is important to supporting U.S. exports, critics on the Left and the Right have long called it a form of corporate welfare and called for its abolition.
Republican opposition to the bank surged during the Obama administration. It reached a high point in 2014, when a push led by conservative lawmakers but which included others such as socialist Sen. Bernie Sanders, I-Vt., caused its charter to lapse.
The bank’s charter was subsequently renewed through September of this year, but its board lost a quorum in 2016 when departing members were not replaced. While technically still open, until the recent vote to install the three appointees, it had only been able to provide loans or guarantees less than $10 million, severely limiting its effectiveness.
[Opinion: Export-Import Bank is a swampy tool of self-enrichment for insiders]
The critics argue that the experience of the past few years, during which the bank was unable to approve large transactions, proves they were right that the Ex-Im Bank is not necessary. In the past, they argued the bank mostly benefited large companies, such as Boeing, who didn’t need the help.
“Now we have evidence that the sky is not falling and, better yet, that what the bank was doing all along was servicing companies that have gone on to thrive without it,” said Veronique de Rugy, a senior research fellow for George Mason University’s Mercatus Center.
In the meantime, though, the Ex-Im Bank acquired a powerful new ally in President Trump. Initially a critic of the bank, Trump shifted once in office, and his administration has pushed hard in cooperation with Senate Majority Leader Mitch McConnell, R-Ky., to bring it back. U.S. Trade Representative Robert Lighthizer told the House Ways and Means Committee in February that there was “no excuse” for keeping the bank in limbo.
Trump’s support for the Ex-Im Bank has caused its opposition to wilt as a conservative cause, said Jessica Anderson, vice president of Heritage Action, which opposes the bank.
“It is really challenging, especially in this kind of environment where the president enjoys such incredible support around the country as well as the microphone,” she said.
Trump initially tried to reassure critics by nominating former Rep. Scott Garrett, R-N.J., a harsh critic of Ex-Im, to one of its open seats in 2017, arguing he would help reform it. The nomination failed when the bank’s proponents rallied to block Garrett.
The administration fared better in the first week of May when the Senate voted 82-17 to approve Kimberly Reed as the bank’s new president, and 79-19 and 74-22 to approve Judith DelZoppo Pryor and former Rep. Spencer Bachus III, respectively, to fill two other open seats on the five-member board, giving it a working quorum.
Anderson sees an opportunity in the fact that the bank will be making loans again. Critics had been running low on recent data to make their arguments, and now they will be able to update their case.
“Between now and September, the bank will start authorizing deals in excess of $10 million. I think we’ll see the pendulum swing back to focusing on the Ex-Im subsidies and loans going to foreign companies and foreign nationals. We have a China angle now too,” Anderson said.
Mercatus’ de Rugy said the reformers will focus on altering the bank’s charter to exclude those who don’t need its services. “The reform path is going to be something that caps lending, excludes as many companies with access to large capital as possible, requires companies to prove they cannot acquire the capital elsewhere, and excludes state-owned companies,” she said.
The critics have no illusions that reform will be easy. “Between keeping the government open and dealing with the debt limit, yeah, it is going to be difficult for Ex-Im to get oxygen,” said a Senate Republican staffer.
Scott Parkinson, vice president of government affairs at the free market Club for Growth and a former congressional staffer who was part of the 2014-2015 fight, notes that opposition still runs across party lines. While conservative Republicans provided most of the opposition to Trump’s nominees, several notable Democrats opposed them as well. Sanders voted against all three nominees, and Sens. Elizabeth Warren, D-Mass., Kamala Harris, D-Calif., and Amy Klobuchar, D-Minn., all opposed Bachus. Sen. Cory Booker, D-N.J., abstained from voting for all three.
“It’s a weird time for some of the conservatives and libertarians on our side: We can align the anti-corporate and socialist Democrats,” Parkinson noted.
