Rep. Kevin McCarthy is famously social but in one of his first interviews as the House majority leader, the California Republican wasn’t winning any friends at the U.S. Chamber of Commerce and the National Association of Manufacturers.
McCarthy told Fox News Sunday that he opposed reauthorization of the Export-Import Bank, the federal agency that provides financing to businesses for trade purposes. McCarthy said the bank does “things that the private sector can do,” and that he would let the agency’s authorization expire on September 30.
But in a press conference today, U.S. Chamber of Commerce President Tom Donahue vowed to protect the bank, arguing that it served primarily small businesses and that shutting down the bank would put U.S. businesses at a competitive disadvantage in the global marketplace.
“The deal is pretty simple. This is about jobs and competitiveness. This is about the American economy and the fact that we are today more than ever before in a global competitive economy, where American leadership in lots of industries is being challenged. We think the Ex-Im Bank can help us meet that challenge and taking it away gets somewhere into the heading of not too bright.”
NAM President and CEO Jay Timmons, who joined Donohue in the press conference, said 98% of export financing is done through the private banking system, but that 200,000 employees at 3,400 companies depend on Ex-Im Bank financing for their jobs.
“Allowing the Ex-Im Bank to shut its doors would be a gift to foreign producers overseas and would result in the loss of exports, manufacturing and jobs here in the United States.”
NAM and the Chamber are leading a coalition of more than 800 companies and associations that sent a letter to members of Congress calling on them to reauthorize the bank. They argue in the letter that other governments provide much more support to their exporters than the U.S. does currently.
“Failure to reauthorize Ex-Im would amount to unilateral disarmament in the face of other governments’ far more aggressive export credit programs, which have provided their own exporters with an estimated $1 trillion in financing support in recent years. Export credit agencies in China, France, Germany, Brazil, and Korea have provided significantly more support for their exporters than Ex-Im has provided to U.S. exporters —in some cases, more than seven times what Ex-Im Bank has provided on an annual basis.”
To help their efforts, Timmons announced, the business coalition has hired a “dream team of advocates” from both sides of the political aisle – Dick Gephardt, Haley Barbour and Tony Fratto. Gephardt, a two-time presidential candidate, was both a House majority and minority leader. Barbour is a former governor of Mississippi and Republican National Committee chairman, while Fratto served as deputy press secretary to President George W. Bush.
While Donohue expressed confidence that the bank would be reauthorized, it faces powerful opposition from conservative groups such as Americans for Prosperity, the Club for Growth and Grover Norquist’s Americans for Tax Reform who argue the bank’s work could be done by the private sector and that it amounts to corporate welfare. Tim Phillips, president of Americans for Prosperity, applauded McCarthy’s opposition to the bank:
“The Export-Import Bank mostly benefits large, well-connected corporations at taxpayer expense, and nonpartisan investigators have found the bank’s outdated accounting practices disguise the fact that it’s losing billions of taxpayer dollars. It’s the wrong way for government to do business.”
The bank and its supporters argue that the bank is not only not a drain on taxpayers, but that it makes a profit. Donahue told reporters: “We don’t lose a plug nickel in doing this. We even make money.” The bank’s website states:
“Because the Bank's loan loss rate has since 1934 been below 2%, Ex-Im earns more than cost of operations and costs of bad loans, so it actually earns a profit for U.S. taxpayers, $1.6 billion since Fiscal Year 2008.”
The House Financial Services Committee is scheduled to hold a hearing on the bank’s reauthorization on Thursday.