Conservatives in Washington scored a big victory last month when Congress failed to reauthorize the federal Export-Import Bank. The Depression-era institution is a prime target of Tea Party activists and conservative groups who complain that it’s benefitted mostly big corporations at the expense of free enterprise.
Gov. Chris Christie, a Republican who last month joined the 2016 GOP presidential race, recently added his name to the list of those opposing reauthorization.
But that position puts Christie at odds with advocates for New Jersey companies that rely on overseas trade. They say the decision by Congress to not extend the bank will have a big impact on their activities and the broader state economy by cutting off access to a key source of capital, one that is often used as a last resort.
And that economic impact comes at a time when the state’s economy is still struggling to recover from the last recession. The unemployment rate here is stuck at 6.5 percent, a full 1 percent above the national jobless rate and exactly where unemployment was a year ago in New Jersey despite Christie’s efforts to boost job growth with business tax cuts and lucrative corporate incentives.
Though often overlooked, the Export-Import Bank is an 81-year-old federal institution that backs loans to foreign customers of U.S. businesses that sell goods and services overseas. It financed $27.5 billion in exports last year, is self-sustaining thanks to fees and interest, and carries a default rate of just .175 percent.
But the bank has also drawn powerful opponents in recent year, including Texas Sen. Ted Cruz — a GOP presidential nomination rival of Christie’s — and conservative groups like Americans for Prosperity, which receives funding from wealthy industrialists Charles and David Koch.
They’ve attempted to make the bank a poster child for corporate welfare, pointing to loan guarantees that have benefitted major corporations like Boeing and General Electric.
Erica Klemens, state director for Americans for Prosperity in New Jersey, said her organization favors lowering corporate tax rates and less regulation.
“The Export-Import Bank is a perfect example of the cronyism that benefits a select few while putting others at a competitive disadvantage,” Klemens said. “While some proponents of the bank are arguing for bringing the bank back to life, they aren’t making a very good case.”
But the issue of overseas trade is a big one for New Jersey, which ranks 12th overall among U.S. states when it comes to exporting, with more than 1 million or roughly one in five New Jersey jobs tied to international trade, according to Trade Benefits America, a business-coalition based in Washington, D.C. that advocates for international trade.
And just yesterday, Lt. Gov. Kim Guadagno met in Trenton with Zhang Qiyue, the Chinese General Consul in New York, to highlight trade relations between New Jersey and China, including $1.43 billion in exports from New Jersey last year.
Nearly 30,000 New Jersey jobs are directly supported by the Export-Import Bank’s activities, according to Exporters for Ex-Im, a coalition that has been lobbying for the bank’s reauthorization. And several New Jersey businesses are among those that have recently posted testimonials on the coalition’s website.
“Our future is dictated by our success in the international arena,” said Paul Sullivan, director of international business development for Parsippany-based bridge designer Acrow Corporation. “A pullback now would severely impact our international business and jeopardize thousands of American jobs in the manufacturing sector.”
In all, more than 200 exporters and 150 small businesses in New Jersey have directly benefitted from the bank’s support over the last five years, exporting nearly $4 billion in goods, according to statistics compiled by the Obama administration, which has lobbied for reauthorization of the bank.
Michele Siekerka, president and chief executive officer of the New Jersey Business & Industry Association, said the inaction on the bank’s reauthorization could hurt the broader state economy.
“Now that the bank has lost its authorization we fear that our state’s companies may fall behind, which harms the state’s business climate through reduced sales, slower economic activity and lower job growth,” Siekerka said.
Christie stressed New Jersey’s foreign-trade relationships during recent overseas trips to Canada, Mexico and the United Kingdom — three of the state’s top trade partners — even as those missions also served to boost his profile nationally. His administration has also been a big supporter of corporate-tax incentives in New Jersey, with roughly $6 billion in potential tax breaks awarded since Christie took office in early 2010.
Last summer, when Christie was asked for his opinion on the future of the Export-Import Bank during a CNBC interview, he did not take a firm position.
“I’m the governor of New Jersey. I don’t spend a lot of time focusing on the Export-Import (Bank),” he said. “I’m not going to pretend to have opinions about things that will be ill-informed.”
But over the last year, as Christie has stepped up his focus on national politics and joined the 2016 GOP presidential contest, his position apparently changed.
Christie said during a June event in New Hampshire, the key early primary state where he’s spent considerable time in recent weeks, that he now opposes reauthorization of the Export-Import Bank.
“When you look at overall the priorities of our country, the way we should be expending our resources, how we should deal with the economy, I just don’t believe the Export-Import Bank is any longer a priority,” Christie said, according to a transcript of an exchange that was provided to NJ Spotlight by his presidential campaign.
“I think we should rely on the private markets to be able to do the things it needs to do, and I am not a supporter of the Export-Import Bank,” he said. “So, no, I would not urge Congress to renew it.”
Among New Jersey’s congressional delegation, members have been outspoken on both sides of the issue. U.S. Rep. Bill Pascrell (D-Passaic) has been among those advocating for the bank’s reauthorization, arguing it helps creates jobs in New Jersey by supporting state-based manufacturers. But U.S. Rep. Scott Garrett (R-Sussex) has lobbied against reauthorization, saying the bank’s mission runs counter to free-market forces and injects cronyism into American capitalism.
So far, Republicans who control Congress are holding firm to their decision to block reauthorization despite pressure from business groups to bring the bank back to life. And a message posted on the bank’s website yesterday made clear that it is no longer accepting applications or engaging in new business; the message read “AUTHORITY HAS LAPSED.”