Are the political stars aligning to doom the U.S. Export-Import Bank? Newly elected House Majority Leader Kevin McCarthy (R-Calif.) said on Sunday that he doesn’t support reauthorizing the bank, which offers financing aid to help U.S. companies sell their goods abroad.
Conservative political groups call the bank an example of “crony capitalism” and oppose its reauthorization, saying the private sector can handle export credits and that the U.S. should not be selecting which companies receive the bank’s assistance to sell overseas. Yet establishment Republicans and most business groups support the bank and say it’s vital to keep American exports competitive with foreign rivals for large manufacturers such as Boeing (BA), Caterpillar (CAT), and Deere (DE). “One of the biggest problems with government is they go and take hard-earned money so others do things that the private sector can do,” McCarthy said on Fox News Sunday. “That’s what the Ex-Im Bank does.”
McCarthy is the highest-ranking House Republican to oppose the bank; the new No. 3 House leader, Majority Whip Steve Scalise of Louisiana, is also no fan of the bank. Its charter expires on Sept. 30, and House Speaker John Boehner isn’t likely to overrule his party’s decisions on the issue. “Boehner has been clear that this is an issue that members, particularly on the Financial Services Committee, need to discuss, and that is happening,” his spokesman, Michael Steel, told the Wall Street Journal.
On Monday the National Association of Manufacturers and the U.S. Chamber of Commerce sent a letter (PDF) to Congress signed by 865 organizations that support the bank, including Alcoa (AA), the Business Roundtable, Honeywell International (HON), Lockheed Martin (LMT), SpaceX, and United Technologies (UTX), Wells Fargo (WFC). “Failure to reauthorize Ex-Im would amount to unilateral disarmament in the face of other governments’ far more aggressive export credit programs, which have provided their own exporters with an estimated $1 trillion in financing support in recent years,” according to the letter. The groups cite Brazil, China, France, Germany, and South Korea as nations that have committed far higher public sums to export credits than has the U.S. The bank said it supported $37 billion worth of exports in 2013, which sustained 200,000 U.S. jobs.
Delta Air Lines (DAL) is among the corporate outliers on the issue, saying the bank’s support for Boeing’s wide-body aircraft exports unfairly advantages its foreign rivals. Boeing has long enjoyed the benefits of the bank’s lending activities: This year the company expects the bank will help finance about $10 billion of its projected $60 billion in aircraft deliveries overseas. Delta has said it backs the Ex-Im Bank but wants to see its financing for the jet exports eliminated.
Boeing, for its part, argues that allowing the bank to lapse would leave the company at a competitive disadvantage against Airbus (AIR:FP), which receives support from equivalent French, German, and British lending authorities. “Any uncertainty in financing ability could unnecessarily tilt the field against Boeing, putting thousands of manufacturing jobs at risk,” the company said in a statement.