New House Majority Leader Kevin McCarthy wants to let the Export-Import Bank expire
Newly-elected House Majority Leader Kevin McCarthy introduced himself to the public in an interview with Chris Wallace of Fox News on Sunday. Perhaps the most buzz-worthy moment of the interview came when McCarthy unambiguously stated that he wanted to let the Export-Import Bank expire, and explained why:
“One of the biggest problems with government is, they go and take hard-earned money, so others do things the private sector can do,” said McCarthy. “That’s what the Ex-Im Bank does. The last authorization of the Ex-Im Bank directed the President and the Treasury Secretary to wind down the Ex-Im Bank, negotiate with the other countries to wind them down, so we have a level playing field.”
The previous re-authorization mentioned by McCarthy was guided through the House by his predecessor as Majority Leader, Eric Cantor, recently defeated by upstart candidate Dave Brat in the Virginia GOP primary. McCarthy couldn’t have been sending a clearer signal to conservatives if he had appeared on “Fox News Sunday” holding a placard inscribed with a #WeHearYou hashtag. It’s also noteworthy that the chairman of the Financial Services Committee is Rep. Jeb Hensarling, who had this to say when the Ex-Im Bank formally requested a five-year re-authorization in April:
“I have always believed that re-authorizing the Export-Import Bank is a bad idea. In many respects, it’s the face of cronyism. So I was surprised, but not shocked, to see the bank ask Congress to raise its lending cap by $20 billion, to $160 billion. Only in Washington can a taxpayer-subsidized program whose only purpose is to pick winners and losers ‘fail upward’ by requesting more money.
“Not only is Ex-Im requesting more room for its lending cap, but the Bank continues to ignore the already screaming alarm bells about the potential risk to taxpayers from its activities. The Bank’s Inspector General noted in a 2012 report that ‘Ex-Im Bank’s current risk management framework and governance structure are not commensurate with the size, scope, and strategic ambitions of the institution.’ It is inconceivable that the bank is seeking a sizable increase in taxpayer exposure at a time when its own Inspector General has raised serious concerns about its risk management capabilities.
“What may be most disturbing is that the Bank’s response to concerns of mismanagement and increased taxpayer risk isn’t to address those concerns – it’s to ask for even greater authority. The committee will hold a hearing in the coming months to discuss this reauthorization request and give Members an opportunity to publicly debate the merits of the Bank. It is time for Members and hard-working taxpayers to take a good look at the operations of the Export-Import Bank.”
McCarthy sounded like he was on the same page as Hensarling – give or take a few delightful cracks about “failing upward” – when he said the business overseen by the Export-Import Bank is “something government does not have to be involved in – the private sector can do it.” Rep. Cantor was noticeably less enthusiastic about pouring more taxpayer money into Ex-Im’s tank this time around. If McCarthy is actively opposed to it – along with his successor as Majority Whip, Steve Scalise - the end is nigh. (Enthusiasm has waned a bit on the other side of the aisle, too. The White House is still officially in favor of re-authorization, but if the House pulls the plug on funding, there’s little Senate Democrats or President Obama could do about it.)
However, supporters of the Export-Import Bank are not going down without a fight, as reported by the Wall Street Journal:
Close to 40 House Republicans are expected to send House GOP leaders a letter this week calling for reauthorization.
Supporters of the Ex-Im Bank say failure to renew its charter would put U.S. companies at a disadvantage because other countries have agencies offering similar support. The U.S. Chamber of Commerce, the National Association of Manufacturers and a number of corporations were planning this week to launch a public-relations push to support reauthorization.
“This is an all-hands-on-deck effort right now because we are really at a very critical time given the bank’s charter expires at the end of September,” said Christopher Wenk, senior director of international policy at the U.S. Chamber of Commerce.
A Caterpillar spokeswoman said, “For the U.S. to close the Ex-Im Bank in this environment is surrendering export markets and economic growth in the U.S.”
“This could be devastating,” said Steven Wilburn, chairman and chief executive of FirmGreen Inc., a Newport Beach, Calif., maker of equipment used to purify biogas. About 80% of the privately owned firm’s business is outside the U.S., he said, and it could lose contracts it seeks in the Philippines, Brazil and Mexico without Ex-Im Bank backing.
Mr. Wilburn said European and South Korean rivals have government-backed financing. “There’s supposed to be a level playing field,” he said.
Boeing has consistently warned that without Ex-Im Bank financing, it and other U.S. companies could lose business to overseas competitors. Airbus Group NV receives export-credit support from agencies in the U.K., France and Germany. Close to 60 countries have agencies to help finance exports.
So we’re caught in an international crony-capitalist arms race, where our companies won’t be able to compete against foreign interests if they don’t get the same kind of mandatory taxpayer subsidies? That doesn’t sound very appealing, especially since that reservoir of taxpayer subsidy cash is looking a lot less “bottomless” than it used to.
Much of our Big Government apparatus is predicated on a lack of trust and confidence in the private sector… which, of course, is never given a chance to prove it can handle the great issues of the day, absent massive government taxes, spending, and regulation. Would the demise of the Export-Import Bank be a first step toward dismantling the Big Government – Big Business “partnership,” or would it be the only hard-fought concession the old system is willing to make? Will the mounting evidence of Big Government’s ineptitude and dishonesty inspire the American people to reclaim their resources, and the freedom to invest them as they see fit… or will they be satisfied with a few carefully-calibrated “messages” from Washington?
Cynics will say McCarthy’s comments were an insincere effort to make peace with the conservative wing of the Republican Party. Fox host Chris Wallace put that question directly to the new Majority Leader:
WALLACE: House Republicans elected you majority leader this week by a wide margin, but some Tea Party activists are concerned. Richard Viguerie, a longtime conservative activist said you and Steve Scalise, the new House whip, the man who replaced you in the three job, are, quote, “business-as-usual, go-along-to-get-along Washington insiders. The gap between the leadership of the Republican Party and the base of the party continues to widen.”
How do you plead?
MCCARTHY: I think he probably doesn’t know my background. I’m a conservative. I believe in the idea of freedom and liberty, but more importantly, look at my voting background. I voted against billing out Wall Street. I voted against, never voted for a tax increase.
I come through the grassroots. My family was not Republicans. I’m the youngest. I came to this party based upon choice. I believe the Constitution matters, that it’s not just a few pieces of paper.
McCarthy supported this contention by saying he would not discuss “comprehensive immigration reform” until the borders are secure, and vigorously opposed raising gasoline taxes to replenish the Highway Trust Fund. He offered his own personal story of winning $5000 in the California state lottery as a teenager, and using the money to start his own business, as an example of his belief in entrepreneurship without the heavy hand of government interference. He’ll have many further opportunities, as Majority Leader, to demonstrate the depth of this commitment. Even the cynical observer would have to say it’s good news that McCarthy, and the rest of the GOP leadership, feel the need to demonstrate their conservative bona fides right now, and killing off the Export-Import Bank would be much more than a small, token gesture.