James T. Berger (August 2012)
President Barack Obama overcame Republican "Tea Party" opposition to win a big victory over congressional conservatives in a bill to not only reauthorize the Export-Import Bank but to increase its lending cap from $100 billion to $140 billion.
After long delays, the bill first sailed through the Republican-controlled House by a 330-93 margin and then passed the Senate 78-20 before going to the President for his signature on May 30. The bill received major support from the U.S. Chamber of Commerce and the National Association of Manufacturers. Both influential conservative groups maintained the reauthorization was critical to U.S. job growth and safety. In a letter to Senators prior to the vote, the U.S. Chamber wrote that the bank's lending directly affects some 300,000 American jobs and 3,600 companies.
President Obama had repeatedly called on Congress to reauthorize and increase the bank's funding as part of his administration's efforts to increase U.S. exports and generate new jobs. A small group within the Republican party was responsible for delaying the passage. The reason was a largely philosophical dispute within the Republican Party dealing with free market issues versus U.S. government controls. One conservative organization, the Club for Growth, called the bank "market-distorting" and called for its abolishment.
The Boeing vs. Delta Issue
There was a side issue that also helped delay congressional action. It dealt with Boeing Co., the bank's leading beneficiary. Supporters of Boeing were opposed by Delta Air Lines, which has claimed that its profits have been hurt because foreign competitors, like Air India, have used Export-Import Bank financing to buy Boeing's newest aircraft. These critics have referred to the Export-Import Bank as "Boeing's bank."
In supporting the bill, Senator Maria Cantwell (D-Washington) called the bank "one of the most powerful tools we have for manufacturing jobs in America." Washington State is home to many Boeing facilities.
In its final form, a compromise provision was added that directs the U.S. Treasury Secretary to initiate multilateral negotiations aimed at reducing and eventually eliminating government export subsidies for aircraft and ultimately ending all government export subsidies.
Founded in 1934
The Export-Import Bank is the official export credit agency of the U.S. federal government. It was established in 1934 by an executive order and was made an independent agency of the Executive Branch by an act of Congress in 1945. Its purpose was to finance and insure foreign purchases of American-made goods for customers unable or unwilling to accept the credit risk.
The bank has been re-chartered a number of times since 1945 and was last chartered for a five-year term in 2006. One limitation of the bank's authority is that it does not compete with private-sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to assume political or commercial risks inherent in the deal.
The latest reauthorization happened literally at the 11th hour. Without congressional action, the bank's charter would have expired at the end of May 2012, and it also would have gone over its lending cap.
Commenting upon the bank's reauthorization, Lauren Airey, director of trade facilitation policy at NAM, told The Washington Times, "Small and medium-sized manufacturers will greatly benefit, helping them reach new markets with their exports and create jobs."