January 30, 2015

Export-Import Bank fuels fight between pro-business and free-enterprise GOP

The Republican Congressman on Wednesday introduced his first piece of legislation for the 114th Congress: a bill to renew the charter of the Export-Import Bank. On the same day, Boeing — easily the biggest beneficiary the agency’s taxpayer-backed financing — announced $1.47 billion in fourth-quarter profits, 19 percent higher than last year, along with a record backlog of airplane orders that stretches eight years.

Fincher got 57 co-sponsors for his Ex-Im bill, all of them Republicans.

In this way, Fincher neatly laid out the mindset of half of the Republican Party: The GOP is the pro-business party.

You see, all that talk of lower taxes, less regulation, and less federal spending could fit sensibly in a framework of free enterprise and limited government. But support for Ex-Im — a federal agency that uses taxpayer dollars to subsidize American exporters and their banks — doesn’t fit in such a free-enterprise frame. The mindset that can simultaneously advocate deregulation and export subsidies is the one that simply says, "listen to the business lobby."

The mindset of the other half of the GOP is different: Republicans are the party of free-enterprise, not because it serves the big and wealthy, but because it puts competitive pressure on the big guys, creates opportunity for little guys, and empowers consumers.

Financial Services Committee Jeb Hensarling, R-Texas, articulates that view often. His committee has control over Ex-Im, whose charter expires this summer. Hensarling sees Ex-Im's activity as cronyism and corporate welfare, and he would just as soon let it die.

Hensarling’s Senate counterpart, Banking Committee Chairman Richard Shelby, R-Ala. also has a free-market populist streak to him. Shelby opposed the 2008 Wall Street bailout, and he’s the only current GOP Senator who voted in 2010 to break up the big banks. But Shelby voted to renew Ex-Im’s charter in 2012. On the other hand, he also supported a failed measure by Sen. Pat Toomey to try to curb the agency and wind it down.

On Thursday, Shelby had mixed remarks on Ex-Im: “I have some real problems with the way the Export-Import Bank has been administered,” CQ Roll Call quoted Shelby. “It’s corporate welfare, and we’ll address that at the proper time.”

Senate Majority Leader Mitch McConnell voted against Ex-Im in 2012, and in recent months has reaffirmed his opposition to renewing the agency.

And so resistance to Ex-Im has momentum, even as Fincher and the industry lobby behind him ramp up their push for renewal. But the numbers, frankly, are grim for conservatives.

While the GOP is divided in half on the matter, the Democratic Party (you know, the one that inveighs against big business and corporate lobbyists) is nearly uniform in its support for Ex-Im. After all, the more government funds big business, the more government controls industry.

Add the two parties together, and you’ve got two-thirds to three-fourths of both chambers likely to support the agency. So, what can the free-enterprise half of the party hope for?

First: Republican leaders could use the party’s majority status to simply kill the agency. The free-market populists don’t need a floor vote to kill Ex-Im, they just need to prevent a vote to save it. Conservatives are hoping that Republicans can vote as a caucus whether or not to extend Ex-Im. If a majority of the GOP majority says no, then House Speaker could simply refuse to bring the bill to the floor.

This would involve GOP leadership going to war with their close allies on K Street and Wall Street — wishful thinking, perhaps.

The second option is to reform Ex-Im. Fincher’s bill demands all sorts of studies and reports from the agency, but these are empty gestures. The Heritage Foundation’s Diane Katz, after reading Fincher’s bill, laughs at the notion that there are any true reforms in there.

If Shelby wants a real reform, he’d have to start from scratch. He could begin by shrinking the agency dramatically — bringing the maximum amount of authorizations down from about $25 billion in 2014 to half that in 2015, with further cuts the following year.

Next, a reform bill would prohibit loans and guarantees to state-owned businesses and banks. The Export-Import Bank of China, for example, has received Ex-Im guarantees, as has Saudi Arabia's state-owned airline.

Finally, a real reform bill might limit the larger loan guarantees to those cases where a U.S. manufacturer faces competition from a foreign manufacturer receiving export subsidies, with real punishments if Ex-Im breaks this rule.

Majority Leader McConnell could make sure these rules are enforced, because he gets to name two new appointees to Ex-Im’s board. If he picks conservatives who are sticklers, he can make sure Ex-Im is truly chastened and its sails are truly trimmed.

Alternatively, the GOP could opt to be the party of business, as usual.


No comments:

Post a Comment