By Nick Timiraos
President-elect Donald Trump's jawboning of executives to keep
jobs in the U.S. is putting free-market conservatives in an awkward
spot after they fought the Obama administration on other government
intervention in business.
Now, the fate of an agency that conservatives have fought to
close over the past year because they say it is an example of the
government picking winners and losers -- the U.S. Export-Import
Bank -- will rest in Mr. Trump's hands.
Ex-Im Bank supporters are already using Mr. Trump's early moves
to build their case. The president-elect's emerging industrial
policy -- seen last week when he touted Carrier Corp.'s agreement
to keep 800 manufacturing jobs in Indiana in exchange for some tax
credits -- would appear at odds with conservative opposition that
has weakened the bank over the past year, amid charges of "crony
capitalism."
Critics of the Ex-Im Bank, which finances exports of U.S.-based
companies, include House Speaker Paul Ryan (R., Wis.) and former
Rep. Jim Jordan (R., Ohio), who was leader of the House Freedom
Caucus, a group of conservative lawmakers. Both men have applauded
Mr. Trump's push to keep Carrier jobs in Indiana.
The Ex-Im Bank's supporters, which include President Barack
Obama, say the bank helps U.S. manufacturers compete on level
footing with foreign companies that receive similar support from
export-credit agencies in their home countries.
The Ex-Im Bank charter expired in July 2015. Over the objections
of GOP leaders, it was reauthorized last December, ending a
five-month shutdown. The bank is still operating at less than full
strength because Sen. Richard Shelby (R., Ala.), chairman of the
Senate Banking Committee, has refused to allow confirmation votes
for vacant board seats, depriving the bank of the quorum needed to
approve financing of more than $10 million.
Congress this week declined to pass a waiver for the bank to
approve larger deals. So whether the bank is fully restored is
likely not to happen until the Trump administration decides how to
proceed.
"President-elect Trump is keenly focused on manufacturing jobs.
That's one of the main things we do," Fred Hochberg, chairman of
the Export-Import Bank, said in an interview. Mr. Hochberg said the
bank has around $25 billion in loan applications in the pipeline
and that six or seven export deals are ready to be approved by the
bank once its board is allowed to resume full operations.
With the remaining two currently filled board seats becoming
vacant after the presidential inauguration next month, Mr. Trump
"can shape this agency to meet the needs of his administration,"
said Mr. Hochberg, an Obama appointee who has headed the bank since
2009. It isn't clear whether Mr. Trump will stick with Mr.
Hochberg.
Other bank backers say restoring the Ex-Im Bank would allow Mr.
Trump to do much more to promote manufacturing on U.S. soil. "We've
lost far more jobs to the Ex-Im Bank being shut down" than those
saved by the Carrier agreement, said Sen. Lindsey Graham (R.,
S.C.).
Mr. Trump hasn't taken a clear stand on the bank. He said last
year that he didn't believe it was necessary, but he told a Seattle
radio station in May that executives had told him they were at a
disadvantage without it. "Everybody wants me to reject it. The
standard conservative thought is to reject it," he said, adding he
would "take a position in the very near future."
Vice President-elect Mike Pence, as an Indiana congressman,
voted in favor of reauthorizing the bank's charter in 2012. Wilbur
Ross Jr., Mr. Trump's nominee for Commerce secretary, and Peter
Navarro, a top economic adviser, declined to comment.
Other potential rifts loom between GOP lawmakers' stated mission
to limit the reach of government and Mr. Trump's more-freewheeling
brand of economic nationalism. Over the past eight years,
conservative lawmakers have resisted big increases in
infrastructure spending, requirements that contractors buy American
steel and iron for those projects and import tariffs on goods sold
by U.S. companies that have moved jobs overseas. Those are all
policies about which Mr. Trump has spoken favorably.
Some conservatives who have long been critical of the Ex-Im Bank
said they were disappointed by Mr. Trump's ad hoc approach to state
support in the Carrier deal last week, when Indiana officials
agreed to give Carrier's parent United Technologies Corp. $7
million in tax breaks over 10 years.
"The Carrier one is stunning. It is government-granted
privilege," said Veronique de Rugy, a conservative economist at the
Mercatus Center at George Mason University.
Despite conservative opposition to the Ex-Im Bank over the past
two years, the GOP reaction to the Carrier announcement shows
"people who thought the Republicans would stop [Trump] are going to
be thoroughly disappointed," Ms. de Rugy said.
For the year ended September, lending backed by Ex-Im fell 60%
from a year earlier and 76% over the past two years, amid the
congressional standoffs. The bank said the $5 billion in financing
extended last year supported 52,000 jobs, the lowest since 1971. It
sent $284 million to the U.S. Treasury earned in interest in fees,
down from $432 million in the previous year.
Meanwhile, General Electric Co. last year said it would begin
increasing hiring overseas because of the inability to submit
competitive bids, which often require an export-credit agency to
sponsor sales of industrial equipment in developing countries.
"If international customers of tractors, turbines, airplanes or
satellites can't get financing from the United States, they'll
simply take their business elsewhere to one of the dozens of other
countries with similar export-credit assistance," said
aircraft-maker Boeing's Chief Executive Dennis Muilenburg in
remarks to the Illinois Manufacturers' Association last week.
Boeing, which faces stiff competition from state-backed
companies abroad, has been the Ex-Im Bank's largest client in
recent years.
--Kristina Peterson contributed to this article.
Write to Nick Timiraos at nick.timiraos@wsj.com
(END) Dow Jones Newswires
December 08, 2016 15:28 ET (20:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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