Mike & Co. —
Prospects for productive activity in Congress seem to be slipping away palpably these days. There are far more significant examples, but we look at one relevant case of obstruction and delay that also foreshadows some central and fundamental differences that the fall campaign is likely to revolve around.
The example is a useful one as well because it provides a glimpse into a gaping vulnerability for GOP presumptive Presidential nominee Donald Trump, relating to the structure, if not business model, of his campaign.
The Curious Case of Ex-Im
By March, the Senate Banking Committee had earned the distinction of being the only committee to hold no votes on any nominees before it throughout the entirety of this Congress. Chair Richard Shelby was facing a difficult primary battle against a young opponent on his right flank. The incumbent Chair promised that once he had dispatched his primary opponent, the Committee could get back to work and begin to hold hearings on the nominees sent to it.
While Shelby did win his primary contest, his committee has approved only a third (6 of 17) of the nominees before it. Not one of these has yet had a confirmation vote from the full Senate.
Some Noms More Equal Than Others
Nominees before Senate Banking have been held up for two stated reasons: ideological allegiance and political pragmatism. But there is a pattern: Shelby is happy to allow SEC or Treasury Department nominees through Senate Banking but he won’t allow a vote for nominees to the Federal Reserve or Ex-Im Bank Boards.
Sen. Shelby is part of a vocal minority of conservative lawmakers who believe the Bank’s operations endanger the free market and its loans put taxpayers at unnecessary risk. This is the same group of Senators who managed to block legislation renewing the Bank’s charter last year, leading to a months-long halt of much of the activity within the agency.
Now, despite a majority in both parties and both houses of Congress coming forward to renew the bank’s charter last December, one person has been able to keep and has single-handedly kept Ex-Im hamstrung.
Unlike his blockade against Federal Reserve nominees (which he says will be lifted if Obama nominates a Vice-Chair for Oversight to the Fed), it’s unclear what, if anything, might persuade Sen. Shelby to relent on Ex-Im. He says only that he “believes his actions are in the best interest of the American taxpayer,” and that “the bank is more about corporate welfare than advancing our economy.
Ex-Im in a Trumpian Context
Relatedly, and at least equally concerning, presumptive GOP nominee Donald Trump said in 2015:
“I don’t like [the Ex-Im Bank] because I don’t think it’s necessary. It’s a one-way street also. It’s sort of a feather bedding for politicians and others, and a few companies. And these are companies that can do very well without it. So I don’t like it. I think it’s a lot of excess baggage. I think it’s unnecessary. And when you think about free enterprise, it’s really not free enterprise. I’d be against it.”
“Feather bedding” is an ironic choice of expression. To date, Trump-linked businesses account for 17 percent of all campaign expenses. He had paid almost $11 million to Trump organizations for these expenses since launching his campaign a year ago. According to campaign finance experts, it’s difficult to tell if he’s breaking the law in doing so, but it’s not difficult to see the hypocrisy of Trump calling the Ex-Im Bank “feather bedding” for politicians.
According to the Associated Press, Trump has directed over $6 million to his business ventures and family members over the past year, as disclosed to the Federal Election Commission. Trump has also boasted in the past that he may be the “first presidential candidate to run and make money on it.”
The Export-Import Bank was established during the Great Depression to help finance purchases of American exports by foreign customers. Since its creation, it has helped finance billions of dollars in international trade between American companies and foreign clients. Dozens of other countries followed our lead and established their on export-promotion agencies.
Consequences of a Hamstrung Ex-Im
The Bank has a five member board of directors, but for several months only two of those seats have been occupied. Without a quorum, or three members, the board cannot approve any loan package totaling more than $10 million. Since there is no alternative way to approve of large loan packages, the bank is effectively hamstrung to give out large loan packages for customers.
This presents a problem: while about 98 percent of recent loan applications are for less than $10 million, and therefor can move out of the bank without approval by the board, a full two-thirds of its loans by dollar value come in the form of loans over the $10 million threshold. Right now the bank has more than 30 such large-value loan packages, totaling over $20 billion, in its backlog.
The consequences for American manufacturing jobs have been clear. Last September, G.E. announced a flurry of moves: creating up to 1,000 jobs in the Czech Republic to produce turboprop aircraft engines; shifting 500 power-project jobs from Texas, South Carolina, Maine and New York to France, Hungary and China; promising 1,000 energy-sector jobs in Britain, whose export bank will finance up to $12 billion in G.E. sales to Brazil, Ghana, India and Mozambique; and relocating 350 engine manufacturing jobs from Waukesha, Wis., to a new factory in Canada.
Other nations’ export-credit agencies are “rolling out the red carpet,” said John G. Rice, the G.E. vice chairman, so instead of exporting products, these companies are exporting jobs to keep up. In fact, Mr. Shelby’s own state is far from exempt. Boeing, a major user of Ex-Im loan packages for sales to developing nations especially, employs 2,750 workers directly in Alabama. The company claims it spent $532.3 million in the state in 2015 and helped to indirectly support 17,000 jobs there through its operations.