Senate Panel Deals 2nd Blow to Reagan, Backs Export Bank

The Senate Budget Committee delivered another blow to President Reagan’s budget plans today, agreeing to support the federal Export-Import Bank that helps U.S. companies compete with foreign businesses.

The 18-1 vote, with only committee Chairman Pete V. Domenici (R-N.M.) opposed, came just one day after the panel agreed to freeze military spending in fiscal 1986, after allowing for inflation. (Story on Page 16.)

Assistant Republican leader Alan K. Simpson of Wyoming said he thinks that it is “a very realistic assumption” that the full Senate will approve the defense spending freeze.

However, when asked about the Senate going along with the above-inflation defense freeze, GOP leader Robert J. Dole of Kansas said he thought that it is “too far away for those speculative questions.”

“I want to see what they (the Senate budget panel) do in the entirety,” Dole said. “I want to see what some of those people who voted to cut defense do on entitlements.”

OKs Democratic Plan

The GOP-led Budget Committee today approved a Democratic plan that would preserve a form of the export-import agency, which provides loans to American companies to subsidize sales of their products abroad.

Reagan had wanted to eliminate the direct loans and proposed replacing that program with expanded loan guarantees and a $100-million interest rate subsidy program.

But the committee voted instead for a plan, sponsored by Sen. Lawton Chiles (D-Fla.), that would more than double the interest rate subsidy program and set aside a $1-billion “war chest” that could be used for direct loans in “exceptional circumstances when U.S. exporters face predatory financing arrangements or unique long-term financing needs.”

Chiles said the $1-billion reserve fund would put countries that exercise a “predatory credit practice” to undercut prices of U.S. products on notice that “we will match it.”

“If they know we’re going to match it, basically they won’t do it,” Chiles reasoned.

Protects Military Aid

The Chiles plan also protects Reagan’s proposed $400-million increase in military sales for Israel and $125 million for Egypt. Separately, the State Department said it will defer a decision on the aid indefinitely.

The Chiles proposal was approved only after the committee, on a 9-9 vote, failed to pass a package from Sen. Bob Kasten (R-Wis.) that would have given even more to the bank.

Domenici, the lone Republican against the Chiles plan, pushed a proposal that resembled Reagan’s package.

“If we intend to make some major policy changes for this country with this budget, we’ve got to take some chances,” Domenici said. “We’re not going to come out of this with real policy changes unless we make a bunch of people mad.”

The committee planned to work several days on the budget proposal, scheduling several night sessions this week.