The White House and private-sector groups Monday rushed to defend the U.S. Export-Import Bank, a day after the incoming House Republican majority leader announced he would oppose any effort in the chamber this summer to reauthorize the bank before its ability to make new deals expires in September.
The future of the Ex-Im Bank, which many conservatives condemn as “corporate welfare” to well-heeled U.S. exporters, was put in doubt when Rep. Kevin McCarthy, the California Republican and the incoming majority leader for the House GOP caucus, said Sunday he opposes a reauthorization vote.
White House press secretary Josh Earnest said Monday that President Obama “strongly supports” the continuation of the bank, which helps foreign buyers finance deals to purchase goods and services from American exporters, including such large corporations as Boeing and Caterpillar.
The bank, formed during the Great Depression, also enjoys support from leading business lobbies such as the National Association of Manufacturers and top trade experts.
“China would be delighted to see Ex-Im go away,” former Deputy US Trade Representative Miriam Sapiro said. “It helps U.S. exporters, large and small, by entering into deals the private sector may not.”
But Mr. McCarthy told Fox News over the weekend that he believes the private sector would be able to pick up the slack if the bank’s authorization was allowed to expire in September.
But Mr. Earnest cited a conservative legend in arguing that the Ex-Im Bank should survive. Former President Ronald Reagan supported the reauthorization of the bank during his administration in 1986, Mr. Earnest noted.
“I can imagine that the incoming majority leader might discount a little bit what I have to say, but I’d be surprised if he discounted President Reagan’s view on this,” Mr. Earnest said.
The bank gives loans to foreign buyers of U.S. goods. The bank also insures U.S. companies against the risk of foreign buyers not paying for purchases, and against risks like exporting to a county with a history of instability that typically would make commercial banks wary.
The bank is seeking reauthorization for five years and an additional $20 billion in allocated lending. If a new bill to reauthorize the bank does not pass through Congress by Sept. 30, the Ex-Im will finish out its current loans and obligations, but will not be able to form any new contracts.
Mr. McCarthy’s predecessor, Virginia Rep. Eric Cantor, had forged a bipartisan deal in 2012 to reauthorize the Ex-Im Bank, which passed the GOP-run House with 330 votes. But Mr. Cantor’s stunning primary loss earlier this month to a little-known populist challenger has changed the dynamic of the House debate.
Ms. Sapiro, now a fellow in Brooking’s Global Economy and Development program, said getting rid of the bank made little sense as a cost-saving measure because it is funded by the interest it receives from its loans. Any extra money made on interest payments is given back to the Treasury Department at the end of the fiscal year.
“The motivation for opposition is not clear,” Ms. Sapiro said. “It sounds like a short-sighted political game.”
Business interests are also adding their voice to the campaign to save the bank.