America’s Export-Import Bank (Exim) is tapped out. Its authority runs out on May 31 and Congress has to agree to some form of extension. Exim has $100 billion of borrowing authority, none of which shows up on the federal balance sheet. It may have already reached its $100 billion limit; there are billions of additional requests for financing that may not get fulfilled if its charter is not extended and its debt limit is not increased.
The Administration has requested a 40% increase in Exim’s borrowing authority. This would keep Exim afloat until 2015. The Republicans, led by Eric Cantor, have made a counter proposal to increase the debt limit by only $13 Billion. Cantor’s plan would have Exim run out of money in less than one year.
So there is a fight brewing on this issue. It is the same fight that has been going on over every economic issue. Conservatives want to cut back on big programs, liberals want to expand them as fast as possible.
Some on the Pro side include the Administration, big exporters like Boeing, liberals and their press:
There are many voices on the Con side:
Central to the issues at Exim is Boeing. From 2005 to 2010 Exim financed 634 Boeing aircraft. In 2011 it lent foreign airlines another $11.4B. This lending has surely helped Boeing, but it’s killing the domestic air carriers which have to compete on overseas routes.
Delta Airlines has sued Exim over its lending to Air India. The lawsuit has to be resolved as part of the extension of the debt limit. Liberal guys, like Chuck Schumer have been talking to Delta. The proposal is to offset the competitive disadvantage that Exim creates, with new subsidies for the airlines.
Subsidies that create inequities that are fixed with more subsidies is bad government. I can’t see the Delta Airlines “fix” getting inked without a large price tag. That cost will be the Republicans insisting that any subsidies be “paid” for with other cuts. A pissing match appears to be in the offing.
When S&P downgraded the USA, it pointed at political gridlock and the inability of D.C. to agree to confront issues as the principal reason for the downgrade. The fight over Exim is a good example of that gridlock.
I’m 70% confident that an Exim “patch” will be in place within the next few weeks. That leaves a 30% chance for this to go wrong. If it gets nasty, it will highlight all that is wrong with the country.
The following video is an edited version of one that is making the rounds on YouTube. This has no ads and runs 64 seconds. Obama’s Exim flip-flop is worth noting.
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