Former Treasury Secretary Lawrence H. Summers is urging Congress to reauthorize the endangered Export-Import Bank, saying that allowing the agency to shut down while other countries have similar programs to boost their foreign sales would be “the economic equivalent of unilateral disarmament.”
Summers, who was President Barack Obama’s top economic adviser in 2009-10, added his voice to those of business leaders and Democratic officials who are fighting to save the bank in the face of Republican opposition.
Bank supporters are lobbying members of Congress aggressively, to persuade them to reauthorize the export-assistance agency before its charter expires on Sept. 30
In an opinion article in the Financial Times on Sunday, Summers said the bank is crucial to U.S. economic engagement in the global economy.
He noted that the bank, which provides loans to foreign buyers of U.S. products and other assistance to exporters, does not require any taxpayer funding. It pays for its operations through interest and fees, and last year it sent a record $1.1 billion in profits back to the Treasury.
The bank “enables U.S. exporters to compete on a more level playing field with those of competitor nations, all of whom have similar vehicles,” Summers said.
“Only by maintaining a capacity to counter foreign subsidies can we hope to maintain a level global trading system and to avoid ceding ground to mercantilists,” he wrote. “Eliminating the Export-Import Bank without extracting any concessions from foreign governments would be the economic equivalent of unilateral disarmament.”
Many House Republicans, including incoming Majority Leader Kevin McCarthy of California, say the bank mostly helps large companies and amounts to unnecessary “crony capitalism.”
Although the bank does not require annual congressional appropriations, the government is on the hook for any losses on its $140 billion in outstanding loans and other assistance.
Summers said the U.S. needs to be more actively engaged on global financial issues. He criticized Congress for not approving reforms proposed by the International Monetary Fund that Obama administration officials have advocated.
The changes at the IMF would give China and other emerging market countries more say in the international agency’s decisions. Republicans question the effectiveness of the IMF and are worried the reforms would lessen U.S. influence over IMF actions.
“A failure to engage effectively with global economic issues is a failure to mount a strong forward defense of American interests,” Summers wrote. “The fact that we cannot do everything must not become a reason not to do anything.”