(CNSNews.com) – House Democratic Whip Steny Hoyer (D-Md.) said it was “reasonable” for the United States to continue to subsidize major corporations like Boeing through the Export-Import (Ex-Im) Bank so long as other countries subsidized Boeing’s competitors.
Hoyer, who has crafted a compromise bill with House Majority Leader Eric Cantor (R-Va.) to reauthorize the Ex-Im Bank, said that in a “perfect world” such subsidies would not be needed.
At a Capitol Hill press briefing, CNSNews.com asked Hoyer if it was right that Boeing received the largest share of Ex-Im Bank funding.
Hoyer said, “In a perfect world of no subsidies, that might be a reasonable place to be [no Ex-Im Bank]. Which is why, of course, this bill has included a provision where the secretary of the Treasury will have to see if we can eliminate these subsidies around the world so that it will be solely the market."
“But until that time, we should not unilaterally disarm and simply cost literally tens of thousands, maybe hundreds of thousands of American jobs,” he said. “So, I think that position is a reasonable one.”
The Ex-Im Bank provides subsidized loans, loan guarantees, and sales insurance to American exporters to help boost their sales in other countries.
Hoyer said that the reason Boeing receives such a large share of Ex-Im financing – 38 percent in 2011 – was because the airplanes it produces are very expensive and its chief competitor Airbus is so heavily subsidized.
“Boeing of course has an expensive – the best product in the world – and there aren’t too many competitors for that, but Airbus obviously is a competitor and Airbus is heavily subsidized as you probably know,” he explained.
Airbus is Boeing’s European competitor and has regularly received subsidized loans from the European Union to finance the sale of its jumbo jets.
Congress is set to vote on a bipartisan deal to reauthorize the Bank this week, avoiding a shutdown of the independent government agency that would have occurred June 1 when its current congressional authorization expired.
The deal, announced May 4, will authorize the Bank through September 2014 and gradually raise its portfolio limit by 40 percent to $140 billion in three tranches. The first $20 billion increase would take effect immediately, with the other two $10 billion increases would come in 2013 and 2014 contingent upon the Bank maintaining a default rate of less than two percent.
The deal would – as Rep. Hoyer pointed out – require the Treasury to begin negotiating with economic partners on eliminating export subsidies around the globe. A report on the progress of those negotiations would be due 180 days after the Bank is reauthorized.
The Ex-Im Bank would also have to issue quarterly business reports so that Treasury could monitor whether it was keeping defaults below two percent of its business. If Ex-Im’s default rates go above two percent, it must submit an explanation as to why its losses have been higher and submit to monthly monitoring of its activities as well as take steps to reduce its default rate – with the possibility of an independent audit of the Bank if its default rate reaches two percent for six months or more.
The proposal would also force the Bank to make public and seek comment on any deals that exceed $100 million, allowing the public to see them before they are finalized. The Bank would also have to publish economic impact analyses of its deals, focusing on whether they actually help foreign competitors do business against U.S. companies.
Those economic analyses come in response to criticisms from American airliners who say that Ex-Im financing of Boeing hurts their competitiveness against foreign airliners because the Ex-Im Bank helps foreign companies buy U.S. planes. The airline industry sued the Bank in November 2011, alleging that its subsidized loans to foreign airlines hurt the U.S. airline industry.
Hoyer said that Democrats would vote for the proposal and that he hoped Republicans would too, given that their leadership supports the deal. He also noted that business and labor interests support renewing the Ex-Im Bank.
Some conservatives such as the Club for Growth oppose the Bank on the grounds that export financing is not hard to find in the private market and that the Bank’s Boeing-heavy portfolio is nothing more than corporate welfare for a major multi-billion company that doesn’t need it.
“The Export-Import Bank is a prime example of corporate welfare that should have been eliminated years ago,” said Club for Growth President Chris Chocola in a January statement when the Bank’s reauthorization originally came up. “By picking winners and losers, politicians and bureaucrats are distorting trade flows. It’s time to end the Ex-Im Bank for good.”