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Delta Embarrassed By Export-Import Bank Loan Guarantee While Lobbying Against Agency

Posted: 04/ 6/2012 3:54 pm Updated: 04/ 6/2012 6:44 pm

WASHINGTON -- A bizarre lobbying battle that pits Delta Air Lines and the Tea Party against the Export-Import Bank became even more interesting on Thursday when the government bank struck back at the airline in a classically Washington way -- by handing an $84.8 million loan guarantee to a Delta customer.

The message from the bank was clear: Even Delta, our fiercest corporate opponent, benefits from what we do.

The bank made sure nobody missed the message, commissioning a public relations service to blast news of the miniscule deal -- a rounding error in Ex-Im Bank terms -- to national reporters and editors, complete with quotes from the bank president about how Delta will benefit from the loan guarantee.

"Ex-Im Bank's financing will support high quality, high wage, technical jobs for Delta employees in Atlanta," said Fred Hochberg, chairman and president of Ex-Im Bank, in the press release.

The Ex-Im Bank, which provides loan support for foreign buyers of American products, is up for reauthorization. Calling the bank little more than a purveyor of corporate welfare, lawmakers and independent groups on the hard right -- and, to a lesser extent, the left -- are fighting the measure. Delta is the primary corporate opponent of the bank's reauthorization.

"Today's announcement was an Ex-Im play," said one industry source watching the fight. "Why did they put out a release? I think it was a political play. Normally they don't put out press statements announcing small deals."

It's true the Ex-Im Bank rarely issues press releases announcing small loans or loan guarantees, although the bank has issued them over the past year to promote a handful of loans backing solar energy, a significant political and public policy priority for President Barack Obama. In the most recent such announcement from November, Hochberg deployed the "win the future" theme from Obama's 2011 State of the Union address. "Solar companies in the United States know that if they can get into this growing market, they have a bright future ahead of them. Ex-Im Bank stands ready to help our exporters win that future," Hochberg said.

The loan guarantee that benefits Delta will help a customer pay for airline mechanical maintenance, with no green energy perks.

"Our mission is jobs, to support American export-related jobs," said Phil Cogan, a spokesman for the Ex-Im Bank. "We do that by providing financing, often to foreign buyers of U.S. goods and services. When the buyers meet our standards and our rules ... then transactions get approved. This transaction, like all other transactions for which we provide financing, will either create new jobs or support existing ones. And that's our mission."

All major industrial countries -- and roughly 80 countries in total -- have institutions like the Ex-Im Bank aimed at promoting their domestic exporters. Unilaterally eliminating the U.S. version would put U.S. exporters at a disadvantage. The bank's charter expires at the end of May, at which point its ability to provide loan guarantees will be severely limited.

Congressional opponents, led by Sen. Jim DeMint (R-S.C.) and the conservative Club for Growth, succeeded in blocking a reauthorization attempt during the debate over the transportation bill. Both Tea Partiers and many progressives, including Sen. Bernie Sanders (I-Vt.), have blasted the bank for providing corporate welfare. Although the bank is supposed to enable the export of small-business products that would otherwise be difficult to sell abroad, more than two-thirds of the loans it guaranteed in 2007 and 2008 benefited Boeing, according to a 2009 study by the Pew Charitable Trusts.

The Ex-Im Bank reauthorization is also at the center of a Republican Party power struggle between DeMint and less conservative members of the party. After playing an active role in the GOP primary process in 2010, DeMint comforted his colleagues by vowing not to spend money challenging incumbent Republicans in 2012. But in March, he disclosed giving $500,000 to the Super PAC operated by the Club for Growth, a hardline economic policy outfit that routinely challenges insufficiently conservative Republicans. And one of the club's top takedown targets in 2012 is the Ex-Im Bank, which it has opposed for years. Although DeMint voted to reauthorize the bank in 2006, he is also now a staunch opponent of its existence.

"Members of Congress in both parties like to bloviate about being against corporate welfare, but they won't end the taxpayer-backed Export-Import Bank whose sole purpose is to provide subsidies to massive and politically connected companies like Enron, Halliburton or, more recently, Boeing," said Club for Growth spokesman Barney Keller.

The Ex-Im Bank's latest muscle-flexing follows an unusually aggressive move by Senate Majority Leader Harry Reid (D-Nev.) over such a relatively low-profile issue. On March 30, Reid sent a letter mocking Republican senators who voted against the reauthorization, but are now worried the bank's demise would harm exporters in their home states.

"I am surprised by your claim of support for the Bank, given that just last week you led a coordinated and successful effort to defeat its reauthorization," Reid wrote in response to a letter from Senate Minority Leader Mitch McConnell (R-Ky.). "If you had not opposed reauthorizing the Export-Import Bank, led a Republican filibuster and insisted on a 60-vote threshold, it would have already passed the Senate with bipartisan support on a vote of 55-44."

Reid went on to tweak McConnell for his vote. "I am sorry to learn that you regret your vote, and I sincerely wish that when the opportunity presented itself, you had voted according to the dictates of your conscience," Reid wrote.

The problem going forward, he noted, is that a standalone bill would fail in the House. Citing "tea party opposition," Reid wrote that "it has come to my attention that Members of the House who are ideologically opposed to the Export-Import Bank's very existence intend to oppose its reauthorization and severely curtail its operations, making the prospect of a stand-alone reauthorization of the Bank passing the House remote."

That means the reauthorization will have to be attached to some other must-pass legislation. Options are dwindling, though Congress may eventually pass a highway bill to which the Ex-Im measure could be attached.

In a statement provided to HuffPost, Delta downplayed the significance of the loan and tweaked the bank for making a statement about it.

"Delta Air Lines has provided engine maintenance for the Brazilian carrier GOL since being awarded a contract in 2010," said Delta spokesman Paul Skrbec. "Delta was not party to the loan transaction recently announced by the Export Import Bank for the Brazilian carrier GOL, but appreciate the Bank bringing it to our attention."

While the language is technically accurate, the statement is misleading. Delta is not, to be sure, a "party to the loan transaction"; that transaction is between a Brazilian company and the Ex-Im Bank. The bank, however, only authorizes such loans to benefit specific American exporters who are part of the application process. According to bank procedures, as the domestic exporter benefiting from the transaction, Delta would have been required to play a role in the application process, which began in October.

Skrbec said that Delta's "specific concerns with the Export-Import Bank remain the Bank's loan guarantees to foreign carriers for the purchase of wide body international aircraft, which gives foreign carriers a significant advantage when competing against U.S. airlines on international routes -- [and] has cost thousands of U.S. airline jobs."

Such concerns are not driving the rest of the U.S. airline industry into the lobbying battle. A spokesman for Airlines for America said that the industry trade group was not taking a position in the Ex-Im fight.

Delta's opponents on the Ex-Im Bank are relishing the position the airline is in. "Delta's version of conservatism is 'Do as I say, not as I do,'" clucked one lobbyist working against Delta on the issue.

Other Ex-Im opponents have also been caught with their hand in the institution's cookie jar. The head of the Club for Growth, Chris Chocola, called the bank "a prime example of corporate welfare," but has taken a less active role in lobbying against reauthorization, according to people involved in the fight, since it was revealed that his former company, CTB, had benefited from Ex-Im financing.

The Club for Growth emphasizes that it has consistently opposed the Ex-Im Bank's existence years before Chocola's appointment as president of the organization in 2009.

UPDATE:The Club for Growth disputes the characterization that Chocola's lobbying efforts have been less active since it was reported that his old company profited from Ex-Im loans, and notes that Chocola has written an op-ed scheduled to run on Sunday.

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