House Democrats are poised to challenge a deal negotiated by Rep. Maxine Waters that would impose new restrictions on the Export-Import Bank, the first show of resistance among members of the Financial Services Committee since she became chairwoman in January.
The new legislation that the California Democrat drafted with the finance panel's top Republican, Rep. Patrick McHenry (R-N.C.), would renew the agency's operations for seven years and expand its capacity to offer loan guarantees to foreign buyers of U.S. exports. Without action, the bank's charter would expire at the end of September.
But the proposal unveiled Tuesday night, which will be up for a committee vote as soon as next week, imposes limitations on the agency that are rattling some centrist Democrats. That includes disclosure requirements for large manufacturers like Boeing that benefit the most from Ex-Im's financial guarantees, as well as restrictions on their deals in China.
"Its premise seems to be basically hostile," said Rep. Denny Heck (D-Wash.), one of the bank's fiercest advocates whose state has about 70,000 Boeing employees.
The clash over the bill is shaping up to be a major test for Waters, who as committee chairwoman has pledged to work with her GOP counterpart to pass legislation to maintain the Export-Import Bank, federal flood insurance and terrorism insurance.
The bill is bringing to the surface simmering frustrations among fellow Democrats who have complained that she's at times leaving them in the dark about the direction of the committee and sacrificing their priorities as she takes the lead in striking compromises with the GOP.
By seeking deals with Republicans, Waters is trying to break down ideological barriers that prevented the committee from enacting major legislation under her conservative Republican predecessor, Jeb Hensarling.
As of Thursday, it was unclear how many Democrats would follow Waters' lead on her latest piece of legislation. One committee Democrat told POLITICO that "opposition is building." Another said, "I can't go against Boeing."
"I'm a supporter of Ex-Im reauthorization," Rep. Ben McAdams (D-Utah) said. "I do have some concerns with the proposal as it stands right now."
Heck, who has emerged as the most vocal critic of the bill, said he raised concerns directly with Waters, adding that she showed a willingness to consider members' issues.
Among his concerns is that the increase in the Ex-Im financing cap wouldn't be enough to keep pace with the economy and competition. The overall plan, he said, "is clearly anti-Boeing."
"We negotiated down to those who are opponents of the bank, as opposed to negotiating up with our allies across the aisle who are supportive of the bank," Heck said.
To be sure, the bill would provide long-term certainty to a beleaguered agency. The bank is just now returning to normal operation after being hobbled from years of attacks by conservative lawmakers, who argue that it engages in crony capitalism by giving an advantage to giant manufacturers and leaves taxpayers at risk, even though it has sent billions in profits to the Treasury.
Waters' predecessor as chairman, Hensarling, led efforts that forced the bank's charter to lapse for several months in 2015. Republican senators then refused to confirm appointees to its board until last month. In the interim, the board lacked a quorum necessary to approve transactions larger than $10 million — a blow to large manufacturers.
Now, the Trump administration is pushing to revitalize the bank as a tool to compete with countries such as China that have their own export-finance agencies.
With an eye toward neutralizing opponents that are still actively fighting the agency in Congress, a person with knowledge of the agreement said Waters wanted to reach a compromise with McHenry to increase the odds that the bank's skeptics would let the bill move, particularly in the Senate, where its Republican adversaries have a stronger hand to halt legislation.
"This took an enormous amount of compromise on both sides to get this far along," McHenry said.
Among the restrictions sought by McHenry were the bill's limits on transactions involving China's state-owned enterprises — a must-have for his support, sources said. In addition, the bill would create another hurdle for large manufacturers by requiring the bank to report to Congress on their diversity and small-business outreach efforts — a measure that one source said was a compromise from stricter limits floated by Republicans.
Boeing's recent safety lapses were a factor in in the negotiations, following fatal crashes of its 737 Max jets in Indonesia and Ethiopia.
Waters sought a provision that would restrict an aircraft's ability to receive Ex-Im support if it had a poor safety record because of concerns that financing deadly products was a risk to the bank. The bill would prohibit transactions for planes that the federal government has grounded.
Priorities for Waters reflected in the bill include the seven-year reauthorization and a gradual increase of the bank's $135 billion portfolio cap to $175 billion. The legislation also includes measures that would direct the bank to expand its support for small businesses, renewable energy and minority- and women-owned businesses. It includes a section that would create a temporary board manned by top administration officials if senators once again decline to confirm a sufficient slate of leaders.
Still, one senior Democratic aide familiar with discussions around the bill doubted the latest draft had the backing of the majority of Waters' caucus.
"If it does, it's very slim and will depend on Republican votes to get through committee," the aide said. "Members whose districts have businesses that use the bank weren't included in the process. Some of the provisions could threaten good paying manufacturing jobs in their districts."
Waters defenders countered that the committee has kept members and staff informed of the panel's agenda, calendar and legislative priorities through meetings, calls, caucuses and updates.
The deal appears to be enough to satisfy champions of the bank on the Republican side of the committee.
One of the committee's lead Export-Import Bank supporters, Rep. Steve Stivers (R-Ohio), said Waters "cut a pretty good deal." Stivers said he planned to support the bill because he believed it would get a strong bipartisan vote and be able to move quickly. He said he expected no more than five Republicans to oppose it in committee and that some who voted against the bank in the past would support the bill this time.
Stivers said momentum and speed were important because the bill will probably need to be attached to another legislative vehicle like the National Defense Authorization Act. That's because the Senate is unlikely to devote floor time to standalone Export-Import Bank legislation.
"The alternative to this proposal, I believe, is a lapse," Stivers said.
The business community is uneasy with the bill but is still mulling next steps. Going into this year's debate on the future of the bank, industry representatives expected that they would have to swallow some new limitations for a long-term renewal to move through the Senate. In the legislation they saw this week, restrictions on sales to China are a top concern.
Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers, said the group was reviewing the details but was pleased to see bipartisan agreement on a multiyear reauthorization.
"Manufacturers will continue working to ensure a robust Ex-Im Bank that strengthens manufacturers' ability to compete in and with China and other countries that are aggressively using their export financing agencies to the detriment of workers in the United States," she said.
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