Sen. Toomey speaks on Senate floor about his Ex-Im amendment
Time to Put an End to Taxpayer Subsidies
WASHINGTON, D.C. - U.S. Senator Pat Toomey (R-Pa.) spoke today on the Senate floor about his amendment (S. Amdt. 2104) to H.R. 2072, the Export-Import Bank Reauthorization Act.
Sen. Toomey's amendment seeks to ensure that the administration successfully negotiates the elimination of taxpayer-backed subsidized export financing programs for businesses. It does this in two phases.
- In the first phase, the amendment would limit the Export-Import Bank's loan cap to $100 billion until the administration has certified in writing to Congress that negotiations to end subsidized export financing programs have begun. After this phase is completed, the loan cap may be increased to $120 billion.
- In the second phase, the bank's loan cap would be frozen at $120 billion until the administration submits a multilateral agreement to Congress eliminating subsidized export financing programs with Organization for Economic Cooperation and Development nations and non-OECD nations with programs exceeding $50 billion. After this phase is completed, the bank's portfolio would be increased to $140 billion, but the Ex-Im Bank and other nations' subsidized export financing programs will be phased out over a designated period of time.
The Senate will vote on Sen. Toomey's amendment later today.
A full transcript of the senator's remarks is below:
"I ask to call up my amendment 2104 which is at the desk.
"This is an amendment that deals with the reauthorization of the Ex-Im Bank. I would urge my colleagues to support this. I think it is a very important measure to begin the process of phasing out a very unfortunate practice that we participate in, as do many of our trading partners, which is the active taxpayer subsidization of exports.
"I want to be clear. There is a very real risk that is carried by American taxpayers and that risk is systematically underpriced. The fact is, the Ex-Im Bank extends loans and provides guarantees to countries and companies buying American exports. It provides those loans and those loan guarantees under terms that are not available in the private sector.
"There is a reason those terms are not available in the private sector. It's because the private sector necessarily requires full compensation for whatever risk they take, and there is risk in any loan. The Ex-Im Bank underprices these loans systematically. That's why it's important. That's why it exists. That's why it does business that the private sector can't win away from the Ex-Im Bank. It is because the Ex-Im Bank necessarily and systematically underprices the risk that taxpayers are ultimately on the hook for. This is - this is what many of us object to, this risk that taxpayers are forced to bear.
"In addition to forcing taxpayers to incur this risk, it's really quite unfair to American companies that have to compete with the foreign companies that get the subsidized financing. And this isn't just theoretical. This happens all the time.
"Some years ago, I was involved in a dispute because the Ex-Im Bank was going to finance the acquisition of equipment by a foreign - I think it was a Chinese steel maker - which would enable them to make steel at lower prices than American steel makers could make because the American companies wouldn't be able to obtain this equipment with this subsidy that the Chinese companies could obtain through the Ex-Im Bank. More recently is the case of Delta Air Lines, which has observed that the price they have to pay for jets is higher than the price paid by other countries who are operating competing routes but buying their aircraft through the subsidies of the Ex-Im Bank.
"In 2008, President Obama, referring to Ex-Im Bank, said, ‘This is little more than a fund for corporate welfare.' Well, I think that's a little harsh. I understand how this has come to be, and I understand why it's been extended, and I understand why people feel like we have to subsidize our exports because other countries around the world subsidize theirs. In other words, if our German and French and Chinese and Russian taxpayers are made to take a risk in subsidizing the sale of their manufacturers, then our taxpayers ought to take a similar risk.
"Frankly, I think there is a logical solution to this. Let's require the administration to sit down with our trading competitors and negotiate a mutual phase-out of all of these export subsidies. Frankly, it's in everybody's interest. We could have a level playing field on which no taxpayers are subject to this risk, no taxpayers are asked to subsidize the sales of private companies, and I think that's what we ought to do.
"This is what my amendment would accomplish. What my amendment does is it says we'll go ahead with this reauthorization of the Ex-Im Bank, but the increase in the lending limit which we're currently at - the first increase, the bump up of $20 billion that is contemplated in this bill that's passed the House - that would be contingent upon the administration informing Congress that they have begun the process of negotiating a phase-out of all export subsidies.
"And the second increase, because I recognize that this phase-out wouldn't occur immediately; it would be a gradual process that would happen over time. But under my amendment, the second increase would occur only when the administration came back and informed Congress that they had indeed, in fact, reached an agreement with our leading trading partners on a framework that would phase out subsidization of exports.
"Mr. President, I think this is a very sensible way to deal with the really only compelling argument I have heard in favor of forcing taxpayers to continue to take this risk, and that is, well everyone else does it, so we must. Well, since that's the only reason, then let's start the process of persuading everyone else not to do it.
"We have tremendous leverage in both bilateral and multinational trade negotiations of all sorts. There are ways that the administration, if it makes this issue a priority, can persuade our trading partners that this is the right direction to go. Each of our trading partners has their own constituency of taxpayers who would probably rather not be forced to subsidize this process, just as we do.
"And I think this amendment does it in a careful fashion that allows business to continue for now, provided that we start in a different direction, a direction that you will avoid continuing to put taxpayers at risk. So I urge my colleagues to support my amendment 2104, and I yield the floor."