Controversy surrounding the reauthorization of the U.S. Export-Import Bank is pitting the airline industry, labor and manufacturers against one another in a three-way tussle on Capitol Hill. Advocates for an Export-Import Bank of the United States (Ex-Im Bank) reauthorization bill were encouraged by President Barack Obama’s first-ever pledge of support for the bill because it lends urgency to passage.
The current bill expires in May, but the bank is on pace to hit its $100 billion lending cap before that, says John Hardy, president of the Coalition for Employment Through Exports, a group advocating for passage of the bill.
Passage of the authorization bill would raise the cap to $135 billion. Without the increase, the bank will be compelled to shut down, jeopardizing financing for deals that bothand general aviation companies have in the pipeline, Hardy says.
He stresses that it is an unusual time to impede exports, since interest rates are low, as is the U.S. dollar, factors that make the climate favorable to selling U.S. exports. But Republicans have been philosophically opposed to increasing the lending cap, and this year’s election climate may be slowing down congressional consideration, Hardy says.
Boeing is calling loudly for Ex-Im Bank’s reauthorization, arguing that the bank creates thousands of U.S. jobs by boosting exports. “Ex-Im reauthorization is vital to keeping U.S. exporters competitive with foreign rivals, who have aggressive levels of export finance support from their respective governments,” a Boeing Capital Corp. spokesman says. “U.S. exports and the thousands of good-paying jobs they support are at risk if Congress fails to authorize Ex-Im and raise the current cap on its loan portfolio.”
Unions have waded into the fray to support Boeing. “Rather than bolster Ex-Im’s ability to assist U.S. manufacturers, some groups are once again creating confusion, this time in an effort to stifle the bank’s loan guarantee authority and sacrifice good-paying American jobs,” said International Association of Machinists President Tom Buffenbarger in a letter to members of Congress. “The Boeing sale is desperately needed to support thousands of manufacturing and service jobs here at home.”
Senate leadership is expected to take up the reauthorization bill soon. But getting the bill passed is not without controversy.
Sen. Tom Coburn (R-Okla.) and five other senators in a Feb. 6 letter to Senate leaders Harry Reid (D-Nevada) and Mitch McConnell (R-Ky.) said that according to the, the bank is processing more than 90% of its applications without reviewing whether its loans would have an adverse impact on other U.S. employers. And until that situation is addressed, Coburn and his colleagues have asked that the bill not move forward.
“He believes the bank needs reforms based on economic impact studies enacted first as part of the reauthorization and is concerned that the bank is not adequately conducting the economic impact studies that, by law, Congress has directed it to conduct,” says Coburn spokeswoman Becky Bernhardt.
This argument is central to Airlines for America’s (A4A) objection to the Ex-Im Bank’s lending practices. “Ex-Im Bank needs to take a look at the impact of its transactions on employment in the airlines industry and the overall impact its loans have on the airline industry,” says David Berg, the association’s chief counsel. “We support Obama’s export initiative and understand the bank plays a role in that,” he says. “We’re calling for increased transparency and to ensure the bank complies with its statutory obligations.”
A lawsuit filed by A4A in the U.S. District Court for the District of Columbia to block an Ex-Im Bank loan guarantee for’s purchase of 30 Boeing aircraft has seen some recent movement, says Berg. last week joined the lawsuit as a plaintiff. The carrier claims that it has been harmed by Air India’s access to below-market financing for aircraft.
A4A called for summary judgment on the suit, and the Ex-Im Bank’s reply is expected on March 5, says Berg, who adds that Ex-Im could file a motion to dismiss the case at the time. The court is expected to render a decision on the matter in May.
One change A4A made to its suit is that the association dropped its claim that Air India may default on its loans due to the carrier’s shaky financial condition, Berg says. The Indian government has said it will back Air India if the carrier is unable to repay the loan.
But Ex-Im’s aircraft loan guarantees historically have not seen many defaults and have generally been a net contributor to the U.S. Treasury.