To kill the Export-Import Bank, all that House Republican leaders opposing it have to do is let the bank's charter expire Tuesday — and they are leaving Friday for the Fourth of July recess without even holding a vote to reauthorize it.
The 81-year-old federal agency that helps companies sell their products abroad has been a prime target of conservatives, who want to reduce the size of government and eliminate what they call crony capitalism.
Shutting the bank's tap, though, also would eliminate tens of thousands of jobs, say business executives, trade groups and the Obama administration.
"It's going to be devastating for us," said Don Nelson, chief executive of ProGauge Technologies Inc., a Bakersfield manufacturer of oil industry equipment. "Basically, we just won't be able to export anymore."
Optimism should be flowing through the ProGauge factory.
It's preparing a bid for a multiyear project in the Middle East worth up to $30 million. Landing the job would help offset a slowdown at the 70-employee company, which already has laid off about a third of its workers because of falling oil prices, Nelson said.
But there's a catch.
If ProGauge has the winning bid next month, it would be required to provide a guarantee that it would deliver the equipment when due or refund the down payment it would get. And the company can get a guarantee for such a project, Nelson said, only with the help of the Export-Import Bank.
"If the Ex-Im Bank isn't here, we can't fill the order," he said.
Exports make up about 70% of ProGauge's business. And if the company can't export, it would have to lay off 30 more employees, Nelson said.
Conservatives have criticized the Export-Import Bank as Boeing's Bank because the aerospace giant and other big firms are the largest recipients of its assistance, which includes loans to foreign buyers of U.S. goods and various guarantee programs for U.S. exporters.
The bank is funded through interest and fees on its aid. Last year, it provided $20.5 billion in assistance that financed $27.5 billion in exports. The bank said those sales supported 164,000 U.S. jobs.
But opponents said the job figures are inflated. And they noted that the $27.5 billion in exports is a minuscule portion of the nation's $2.3 trillion in total exports, demonstrating that the bank can disappear without major damage.
"The overwhelming majority of businesses, especially small businesses, export without the Export-Import Bank," said Dan Holler, a spokesman for Heritage Action for America, a conservative group that opposes the bank. "All these companies somehow are finding a way forward, so the idea we won't be able to export after July 1 is just not true."
Taxpayers are ultimately on the hook for any losses the bank can't cover on its $112 billion in outstanding assistance — a number that the law allows to grow to $140 billion. That's an unnecessary risk that is better borne by private lenders or the companies themselves, opponents said.
But the bank said it had a default rate of less than 0.2% as of Sept. 30 and has not had to seek a taxpayer bailout since the 1980s.
Bank supporters note that Boeing Co. funnels business to some 15,600 U.S. suppliers, a third of them in California. And although major corporations could survive without the bank's assistance, many small exporters like ProGauge might not.
And there's a broader issue of U.S. competitiveness.
At least 59 other nations — including China, Germany and France — have similar agencies assisting their exporters. Export-Import Bank President Fred Hochberg has said the U.S would be putting its exporters at a major disadvantage, allowing competitors such as Airbus in France to grab more business.
If the bank's charter is not reauthorized, it would continue to provide assistance for deals it already has committed to fund. But it would no longer be able to provide new aid, meaning its portfolio would shrink over time until the bank finally shuts down. Loans have terms as long as 18 years, but the vast majority of insurance and guarantee assistance last only about a year.
Many companies — from Boeing to small manufacturers such as ProGauge — are scrambling to try to save the bank even as they search for alternative sources of funding in case they can't.
"If you had told me a decade ago that this would ever be something our country would eliminate, I would have said you're crazy," Jeffrey R. Immelt, chief executive of General Electric Co., said in a Washington speech this month.
The National Assn. of Manufacturers, the U.S. Chamber of Commerce and other business groups are lobbying aggressively for the bank's charter to be reauthorized. The Obama administration is pushing for a five-year reauthorization, and most Democrats and many Republicans support the bank.
Even if there's hope of reauthorizing the bank sometime after Wednesday, there's likely to be at least a short period during which the bank cannot provide any new loan guarantees or other assistance. And that delay already has endangered foreign sales, executives said.
"It will definitely slow my growth to near zero. I'll have to cut domestic jobs for sure," said Robert Patton, chief executive of Patton Electronics Co., a communications equipment manufacturer in Gaithersburg, Md. "There [are] definitely deals that we've already lost."
Patton said he depends on the Export-Import Bank to help provide financing until payments are received from foreign sales, which make up about 70% of the company's revenue.
U.S. banks won't lend Patton money on pending payments from abroad, which are viewed as riskier than those from domestic customers. The Export-Import Bank guarantees those foreign payments, enabling Patton to obtain loans that keep the company running until the customers' checks arrive, he said.
Loans to foreign buyers of U.S. products are the most well-known export assistance.
But other Export-Import Bank initiatives, such as the working capital loan guarantee program used by Patton and other small U.S. firms, also are crucial to selling products abroad, executives said.
"I don't know of a domestic bank that will loan on international receivables without some sort of insurance," Patton said.
Without the Export-Import Bank program, he'd have to pay about 10% on working capital loans for exports — about double what he pays on such loans for domestic sales. Such a rate would be unaffordable because his foreign competitors have export aid in their countries, he said.
"We're competing internationally against other companies that have the kind of facilities the Ex-Im Bank provides to our companies," he said. "It's a ridiculous thing to take away."
Immelt said that many countries will not even allow a company to bid on a major infrastructure project unless it has the backing of a government export-assistance agency.
"In country after country, you find the same thing: Deals are structured around export credit financing. And without it, in many cases, you can say goodbye to those deals and the jobs that go with them," he told the Economic Club of Washington.
GE won't give up those deals, Immelt said, echoing warnings from other executives that a bank shutdown will cost the U.S. jobs. "We will build these products in places where export credit financing is available because we have to," he said.
"What happens then? Good jobs in the U.S. will become good jobs in Canada and Europe," Immelt said. "That's a mighty high price to pay for ideological purity, and it doesn't fit my idea of a national strategy for growth and jobs."
Holler said big companies such as GE don't want to give up government-backed assistance from the Export-Import Bank. And he predicted that the warnings will prove false in the weeks and months after the bank's charter expires.
"CEOs talking about moving manufacturing overseas, that is just pure fear-mongering," he said. "The case that the bank is a necessity for the U.S. economy dwindles by the day after you get past July 1."
Some business owners have said the uncertainty over the bank's future already has cost them sales. And the National Assn. of Manufacturers said those will add up if Congress doesn't act soon to keep the bank running.
"If Ex-Im is not reauthorized a year from now," said Linda Dempsey, the group's vice president for international economic affairs, "we believe that there are tens of millions of dollars in exports and tens of thousands of jobs in the manufacturing sector that are going to be put at risk."