Congress comes back from its annual August recess next week. One of the top items on its agenda is deciding the Export-Import Bank’s fate. Ex-Im subsidizes financing for U.S. exporters and their foreign customers. As I outlined here, Ex-Im subsidizes certain businesses at others’ expense. It is a pro-business policy, when what the economy needs are pro-market policies. Ex-Im will also be forced to shut its doors unless Congress reauthorizes its charter by the end of September, making for a golden reform opportunity for corporate welfare opponents.
The merits of the issue are clear enough, but politics is getting in the way. A bill to reauthorizes Ex-Im’s charter would likely pass the Senate, but would have trouble getting through the House. This would ordinarily mean that Ex-Im opponents would succeed in shuttering the agency, since Ex-Im’s expiration is automatic without reauthorization. That means Ex-Im supporters will probably pursue other means, such as tucking Ex-Im’s reauthorization into a must-pass appropriations bill. Ex-Im opponents would have no choice but to swallow that poison pill, or risk another politically costly government shutdown.
If the appropriations bill scenario is what comes to pass, reformers will likely gain some kind of concession, such as a very short reauthorization period. Ex-Im reauthorizations are typically good for four or five years; this reauthorization could last just a few months, forcing Congress to revisit Ex-Im as soon as January or February. This would remove Ex-Im as an election issue for reformers, but still leave them with a genuine chance of victory once the next Congress convenes. It would also give campaigning pro-Ex-Im incumbents a chance to tell voters they can bring home the bacon—especially in Washington State, which receives more than 40 percent of Ex-Im’s total financing, despite housing only 2 percent of the U.S. population.
There are a lot of possible fates for the Export-Import Bank. Whatever happens this month, reformers will have a good chance to end one of the federal government’s largest corporate welfare programs. Readers interested in more detail on the politics of the Ex-Im fight should read John Bresnahan and Jake Sherman’s piece in today’s Politico. For the merits of the issue, see my recent Ex-Im paper.