If the U.S. Export-Import Bank isn't reauthorized by the end of the month, the bank will stop providing new financing on Oct. 1 — a development supporters say will hurt U.S. export competitiveness.
During its 80-year history, funding for the bank, which must be reauthorized every five years, has generally met with little opposition or stirred much controversy.
But this year the bank, which provides financing to foreign corporations to help them buy American products and offers loan guarantees and other support to U.S. exporters, has run into bipartisan opposition. Conservatives have called the bank a form of corporate welfare, a drain on taxpayers and a boondoggle that should just go away.
But on the sidelines of the Americas Trade & ConnectAmericas Expo in Miami this week, Sean Mulvaney, an Ex-Im Bank director and a Republican, delivered an impassioned plea for continued funding for the bank. The uncertainty, he said, is already hurting U.S. competitiveness abroad.
Digital Access For Only $0.99
For the most comprehensive local coverage, subscribe today.
“It’s become an existential battle for Ex-Im Bank. It shouldn’t be,” said Mulvaney, in an interview with the Miami Herald.
South Florida Rep. Joe Garcia, a Democrat, also made a pitch for reauthorization during a speech at the event.
He urged the 450 business and government leaders from around the Americas to get the message to Washington that it's important to push ahead with Ex-Im Bank reauthorization. “It is key,” said Garcia.
As do most Democrats, he supports reauthorization. It's particularly important to Florida, where Ex-Im Bank funding creates 70,000 jobs, he said. Florida has perhaps more to lose if the bank is deauthorized than any other state, said Garcia.
In July, a group of 31 governors sent House Speaker John Boehner, R-Ohio, Senate Majority Leader Harry Reid, D-Nev., and minority leaders Rep. Nancy Pelosi, D-Calif., and Sen. Mitch McConnell, R-Ky., a letter urging reauthorization of the bank by Sept. 30. Several other governors have since joined the bandwagon.
The original bipartisan group, which also included the governors of Puerto Rico, Guam and the U.S. Virgin Islands, said their states and territories benefit from exports and “Ex-Im allows our companies and workers to compete on a level playing field against our competitors.”
Florida Gov. Rick Scott wasn’t a signatory of the letter but later sent his own letter urging reauthorization of the bank, with a nod to concerns and a suggestion that the bank’s program might be improved by “making it more transparent.” Questions about the bank’s accountability have been raised amid reports of alleged kickbacks.
“We need to get a funding bill out of Congress,” said Mulvaney. But so far a bill hasn’t moved out of committee in either chamber.
If legislation remains mired in committee, a temporary funding authorization could keep the bank alive for a limited period, or its funding could be included in a resolution. Failing that, the reauthorization could be addressed at the lame-duck session of Congress in November.
The debate remains polarized. “The bank is beset by mismanagement, dysfunction and risk ... Allowing the authorization to expire should be an easy call for lawmakers,” Diane Katz, a Heritage Foundation researcher, wrote in an issues brief.
Mulvaney concedes that conservative think tanks and some grassroots organizations “view the Ex-Im bank as a market intervention that distorts markets.” But he said the bank “puts markets back together again.”
Among other criticisms leveled against the bank are that it plays favorites and mostly helps large corporations.
“That’s just not true,” Stefan M. Selig, U.S. undersecretary of commerce for international trade, said in an interview with the Miami Herald. In 2013, he said, 89 percent of Ex-Im transactions were for small and medium-size enterprises.
“Maybe in a perfect world there wouldn’t be the requirement for this sort of institution,” said Selig, who was in Miami this week for the Trade Americas event. “But the fact is, comparable institutions exist in this world supporting our competitors in their countries.”
Uncertainty about the bank’s funding is already having a negative impact on U.S. companies, Mulvaney said, citing the case of FirmGreen.
Steven Wilburn, founder and chief executive of FirmGreen, a California company that invents, develops and commercializes new energy technologies, testified at a House hearing in June that he had lost a $57 million deal in the Philippines to a Korean competitor.
The potential client sent a letter, Wilburn said, saying “they still prefer our technology, but require certainty about financing terms equal to that being offered my Korean competitor backed by the Korean Ex-Im Bank.” Wilburn said he had been unable to find competitive private financing for his overseas capital projects.
The Obama administration, said Mulvaney, is trying to engage with Congress to find a compromise on reauthorization. But he added, “It will take both parties to compromise. We need a functioning committee system in Congress to produce bills.”