Senate Majority Leader Harry Reid is considering testing Republican opposition to the U.S. Export-Import Bank by linking the lender’s reauthorization to funding the federal government after Sept. 30.
Reid, a Nevada Democrat, is deciding whether to attach a short-term reauthorization of Ex-Im to a stop-gap spending bill that would keep the government funded beyond the end of its fiscal year, said a senior Democratic aide who requested anonymity to speak about strategy.
Attaching the lender’s renewal to government funding would force House Republicans to decide between preserving the bank -- which provides loans, loan guarantees and credit insurance to foreign buyers of U.S. goods -- or shutting down the government ahead of the November congressional election, the aide said. Republicans, who have the majority in the House, need to win six seats from Democrats to take control of the Senate.
Meanwhile, support among Senate Republicans is growing for a proposal from Senator Joe Manchin, a West Virginia Democrat, to keep the bank operating for another five years.
“It is a very important way of financing U.S. sales,” Senator Thad Cochran, a Mississippi Republican, said in an interview about the Ex-Im Bank.
Spending disputes last year led to a 16-day partial government shutdown, the first in 17 years.
The argument then centered on House Republican’s insistence on defunding President Barack Obama’s health-care law. They ultimately relented as the party’s favorability sank to a record low of 29 percent, according to a Oct. 9 Gallup poll.
Lawmakers have since agreed to new spending measures, including one in January that financed government operations through Sept. 30.
That’s the same cut-off date for the bank’s lending authority. The bank’s renewal was put in doubt after Representative Kevin McCarthy, a California Republican elected to become House majority leader Aug. 1, said last month that lawmakers should let the bank expire.
The 80-year-old bank is facing criticism from House Republicans aligned with the small-government Tea Party movement who describe the lender as providing corporate welfare.
Eliminating the bank would hobble U.S. exporters as they compete with companies from Japan, Germany, Korea, France, China and other large countries that have government-backed financing for exports, said Dave Cote, chief executive officer of Honeywell International (HON) Inc., which makes varied manufactured goods for the aerospace, oil and gas, auto and construction industries.
“We can’t unilaterally disarm,” he said in a television interview on CNBC today. “It puts U.S. workers at a disadvantage.”
Boeing may face a long-term credit risk if Congress doesn’t reauthorize the bank, said a report today by Standard & Poor’s Ratings Services.
Without the Ex-Im, the world’s largest plane maker may need to provide between $7 billion and $9 billion in financial backing to airlines and other clients, according to the report today. Chicago-based Boeing’s current financing portfolio was $3.5 billion on March 31.
“Boeing, the largest beneficiary of Ex-Im’s activities, could face long-term credit risks, especially if it responds by significantly expanding the direct loans and guarantees it provides to its airline customers in order to remain competitive,” according to S&P, a unit of McGraw-Hill Cos. that provides credit ratings and financial information.
Boeing fell 1.8 percent to $126.79 at the close in New York.
“The potential effects on multiple U.S. business sectors as noted in the S&P report are consistent with what we have been saying all along,” said Tim Neale, a Boeing spokesman, in a statement. “For aerospace, the elimination of Ex-Im would put Boeing and thousands of companies in our U.S. supply chain at a competitive disadvantage to Airbus.”
Ex-Im says its loans supported more than 200,000 jobs last year at no cost to taxpayers.
Two Republican senators, Mark Kirk of Illinois and Roy Blunt of Missouri, said they’ll support Manchin’s plan to reauthorize the bank for five more years and increase the lending cap to $160 billion from $140 billion. The proposal, which hasn’t been introduced, would make it easier for the bank to finance exports for coal-fired power plants to some countries, including India.
Kirk said the S&P report made him “doubly concerned” about the need to renew Ex-Im’s reauthorization.
“We should make sure the No. 1 exporter in America is solid,” Kirk said in an interview today in Washington.
Cochran said he’ll probably support Manchin’s plan, but wants to first see the details. With support from the U.S. Chamber of Commerce, the nation’s largest business lobby and a supporter of the Ex-Im, Cochran defeated a primary challenger who had backing from the Tea Party.
“We’ll deal with it in a timely way I hope, and keep things moving so we create more jobs for U.S. workers,” Cochran said.
Senator John Hoeven, a North Dakota Republican, said he’s also inclined to back the Manchin proposal.
“I’ll likely support it, but I still have to go through the details,” Hoeven said.