The federal agency authorized to subsidize U.S. exports would, under a Biden administration plan, expand beyond its congressionally mandated purpose and begin subsidizing American manufacturing “with no direct export component.” At least one Republican senator is objecting.
Pennsylvania’s Pat Toomey, the top Republican on the Senate Banking Committee, sent a letter Wednesday to the president of the Export-Import Bank assailing this “new proposal that would improperly expand the reach of the bank.”
Ex-Im is a federal agency that extends taxpayer-backed financing to foreign buyers and their lenders in order to subsidize U.S. exporters. Ex-Im has never subsidized imports, despite its name.
The Biden White House last year proposed that Ex-Im launch a “Domestic Financing Program,” which, instead of financing exports directly, would simply subsidize U.S. manufacturers. Now that Biden appointee Reta Jo Lewis has taken over as president of Ex-Im, she has signaled her intention to move ahead with this new corporate subsidy.
Toomey, the most consistent congressional critic of Ex-Im, argues in his letter that Congress has not given Ex-Im authority to simply subsidize U.S. manufacturing based on expected indirect impact on exports.
“This is worse than mission creep,” writes Toomey. “It subverts Congressional intent and strains EXIM’s statutory mandate to such an extent to make it meaningless.”
Lewis and the Biden administration have provided very little information on how Ex-Im’s domestic financing program would work and how it fits within the mandate Congress has given the agency.
Toomey, in his March 9 letter to Ex-Im president Lewis, wrote that Ex-Im staff informed him that “the new Domestic Financing Program would provide taxpayer support to domestic manufacturing facilities and infrastructure projects so long as there is an expectation that some arbitrary portion of goods produced will be exported.”
“That is,” as Toomey summed it up, “an EXIM-financed manufacturer does not actually have to export anything, so long as its customers do. This is worse than mission creep.”
Beyond the questions of congressional authority, Toomey pointed to the bad economics behind a Domestic Financing Program. “There is no reason for EXIM to provide domestic financing,” Toomey wrote.
“The United States has the largest and most highly developed market economy in the world; promising businesses have unrivaled access to capital on competitive terms. Just like with all of EXIM’s other programs — and perhaps more so — EXIM could only win domestic financing business if it finances bad deals that the private sector refuses to underwrite, or if it underprices the risk associated with those deals, putting taxpayers needlessly at risk.”
Toomey’s letter, below, included 13 questions for Lewis about her plans to broaden Ex-Im’s mission.
