By Paul Merrion, Crain News Service
CHICAGO (June 12, 2014) — Looks like another D.C. mudfight is looming over the Eximbank.
Caterpillar Inc. and Boeing Co. are scrambling to block a move by conservative Republicans in Washington, D.C., to kill the U.S. Export-Import Bank, a little-known federal agency that finances many companies’ high-ticket sales to foreign buyers.
The bank has become this year’s political pinata for those who railed against government bailouts during the 2008 financial crisis, pushed the government to the brink of defaulting on its debt and tried repeatedly to repeal “Obamacare.”
With Democrats in strong support of the bank, the Republican Party’s most conservative members probably don’t have enough votes in the House to approve legislation terminating it. But they don’t have to pass anything: Eximbank’s charter expires Sept. 30, so all they have to do is prevent a reauthorization vote over the next few months.
It’s an especially big deal for Chicago-based Boeing, whose commercial aircraft sales to foreign airlines account for about half of Eximbank’s financial support, leading critics to call it the “Bank of Boeing.” Peoria-based Caterpillar Inc. also ranks among the bank’s 10 largest customers and is second-largest among the nearly 300 firms in Illinois that use Eximbank.
“This is a priority for the company, that’s for sure,” Boeing spokesman Tim Neale said. “We’re lobbying individually and as part of the coalition” of business groups supporting reauthorization, including the Aerospace Industry Association, National Association of Manufacturers and the U.S. Chamber of Commerce. Lobbying reports show that Boeing has 16 in-house lobbyists and six outside lobbying firms working on the issue.
Not counting Boeing’s aircraft exports, which are attributed to the state of Washington where they are manufactured, Illinois ranked ninth with $884 million in export sales supported by Eximbank in 2013. That ranking varies widely from year to year. In 2010, the state ranked second with $2 billion in Eximbank-supported exports.
Conservative free-market groups such as the Heritage Foundation, Club for Growth and Americans for Prosperity have their own coalition working against Eximbank.
Their main argument is that the bank represents government meddling in the economy, rewarding well-connected firms with subsidies at the expense of taxpayers. “It distorts markets; it’s cronyism at its worst,” said Diane Katz, a research fellow at the Heritage Foundation, based in Washington. “The vast majority of money goes to very few corporations that could easily obtain private financing.”
The vast majority of transactions, by contrast, are with small and midsized exporters.
“It’s definitely not cronyism,” said Mary Howe, president of Chicago-based Howe Corp., a 40-employee maker of industrial refrigeration equipment that has used Eximbank to insure its foreign receivables for about 10 years. “That just doesn’t apply.”
Boeing and the bank’s supporters argue that terminating the bank would amount to unilateral disarmament in a world where 59 other countries have export credit agencies. “To eliminate Eximbank in this context would put U.S. exporters at a competitive disadvantage,” Caterpillar said in a statement.
That doesn’t sway critics like Ms. Katz. “Just because France or pick-your-country is engaging in a bad policy doesn’t mean the U.S. should be engaging in a bad policy,” she said.
The Senate is likely to pass reauthorization, although no vote has been scheduled yet. One of the bank’s most vocal critics, Rep. Jeb Hensarling, R-Texas, is chairman of the House Financial Services Committee, which has jurisdiction over the issue, putting him in position to stall any Senate-passed legislation.
The bank’s “demise would clearly be one of the few achievable victories for the Main Street competitive economy left in this Congress,” Mr. Hensarling said in a recent speech at the Heritage Foundation. “I believe it is a defining issue for our party and our movement.”
Killing Eximbank would be a huge trophy for Mr. Hensarling, who is viewed as a potential replacement for House Speaker John Boehner of Ohio, an Eximbank supporter. Mr. Hensarling has said he is not in contention to be speaker but he wouldn’t rule it out in the future.
This report appeared on the website of Crain’s Chicago Business magazine, a sister publication of Tire Business.
How often do you monitor your investments in the stock market?
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22% (19 votes)
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