- The Washington Times - Wednesday, August 6, 2014

President Obama’s push to renew the Export-Import Bank over Republican opposition is being undercut by comments he made as a candidate in 2008, when he viewed the bank as “little more than a fund for corporate welfare.”

Weeks before he was elected president, Mr. Obama said the bank was an example of a government program that doesn’t work.

“I’m not a Democrat who believes we can or should defend every government program just because it’s there,” Mr. Obama said at the time. “There are some programs that have been duplicated by other programs that we just need to cut back, like waste at the Economic Development [Administration] and the Export-Import Bank that’s become little more than a fund for corporate welfare.”

He promised when elected to delve into the federal budget “page by page, line by line, and I will eliminate the programs that do not work and are not needed.”

But as some House Republicans try this year to do exactly that, Mr. Obama is pitching for Congress to reauthorize the bank. At a U.S.-Africa business forum in Washington on Tuesday, he said the move is critical to the economy.

“House Republicans can help by reauthorizing the Export-Import Bank,” he told an audience of government officials and CEOs. “That is the right thing to do. It’s pretty straightforward. And you business leaders can help make clear that it is critical to U.S. business.”

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The Export-Import Bank, which relies mainly on fees and interest, helps U.S. companies sell their products overseas by guaranteeing loans to foreign customers. Many countries provide similar financing to boost their businesses.

White House aides said the bank played a significant role during and after the Great Recession when companies were having trouble obtaining loans. They said Congress required helpful reforms when lawmakers reauthorized the bank in 2012, directing that it submit quarterly reports about its default rate and give public notice of large loans.

But some prominent House Republicans say the bank interferes with free markets and that the U.S. should not subsidize certain preferred industries. House Budget Committee Chairman Paul Ryan, Wisconsin Republican, calls the bank an example of “crony capitalism.”

“Big government and big business [are] joining in a common cause to hand out preferences,” Mr. Ryan said. “I believe that we as Republicans should be pro-market, not necessarily pro-business.”

House Financial Services Committee Chairman Jeb Hensarling, Texas Republican, said the bank benefits large corporations that don’t need help.

House Majority Leader Kevin McCarthy, California Republican, said he wants the 80-year-old bank’s authorization to expire Sept. 30, the deadline for Congress to act.

At the business forum, former New York City Mayor Michael R. Bloomberg said allowing the bank to expire would put U.S. businesses at a competitive disadvantage.

“If you think that we shouldn’t do it and you can get all countries to stop, then we’ll have a level playing field,” Mr. Bloomberg said.

The bank, he said, is a “catalyst and gives people the ability to buy now and pay later.”

“This is not a political thing; this is something that every other country does,” Mr. Bloomberg said in an interview with the television network he founded. “If we’re going to be competitive, we have to do it.”

The National Association of Manufacturers, which is urging lawmakers to reauthorize the bank, said nearly 90 percent of the transactions support small businesses and that the bank operates at no cost to taxpayers.

Mr. Obama also is facing questions about whether his position has shifted on the issue of corporate “inversions,” in which U.S. corporations adopt foreign addresses to avoid taxes. The president has called the firms “corporate deserters,” and the administration is considering steps that would limit those companies from maximizing their tax breaks.

Mr. Obama said at a news conference Wednesday night that his administration wants to move “as quickly as possible” to close the tax loophole. He acknowledged that Treasury Secretary Jack Lew said previously that the administration couldn’t solve the problem.

“We don’t want to see this trend grow,” Mr. Obama said. “It’s not fair, it’s not right. We’re reviewing all of our options.”

But Bloomberg News reported Wednesday that during the auto bailout in 2009, the Treasury Department authorized spending $1.7 billion to keep afloat a bankrupt Michigan auto parts manufacturer. The company, Delphi Automotive, then moved its paper headquarters to England, potentially reducing its U.S. tax by up to $110 million per year.

Delphi recently disclosed in a Securities and Exchange Commission filing that it received a “notice of proposed adjustment” from the Internal Revenue Service, asserting that the agency believes Delphi should be treated as a domestic corporation for federal income tax purposes, retroactive to Oct. 6, 2009.

A wave of U.S. companies is seeking to change to foreign addresses to avoid the U.S. corporate tax rate of 35 percent, the highest in the developed world.

Treasury Department spokesman Adam Hodge said former Treasury officials “have said they were not involved in Delphi’s decision to incorporate overseas or in any decision Delphi made regarding the tax implications of the company’s emergence from bankruptcy.”



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