The Sleeper Issue That Could Spark Another Government Shutdown

Nobody wants a recreation of the government shutdown from last fall, which resulted in about 1 million federal workers either getting furloughed or having their work hours and paychecks drastically curtailed. Small businesses also suffered, particularly federal contractors whose payments were put on hold. To put an even finer point on it: The shutdown shaved as much as 0.5 percent and $20 billion from the U.S.’s fourth quarter growth.

But a shutdown is exactly what may happen…again. The reason this time isn’t conservative outrage about funding Obamacare, but their anger over the existence of the Export-Import Bank.

Some members of Congress want to revoke the bank’s charter when it comes up for renewal at the end of September, when the President must submit a new budget to Congress. Political observers say the charter renewal will be attached to the new budget, which could trigger a new shutdown.

If you’re scratching your head wondering what the Ex-Im bank is, here’s a primer:

The Export-Import Bank, is an 80-year-old, federal agency that supports billions of dollars worth of loans and insurance to exporting small businesses. It also protects the credit commitments of buyers overseas. While the bank helps numerous large businesses as well as small ones, conservatives such as Jeb Hensarling (R., Texas), chairman of the House Financial Services Committee and a Tea Party Republican, say the agency wastes taxpayer money. His committee has oversight of the bank, and he’s been on something of a crusade to shut it down for some time, despite significant pushback, including from businesses in his home state. 

And he’s also enlisted the support of incoming House Majority Leader Kevin McCarthy, who recently expressed his deisre to shut down the agency. 

Just how the fate of the Ex-Im Bank entwines itself with a new budget was the subject of a recent Poltico story, which cited high-level sources from both parties who believe reauthorization of the bank will be tied to a new spending bill. That’s likely to provoke Republican ire.

One of the lead players in last year’s shutdown, the Conservative Action Project and its chairman, former Reagan-era Attorney General Edwin Meese, has urged using the Ex-Im bank as leverage. Last year, Meese also penned a memo for CAP in which he created a “blueprint” to close down the government if the Affordable Care Act was not stripped from the continuing resolution for the budget.

Here’s what Meese’s memo to conservatives in Congress has to say:

Corporate powerhouses and their allies in the Obama administration and Congress seek to reauthorize the Export-Import Bank of the United States before the Bank’s current authority expires at the end of September. The Export-Import Bank distorts the free market by providing loans to politically favored companies, at the expense of their competitors who receive no such help. It uses taxpayer dollars to subsidize goods and services that benefit foreign regimes, including Russia and China. To close the door to cronyism, the Export-Import Bank should not be reauthorized.

Shutting the bank down, observers say, will do extensive damage to the competitiveness of all U.S. companies, which compete globally against businesses that rely on similar supports in other countries. The Export-Import Bank of China, for example, is one of three government-chartered banks in China with similar trade objectives, which collectively support 11 times as much trade financing as the U.S.

Defenders of the agency, which include the White House and the traditionally conservative U.S. Chamber of Commerce, say it creates jobs and helps small businesses conduct their affairs in foreign markets. Closing the bank will harm U.S. exports, they say, which could in turn harm the economy as it struggles to recover.

Meanwhile, the specter of another government shutdown is making small businesses, like federal contractor LinTech Global, of Farmington Hills, Michigan a little wary. LinTech, an Inc. 500 company with 40 employees that provides software consulting and systems integration help to government agencies, saw approval of its contracts grind to a halt as the government shuttered last year.

“A shutdown creates a lot of uncertainty and could have an impact on my workforce,” says Michael Lin, chief executive and founder of the company.