Some of the country's most powerful corporations and banks, led by Boeing Corp., Westinghouse, General Electric and Cititbank, have suddenly found themselves among the intended victims of President Reagan's budget cutting, and are joining to fight back.
The companies are the prime beneficiaries of the lending program run by the Export-Import Bank, a government agency which uses low interest rates to help and entice foreign customers to buy American-made jet aircraft, turbines, nuclear reactors and similar costly items.
To its customers, the bank is an essential cog in the campaign to increase U.S. export sales, against competitors from Europe and Japan who are getting low-rate financing from their governments. But critics say it is an open wallet giving subsidies that in many cases are not needed.
The spending reductions planned by the Office of Management and Budget apparently would halt the Ex-Im Bank in its tracks. According to budget director David A. Stockman's "black book" of spending cuts, the bank's loan authority for the current fiscal year would be reduced by more than $1.1 billion, to $4.9 billion, while the cuts for fiscal 1982 would be deeper, from $5 billion to $3.3 billion.
These proposed cuts would land doubly hard because Ex-Im has been making heavy advance promises of financial support.
"They've not only lent out last year's money, they've committed next year's money too," said one administration official close to the bank. The advance committments aren't binding, the source said, but for Ex-Im to renege would be considered a breach of faith.
It is precisely this open-handedness that has gotten the bank in deep trouble with the Reagan administration budget cutters.
Since 1977, the bank's export financing has grown by nearly 600 percent, and has been channeled increasingly to the big U.S. aircraft and power generating equipment manufacturers. Its principal beneficiaries are Boeing, Westinghouse, McDonnell Douglas, Combustion Engineering and Lockheed.
The bank's assistance come primarily in two forms. It makes direct loans at reduced interest rates, and guarantees repayment of private financing. In a typical agreement, the bank would make a direct loan covering 60 percent of the sales prices and provide a guarantee covering the remaining private financing.
The bank's loans recently have carried interest charges of 8 1/2 to 9 1/2 percent, making them very desirable.In turn, the bank borrows loan funds from the Treasury at a cost of 10 to 12 percent and the difference has to be made up from the Ex-Im Bank's budget, or from cash subsidies from the U.S. treasury.
The bank's defenders say this low-cost financing is essential to meet the competition of foreign manufacturers, who are lavishly backed by their governments.
The French-German group selling the wide-bodied Airbus Industrie jetliner and the French nuclear power consortium Framatom both are aided by low-interest financing. The United States must meet this, in most cases, or lose the business, said Bengt Kjellgren, the head of a committee of exporters organized by the National Foreign Trade Council in New York City to defend the Ex-Im bank.
The Ex-Im's critics contend, however, that the bank, urged on by the Carter administration, also has made loans that were not necessary to clinch sales for U.S. producers.
One notable embarrassment was a $201 million loan at 8 percent approved last year by Ex-Im bank's president, John L. Moore, to an airline half-owned by Australian financhier and publisher Rupert Murdoch.
The loan coincided with Murdoch's decision to endorse President Carter's renomination on the editorial page of The New York Post, which he owns, just before Carter's showdown against Sen. Edward M. Kennedy (D-Mass.) in the New York Democratic primary.
"The Ex-Im Bank should be a lender of last resort," said one government expert. "It hasn't been."
Stockman and Deputy Treasury Secretary R.T. McNamar won an intra-Cabinet debate over Ex-Im funding two weeks ago, arguing that Ex-Im has added significantly to the federal government's demands for credit, which administration policymakers are determined to reduce.
It is a particular dilemma for business, which has long called for just the budget-cutting strategy that Reagan is now ready to impose.
"It's awfully hard for the business community to be against that," Kjellgren said. "Everybody's going to say, 'cut the other fellow, not me.' But I really think we have a better case."