"How An Oddball Bank’s Reauthorization Could Split The Democrats Over Coal Financing"
CREDIT: AP Photo / Evan Vucci
So far, the brewing fight over the Export-Import Bank — an esoteric institution that’s long flown under the political radar — has pitted Republicans against one another. But now the issue of climate change may split the Democrats over reauthorization as well.
At issue for the Democrats is what restrictions the “Ex-Im Bank” — as it’s colloquially known — will have when it comes to projects involving fossil fuels. This past December, the Bank joined a growing trend of international lending institutions who are refusing to finance coal-fired power plants overseas, unless the plants serve especially economically vulnerable countries, or unless they adopt carbon capture and sequestration technology. But the bill Sen. Joe Manchin (D-WV) is working on to reauthorize the Bank includes language to roll back those rules.
On Tuesday, both Sen. Barbara Boxer (D-CA) and Sen. Sheldon Whitehouse (D-RI) promised to fight Manchin’s language, with Boxer saying she’s “confident” Manchin’s addition can be struck down and a clean reauthorization bill sent to the Senate floor.
“It essentially says you can build any dirty, filthy coal power plant you wanted,” Boxer added. “It really will set the world back … and will lead to much worse climate pollution.”
Whitehouse said he’s “not thrilled” with Manchin’s language.
For his part, Manchin was hoping to meet with fellow Democrats Tuesday night to get a better lay of the political land, though it’s as yet unclear if that hope bore any fruit. He argues that eliminating the coal restrictions would increase exports of clean coal technology.
The Ex-Im Bank is a corporation set up and owned by the federal government, tasked with promoting U.S. exports by providing credit and loan guarantees to foreign buyers that private banks usually won’t help with. It was set up in 1934 and has been reauthorized with little fanfare on a regular basis since.
Its current authorization ends on September 30, and for the first time a growing rift within the Republican Party has put the Bank’s fate in real jeopardy. The more ideological and Tea-Party-inspired wings of the conservative movement have cohered around opposing Ex-Im as an unfair government intervention in the economy, and much of the House GOP and Republican leadership is on their side. Supporting the Bank’s reauthorization are business-friendly Republicans like the U.S. Chamber of Commerce and some governors.
For their part, Democrats have derided the Ex-Im Bank as corporate welfare in the past, and at least some liberal economists are arguing against reauthorization. But, sensing an opportunity to split Republicans, Democrats are largely lining up in support of the Bank this time around.
What the actual effect would be of axing Ex-Im is unclear. The Bank is usually a net gain for U.S. taxpayers — it returned a $1 billion profit to the Treasury last year. And by propping up U.S exports it certainly creates some domestic jobs; arguably more now than usual, thanks to the weak economy. But by helping foreign companies buy products on the cheap, it likely prevents some number of domestic jobs as well.
Meanwhile, Ex-Im has spent $3.4 billion since 1994 supporting coal plants around the world.
As currently written, both reauthorization bills moving through the House and the Senate would undo the anti-coal restrictions. Climate activists have already raised objections: a letter from a dozen green groups last week — including Friends of the Earth, the Sierra Club, and the Natural Resources Defense Council — said Manchin’s change “erodes foreign confidence that the United States will act on climate or follow the administration’s stated G20 goal of ending fossil fuel subsidies.”
Boxer and Whitehouse’s turn on Tuesday, however, means major Democratic politicians are also getting into the game.