Amid Conservative Pressure, McCarthy Wants to Let Ex-Im Bank Expire

Rep. Kevin McCarthy (R-CA) is trailed by reporters while walking through Statuary Hall the U.S. Capitol building, June 11, 2014 in Washington, DC.
National Journal
Billy House
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Billy House
June 22, 2014, 9:29 a.m.

House Ma­jor­ity Lead­er-elect Kev­in Mc­Carthy said on Sunday that he in­tends to let the charter of the con­tro­ver­sial Ex­port-Im­port Bank ex­pire this fall — a move that would ap­pease con­ser­vat­ives in Con­gress who are de­mand­ing that the bank not be reau­thor­ized.

“We’ve got hear­ings go­ing on [this week] in fin­an­cial ser­vices, which I sit on,” said Mc­Carthy in an ap­pear­ance on Fox News Sunday with Chris Wal­lace. “I think that Ex-Im is one that gov­ern­ment does not have to be in­volved in.”

Two years ago, Mc­Carthy was one of 147 House Re­pub­lic­ans who joined with 183 Demo­crats in vot­ing to reau­thor­ize the bank’s charter — over the op­pos­i­tion of con­ser­vat­ives like Fin­an­cial Ser­vices Com­mit­tee Chair­man Jeb Hensarling who char­ac­ter­ized the bank as cor­por­ate wel­fare.

The bank makes tax­pay­er-backed loans to help over­seas en­tit­ies buy U.S. products, au­thor­iz­ing roughly $27 bil­lion in fisc­al 2013 to back about $37 bil­lion in ex­port sales. Its charter comes due for re­new­al again on Sept. 30.

Mc­Carthy was elec­ted just last week by Re­pub­lic­ans to be their ma­jor­ity lead­er — a job that in­cludes set­ting the le­gis­lat­ive agenda and floor sched­ule — after Eric Can­tor’s primary-elec­tion de­feat. Mc­Carthy of­fi­cially takes over that job on Ju­ly 31. And he does so know­ing that Re­pub­lic­ans will pick a full slate of lead­ers again just after the Nov. 4 midterm elec­tions, and rest­ive con­ser­vat­ives will be watch­ing his ac­tions closely between now and then.

One of Mc­Carthy’s first hurdles could be his hand­ling of the Ex­port-Im­port Bank ques­tion. Can­tor had been in­stru­ment­al in work­ing with Minor­ity Whip Steny Hoy­er in get­ting the 2012 le­gis­la­tion passed to reau­thor­ize the bank for an­oth­er two years.

But along with some con­ser­vat­ive law­makers, out­side con­ser­vat­ive groups such as Her­it­age Ac­tion and the Club for Growth are de­mand­ing that the bank not be reau­thor­ized again.

It was against this back­drop that Fox News’s Wal­lace pressed Mc­Carthy dir­ectly on Sunday with the ques­tion: “So, straight­for­ward ques­tion, you can say it right here. You would al­low the Ex-Im bank to ex­pire in Septem­ber?

And Mc­Carthy re­spon­ded, “Yes, be­cause it’s something that the private sec­tor can be able to do.”

Mc­Carthy also said dur­ing the in­ter­view, “One of the prob­lems with gov­ern­ment is they go and take hard-earned money so oth­ers do things that the private sec­tor can do. That’s what the Ex-Im Bank does.”

“The last au­thor­iz­a­tion with the Ex-Im Bank dir­ec­ted the pres­id­ent and the Treas­ury sec­ret­ary to wind down the Ex-Im Bank, ne­go­ti­ate with oth­er coun­tries to wind them down, so we have a level play­ing field,” he said.

Mc­Carthy’s com­ments come as de­bate over wheth­er to re­new the bank’s charter is ramp­ing up. As Mc­Carthy in­dic­ated in the in­ter­view, Hensarling’s Fin­an­cial Ser­vices Com­mit­tee is set to hold a hear­ing on Wed­nes­day, titled, “Ex­amin­ing Reau­thor­iz­a­tion of the Ex­port-Im­port Bank: Cor­por­ate Ne­ces­sity or Cor­por­ate Wel­fare?”

Earli­er this year, Re­pub­lic­an Sen. Mike Lee pub­licly laid out this op­pos­i­tion in a Na­tion­al Re­view piece he wrote. Head­lined “Ex-Im Bank and the GOP’s Cronyism Test,” Lee called the is­sue a key ques­tion for con­gres­sion­al Re­pub­lic­ans.

“Wheth­er the be­ne­fi­ciar­ies of par­tic­u­lar Ex-Im Bank loan guar­an­tees are re­spec­ted, suc­cess­ful com­pan­ies like Boe­ing or crony bas­ket cases like Solyn­dra, is ir­rel­ev­ant. Twist­ing policy to be­ne­fit any busi­ness at the ex­pense of oth­ers is un­fair and anti-growth,” he wrote. “Wheth­er con­gres­sion­al Re­pub­lic­ans say so — and do something about it — dur­ing the com­ing Ex-Im Bank de­bate will tell us a lot about what, and who, the party really stands for in 2014 and bey­ond.”

Hensarling him­self has said at a con­gres­sion­al hear­ing earli­er this year that he be­lieves “there are a num­ber of re­forms that should be had if this pro­gram is go­ing to be reau­thor­ized,” but that he “re­main[s] skep­tic­al that tax­pay­ers ought to be on the hook for this.”

Against this back­drop, however, has come a push from busi­ness in­terests and oth­er groups to re­new the bank’s charter.

And bank of­fi­cials have sched­uled a brief­ing for re­port­ers on Monday to provide, ac­cord­ing to an in­vit­a­tion, “a sort of ‘Ex-Im Bank 101’ — a re­view of how the Bank’s products equip U.S. com­pan­ies to com­pete, a look at the glob­al ex­port cred­it land­scape, and an up­date on the Bank’s ro­bust risk-man­age­ment pro­ced­ures.”

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