A month after the Senate restored full financing capabilities of the U.S. Export-Import Bank with the confirmation of three board members, industries leaders are turning their focus to the next battle in the survival of the bank: reauthorization. The bank's current authorization is set to expire at the end of the fiscal year on September 30.
During the last reauthorization cycle, the Ex-Im’s Bank’s charter was permitted to expire for five months in 2015 as certain key Republican lawmakers believed that it was turning into corporate welfare. This time, however, the bank is facing a more accepting audience. House Financial Services Committee chair Maxine Waters (D-California) said during a hearing this week that the bank “has repeatedly been under attack” but that “failure to reauthorize and strengthen Ex-Im would result in the loss of tens of thousands of jobs, as U.S. exporters suffer declining overseas sales.” Waters stressed the importance the bank plays in reinforcing the manufacturing base and international competitiveness.
Aerospace Industries Association president and CEO Eric Fanning offered his association’s strong support for reauthorization in a letter to the committee. Fanning called the hearing on June 4 a “first step toward ensuring the bank can continue leveling the playing field for U.S. exporters.” The U.S. aerospace industry employs more than 2.4 million in the U.S. and exported more than $143 billion in goods in 2017 with an $85.9 billion trade surplus, he noted.
But a functional Ex-Im bank can do more to strengthen the economy, he said, particularly in light of the fact that 95 export credit agency exist worldwide and international competitors are relying on them to strengthen their own businesses. “This means the U.S. Export-Import Bank is a necessary equalizer in an increasingly competitive global market,” Fanning said.
He disputed critic claims that closing the bank would save taxpayer money, saying, “The bank's financing options are in no way a taxpayer-funded handout. Instead, they generate money for the taxpayers.” Fanning further disputed contentions that the bank competes with private lenders, saying it is the “lender of last resort” that requires proof that the applicant is unable to secure private funding.
As for concerns that the bank supports only large companies, he said 90 percent of transactions supported small businesses in 2016. However, even transactions involving large companies have a ripple effect that supports numerous small business in the supply chain. “Whether it's bolts and screws, or hoses and wires, small and medium-sized companies make the parts that are critical to build, maintain, repair, and overhaul airplanes and other large commercial goods. Without small businesses, the aerospace industry wouldn't exist,” he said. “The bank's support for aerospace means support for small business. The Export-Import Bank is a cornerstone of American competitiveness in an increasingly fierce global market.”
Fanning’s appeal was reinforced by the handful of representatives testifying before the committee, including from the National Association of Manufacturers, International Association of Machinists & Aerospace Workers, and Chamber of Commerce and individual businesses, among others.
Committee ranking member Patrick McHenry (R-North Carolina), however, is seeking changes that include modernization and diversification of the bank. He stressed the bank should be “a tool of our national interests, and even our national security interests” in light of China’s “unparalleled levels of export subsidies for its companies.” Ex-Im should focus on “exports of the future” and modern technologies, he said.
But not everybody is on board with a renewal of the bank’s full charter. The Reason Foundation’s Reason magazine responded after the hearing recalling that in 2015 “there was widespread agreement in Congress that the Export-Import Bank—the U.S. government's export credit agency—was nothing but a crony bank, mostly serving the greedy interests of Boeing and other large companies,” and reiterating its belief that the Ex-Im isn’t all about small businesses. Winners of American subsidies, the magazine continued, have been Air China and Pemex. Meanwhile, with Ex-Im’s lending ability hampered, exports continued, Reason added.