There are two policy areas over
the past few years that regularly generate heat, debate, and often in the end a
grudging acceptance of continuing existing policy.

One is electronic surveillance by
the National Security Agency of mega-data that may or may not include US
citizens. The reason for continuing debate is tied to the fact that, on the one
hand, the government can reasonably argue that absent that collection,
terrorist organizations would be much freer to use everyday communication tools
to plot and plan; while, on the other hand, privacy advocates note that it is
precisely the collection of this tracking data — even without tapping into the
substance of a call or text — that can give government a virtual picture of a
person’s daily comings and goings. These are two important principles simply at
odds with each other. They’re regularly resolved by measures involving
increased oversight, reporting and sunset provisions so that Congress can
review them again at some time in the future.

The second policy debate of this
sort surrounds the reauthorization of the Export-Import Bank, the US
government-backed bank that, among other things, helps support American exports
by guaranteeing loans to foreign buyers and providing credit insurance. Many
economists would argue that the Bank is not necessary. Market forces like
exchange rates, interest rates and the availability of competitive products
matter more. And, of course, many economists would also suggest that the market,
not a government entity, should determine how financial resources are used for the
most effectual use of those resources.

Proponents of the Bank are just as likely to argue that, while economic theory is one thing, global economic realities make the Bank a necessary adjunct to free-market policies. Well over 100 countries have Export Credit Agencies (ECAs), with the vast majority of them less concerned about staying within fair-market lending guidelines than subsidizing domestic enterprises with an eye toward gaining substantive foreign policy advantages. Indeed, according to the Congressional Research Service, in 2018, the Ex-Im Bank’s financing of exports amounted to a pittance: $300 million compared with China ($39b), Germany ($12b), South Korea ($10.6b), France ($8.9b) and India ($7.6b). Combine that with more stringent lending rules at home in the wake of 2008, the frequent lack of knowledge about foreign markets by many banks, and discomfort with large, long-term infrastructure projects, and the reasonable conclusion is that the Ex-Im Bank plays a necessary but niche role in promoting American businesses and manufacturing in the global market.

This debate between the Bank’s
critics and proponents has led, in recent years, to a “stop and go” history for
the Bank. On July 1, 2015, the Bank’s charter was allowed to lapse. It was
reauthorized in early December of 2015, but only until September 30, 2019. To
prevent another lapse, as no longer-term reauthorization bill had been enacted
before this last deadline, the Bank’s charter was extended to November 2019 as
a stop-gap measure. Additionally, at various times the Bank has been left
without a functioning quorum of officers, bringing much of its anticipated
activities to a halt. As the saying goes, (pun intended), this is no way to run
a bank. But it is perhaps predictable given the competing principles involved.
In fact, reauthorizations of the Bank during the early Cold War ran on average
a bit over six years but since then reauthorizations have been around the four-year
mark or less, especially since the end of the Cold War.

To meet the November 21 deadline, the House leadership has announced that a new reauthorization bill for the Bank will hit the legislative floor either late Wednesday or sometime Thursday. The bill would raise the ceiling on possible lending to $175 billion from $135 billion, and extend the charter for a 10-year period. The White House has signaled that it is in favor of both, wanting to have the Bank in its tool kit for competing with export giants like China and Germany, but also wanting to give better long-term assurance to companies that the Bank will be around, for their planning purposes. Sensible reasons, all.  What the White House is seemingly opposed to (along with many Republicans in the House and on the Financial Services Committee) is principally the fact that the measure allows the Bank to make loans for American exports to Chinese State-Owned-Enterprises (SOEs). Given the sensitivities about Chinese trade practices, IP theft, and the all-around challenge to the US regionally and globally by Beijing, the bill’s lack of strategic sophistication is rightly cause for concern.  

That said, the Bank’s continuance is important. The flaws in the bill can be fixed, after Senate passage of its own reauthorization, in conference between the House and Senate committee managers. Loans for exports to China do indeed require heightened scrutiny but not all loans would be contrary to American commercial or security interests. It’s regrettable that the House Financial Services Committee, chaired by Maxine Waters, has somewhat predictably ignored these concerns. But that doesn’t mean we should simply throw the baby out with the bathwater. Setting the Ex-Im Bank, properly monitored, on a more sustainable course is the better course in an imperfect world.

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