The Export-Import Bank is about to turn into a pumpkin.
The government-run bank — hardly noticed for much of its 80 years of existence — has become a punching bag for small-government Republicans on Capitol Hill, frustrating the party’s traditional business allies.
Its charter expires at midnight on Tuesday. Congress is out of town, leaving the bank in limbo and forcing its supporters to scramble for ways to resurrect it in the coming weeks, before it’s forgotten.
Conservative groups, meanwhile, were celebrating the bank’s expiration and flexing their muscles.
“Today will be remembered as a day Americans stood up to powerful special interests and won,” said Veronique de Rugy, an economist at the Mercatus Center at George Mason University and a longtime critic of the bank whose writings have influenced conservative Republicans.
The path forward for the bank, known as Ex-Im, is uncertain. In a test vote in the Senate, reauthorizing the bank drew 65 votes. But House Speaker John Boehner hasn’t indicated how Ex-Im might advance there, and his two top lieutenants are among the bank’s chief opponents.
As a sign of what a litmus test the bank has become on the right, nearly all of the GOP’s presidential candidates have already broken with big business — even at the risk of losing major donors — to say they want Ex-Im abolished.
Sen. Marco Rubio, R-Florida, was set to join the Freedom Partners Chamber of Commerce, the umbrella for the conservative Koch brothers’ political activity, for a Tuesday evening conference call celebrating the end of a bank that has existed since 1934.
Established under President Franklin Roosevelt, the bank helps American companies export goods overseas and supported around $27 billion in U.S. exports last year. But for the first time in its long history, Ex-Im has suddenly found itself facing an existential crisis as members of Congress debate the virtues of the agency.
Senate and House sources have acknowledged for days that the bank’s charter will expire at the end June, and that its next chance of revival is for a reauthorization bill to be attached to “must-pass” legislation later this summer — potentially a highway funding bill at the end of July.
Don’t expect Export-Import Bank Chairman Fred Hochberg to board up the windows of his downtown Washington offices. The bank will continue to exist, and its employees will be paid. It will take in payments for the financing it’s already extended, with some contracts running as long as 18 years.
But it can’t approve any new deals — and that’s why the U.S. Chamber of Commerce, the National Association of Manufacturers and major industries like aerospace are concerned. They point out that about 60 other countries have similar export credit agencies, some much larger than the bank in the U.S.
Many in the business community who view Ex-Im as a critical financial lifeline for companies that struggle to get more traditional forms of loans are frustrated by what is widely expected to be a short-term lapse in the bank’s charter.
Jay Timmons, president and CEO of the National Association of Manufacturers, said in an interview that even a brief expiration of Ex-Im’s charter will send a message to foreign competitors that the United States is “taking its position of economic leadership for granted.”
“I can’t understand why an agency that helps business, creates jobs, provides opportunities for Americana and helps us compete internationally is something that a certain group of Republicans want to take down,” Timmons said. “It is totally counterintuitive from anything I’ve ever seen from an elected official who counts on the votes of folks who want those opportunities and jobs at home.”
Democrats are placing the blame squarely on the shoulders of Republicans, where there is a deep internal divide among members on Ex-Im.
House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, has led the charge to shutter the bank.
He’s argued that its more than $100 billion in financing authority makes the bank a fund for corporate cronyism, pointing out that Boeing — which battles Europe’s Airbus for overseas sales — is among Ex-Im’s primary beneficiaries.
“As more Americans and more members of Congress learned about Ex-Im’s political lending, corruption and fundamental unfairness, the more they wanted it to expire,” Hensarling said in a statement.
“Now the challenge for supporters of a competitive free-market economy is to make sure Ex-Im stays expired,” he said. “Ex-Im is a part of yesterday’s economy.”
The House Financial Services Committee’s top Democrat, Maxine Waters, said in a statement to CNN that she was in “disbelief” to see some Republicans vilify an agency that helps businesses small and large across the country.
“The ideologues who are committed to chopping away government programs that support our nation’s students, seniors, exporters and others, the facts don’t really matter,” the California lawmaker said. “They just see ending the Bank as a conservative litmus test.”
Steven Wilburn, the chief executive of FirmGreen Inc., said his California-based renewable energy company lost a $57 million contract to South Korea because of the Export-Import Bank’s uncertain future.
He said he could lose millions of dollars more in contracts in the Philippines if the bank’s charter lapses for long.
“It’s just too critical an agency right now to abandon,” Wilburn said.
He said there’s irony in Congress voting last week in favor of trade promotion authority — a bill that allows President Barack Obama to ink major pacts in the Asia-Pacific and Europe — while this week allowing a mechanism that makes international trade work to expire.
Congress, he said, is promoting trade in theory “while at the same time we’re withdrawing from the finance of trade.