Export-Import Bank: An obscure institution that's generated big controversy
November 11, 2015 12:50 PM
Critics like U.S. Sen. Pat Toomey contend the bank is a tool of crony capitalism.
J. Scott Applewhite/Associated Press
Sen. Bernie Sanders, I-Vt., and some Tea Party Republicans are unlikely allies on the issue.
By Chris Potter / Pittsburgh Post-Gazette
The federal government’s Export-Import Bank is supposed to help export American products abroad. But the political fight over it has scrambled maps much closer to home.
Just ask U.S. Sen. Pat Toomey, whose opposition to the bank has put him at odds with Democrats seeking to oust him in 2016 -- and with many business interests he ordinarily champions. Mr. Toomey’s allies on the issue, meanwhile, include not just Tea Party Republicans but Bernie Sanders, the self-described democratic socialist candidate for president.
The ordinarily obscure bank provides financing and insurance to foreign companies seeking to buy American products. China and scores of other nations competing in the international market have similar entities. But critics like Mr. Toomey contend the bank is a tool of crony capitalism: Ex-Im provides aid only for about 2 percent of exports, and measured in absolute dollars, the deals it finances largely benefit mega-corporations, especially Boeing, General Electric, and Caterpillar.
“The Ex-Im Bank forces middle class taxpayers to bail out giant corporations, and lets Washington insiders pick the corporate winners and losers,” said Steve Kelly, a spokesman for Mr. Toomey’s re-election campaign. “That’s the kind of cronyism Pat Toomey was elected to oppose.”
Facing such opposition from conservative Republicans, Congress failed to reauthorize the bank in June. The result has been the longest government shutdown you’ve never heard of: Conservatives had a reauthorization bill bottled up in committee all summer, leaving the bank unable to finance new deals. Many business leaders aren’t happy.
“Pat Toomey is right on 99 out of 100 economic issues,” said, David Patti, who heads the Pennsylvania Business Council. But “somehow the arch-conservatives have made this out to be corporate welfare.”
Mr. Patti said that in a competitive global market, the bank was a necessary evil: “It’s like nuclear disarmament -- I’ll put down mine when they put down theirs.”
Right now, it’s bank opponents who risk being defanged. Last month, House Democrats and moderate Republicans used a rare parliamentary maneuver to yank the reauthorization measure out of committee. The bank could be back in business as early as next week. But that won’t be early enough to preempt bad news from Erie, where GE announced last week the lay-off of 1,500 workers at a locomotive-building plant.
Democrats seeking to challenge Mr. Toomey next year characterized those jobs as casualties of the Ex-Im fight.
“Senator Toomey’s opposition to reauthorizing Ex-Im shows that he just doesn’t get it,” said Katie McGinty in a statement. Mr. Toomey, she charged, “prefers to stick to his rigid ideology instead of standing up for good-paying Pennsylvania jobs.”
“[W]hen a U.S. Senator sits by and ignores the request of the Pennsylvanians and the company itself,” said a statement from fellow Democrat Joe Sestak, it “is indicative of a D.C. establishment that has once again failed the American people.”
Asked whether the bank’s hiatus triggered the layoffs, GE spokeswoman Clarissa Beyah-Taylor said, “I would say ‘no’ to a great extent.” After a recent boom in locomotive orders, “we’re going back to more historical levels.”
Still, she added, “Ex-Im is very important to Erie,” because it helps GE sell locomotives overseas.
Indeed, while hardline Republicans like Keith Rothfus, R-Sewickley, oppose the bank, fellow conservative Mike Kelly, whose district includes Erie, joined moderates like Tim Murphy, R-South Hills, to support reauthorization. “My constituents always come first,” Mr. Kelly said in a statement, and the bank “helps sustain thousands of my constituents’ jobs, especially at GE Transportation.”
That’s a popular position in Erie -- and not just at GE.
“I’m a fiscal conservative myself, but companies like ours rely on this international business,” said Dave Tullio, president of Custom Engineering, a 155-employee Erie fabrication firm that numbers GE among its top clients. “Of all the things to choose as the standard bearer of reduced government, this doesn’t make sense to me.”
Bank critics worry that if the bank fails, taxpayers could end up bailing it out. They also fault its governance: A loan officer was charged with bribery earlier this year, for example. Mr. Rothfus, for one, explained his October vote not to reauthorize the bank by insisting that without thorough reforms, “it is the taxpayer … and not the entity that made the profit, who is on the hook for the loss.”
As for the fact that other nations maintain such banks, Mr. Toomey said in a statement, “if ‘the other guys do it’ is the rationale … how many other misguided policies of other countries must we imitate?”
Bank supporters, meanwhile, note that the bank generates surpluses that are paid back to the U.S. Treasury -- roughly $7 billion over 20 years. And many say the opposition to the bank reflects not public opposition, but the increasing influence of ultra-conservative advocacy groups like Americans for Prosperity and Club for Growth.
Many of those business and political insiders were wary of speaking on the record, but their concern was reflected in a June speech by GE chairman and CEO Jeff Immelt, who said that if the bank was suspended, “a few think tanks in Washington will send out the alerts that they have won,” even as “Berlin and Beijing [will] really have cause to celebrate.”
There can be costs for defying such groups. The Club for Growth, which Mr. Toomey headed prior to becoming a senator, has pledged to “score” the Ex-Im vote on the report card it issues on Congressional voting records. Low scores can dent conservative backing for Republican office-holders; the groups have also been known to target Republican legislators with issue ads during primaries.
Club for Growth spokesman Doug Sachtleben said his organization wasn’t planning to settle scores next year. “The fix is in, and it would be tough to stop at this point,” he said.
Indeed, prospects for reauthorization grew stronger last month after lawmakers in the House attached the measure to a transportation-funding bill. If there’s one issue Congress can come together on, it’s transportation: With infrastructure needs in every district, it’s hard for members to vote against such bills.
The Senate version of the transportation bill doesn’t include Ex-Im provisions, though the Senate -- including Pennsylvania Democrat Bob Casey -- previously voted for reauthorization. That means the legislation is headed to a conference committee, where House and Senate members will decide whether to include Ex-Im in the final bill. That measure will go back to each chamber for an up-or-down vote.
Even if Ex-Im passes, Mr. Sachtleben said, the fight isn’t over. The bank will require reauthorization in another four years, he said, and “the vast majority of Republican presidential candidates are opposed to it.” (The exception: former Pennsylvania Senator Rick Santorum.) “I don’t think that’s because of a few think tanks in Washington.”
What’s more, he added wryly, “We’ve got Bernie Sanders on our side.”
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