The latest skirmish in the protracted power struggle in the Republican Party is being waged over a little-known federal agency created to help U.S. companies sell products abroad.
For 80 years, the Export-Import Bank has offered products such as loans and insurance to U.S. companies hoping to break into foreign markets.
In Ohio, 258 businesses benefited from the program between 2007 and 2014, and the bank has supported $2 billion in business.
The bank needs reauthorization by Congress by Sept. 30 to continue its work.
A coalition of conservative groups, including Heritage Action for America, Americans for Prosperity and the Club for Growth, is urging Congress to forgo reauthorization, saying the agency is a perfect example of “crony capitalism” and “corporate welfare.” The groups say the bank picks winners and losers and puts taxpayers at risk. To them, refusing to reauthorize the bank presents a scintillating opportunity: The chance to make a federal agency go away.
“There’s a potential to secure a massive victory for conservatives,” said Dan Holler, Heritage’s communications director. “This would be the biggest victory since the earmark moratorium.”
On the other end of the spectrum are groups such as the National Association of Manufacturers and the U.S. Chamber of Commerce that say ending the bank would be the fiscal equivalent of cutting off your nose to spite your face. They say that in an era in which the U.S faces a huge trade deficit, eliminating a tool that supports U.S. exporters is foolhardy. Most of the employers that use the bank, they say, are small businesses.
“We’re already at a competitive disadvantage in a lot of ways,” said Christopher Wenk, senior director of international policy at the national chamber. “If we were to do away with (the Export-Import Bank), the playing field would be even more unlevel in terms of our ability to compete overseas.”
The disagreement highlights what has become an increasingly fraught relationship between tea party conservatives and more traditional, “Chamber of Commerce conservatives.” It’s just the latest struggle for a party that has become increasingly conflicted over what it wants to be.
It is playing out even among Ohio’s congressional delegation. Rep. Jim Jordan, R-Urbana, supports ending the bank, while Rep. Steve Stivers, R-Upper Arlington, wants it to be reauthorized, albeit with reforms.
“I’m for letting it wind down,” Jordan said. “Let the marketplace work.” He said he’d support allowing all the loans in place to continue, but “once they’re complete, you move on.”
Stivers said the debate is “fairly illustrative” of divisions within the GOP.
“It’s not even philosophical,” he said. “It’s about whether we’re going to be pragmatists. I consider myself to be a center-right conservative, but this is really about whether we’re going to be practical or philosophical, driven by a bunch of college professors or people who live in the real world.”
Sen. Rob Portman, R-Ohio, also opposes closing the bank’s doors. He does, however, support making “meaningful improvements” to the bank aimed at ensuring that taxpayers and private financing of exports are protected.
Among Democrats, support for the embattled bank is pretty strong. Rep. Joyce Beatty, D-Jefferson Township, who, like Stivers, is a member of the House Financial Services Committee, backs the bank, as does Sen. Sherrod Brown, D-Ohio, a senior member of the Senate Banking Committee.
“I’ve seen what happens to our state with job loss because we import so much more than we export,” Brown said. The bank “does help, in many cases, Ohio companies to sell products abroad."
Said Beatty: “When you look at number of jobs and job creation, this could be devastating with the post-financial-crisis era we’re in right now.”
Supporters of the bank say that 59 other countries — including China, South Korea and most of those in Europe — have some sort of equivalent institution, and eliminating the Export-Import Bank would hurt U.S. companies.
“The worst thing for us to do is just unilaterally disarm and put our job creators at a competitive disadvantage,” Stivers said.
In Columbus, Yenkin-Majestic Paints in Columbus has used the bank’s insurance to support development of business in eastern Europe, China and South America. The company has never had to draw on that insurance, but it needs it, all the same, in case sales fall through, according to company CEO Merom Brachman.
When foreign companies choose to buy from Yenkin-Majestic, it’s per invoice. The company does credit checks on its foreign customers but would be reluctant to take the risk to expand, were it not for the credit insurance that it receives from the Export-Import Bank.
Over the past three years, Brachman said, the company has paid $10,500 in fees to the bank in return for the development of about $1.6 million worth of sales in the three foreign markets involved. The business is a modest but meaningful part of earnings.
Brachman wonders why a bank supported by Republican and Democratic presidential administrations alike is in danger. “It seems a little shortsighted — in the middle of an economic recovery — to make this a severe issue,” Brachman said.
By Jessica Wehrman - The Columbus Dispatch, Ohio (MCT)
©2014 The Columbus Dispatch (Columbus, Ohio)
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