President Obama and the Senate Democratic leadership these days are standing with the Chamber of Commerce to defend corporate welfare from a conservative attack.
The Senate, heeding White House guidance, was poised at press time to reauthorize the Export-Import Bank, a federal agency that subsidizes major banks and U.S. exporters like Boeing and General Electric, and also increase the amount of taxpayer money the bank can put at risk. This clearly undermines Obama's rhetoric about battling the special interests, not to mention his State of the Union pledge of "no more handouts," but it also gives Republicans a potential political opening.
Ex-Im, which issues taxpayer-backed loans and loan guarantees to banks and foreign buyers in order to help U.S. exporters, will expire at the end of May if Congress does not reauthorize it before then. The agency is already butting up against the $100 billion legal limit on outstanding financing. Ex-Im reauthorizations typically pass with healthy bipartisan support. Senate Majority Leader Harry Reid has decided to use a GOP jobs bill as a vehicle to reauthorize Ex-Im and increase its loan limit.
Ex-Im reauthorization typically passes easily. But after the Wall Street bailouts, Fannie Mae's bailout, Solyndra's collapse, and the rise of the Tea Party, many conservatives in Washington have grown hostile to corporate welfare. The free-enterprise Club for Growth, which was central in 2010 in helping conservatives and hurting moderate Republicans, blasted Ex-Im as "nothing more than a corporate welfare slush fund for companies with the best lobbyists."
Dubbing the agency "The Federal Bank of Boeing" because a majority of its financing most years goes to subsidize Boeing sales, the Club in January declared that it would "Key Vote" Ex-Im's reauthorization. Any congressman voting to preserve Ex-Im will get a ding on his Club for Growth scorecard. Ask former Republican lawmakers like Bob Bennett, Arlen Specter, and Bob Ingliss about getting on the Club's bad side. In addition to keeping moderates in line, the Club's scorecard acts as a roadmap for conservative lawmakers the group has supported.
The Club for Growth, as far as I can tell, was the first organization to make Ex-Im's abolition a do-or-die vote for lawmakers. The Heritage Foundation followed suit. Heritage Action, the advocacy arm of the prominent conservative think tank, this week announced it would also include Ex-Im reauthorization on its scorecard, urging abolition.
Leading the charge on Capitol Hill is Sen. Jim DeMint. DeMint, along with the Club for Growth, helped usher in a class of conservative freshmen senators including Mike Lee, Pat Toomey, Rand Paul, and Marco Rubio. All of these freshmen won their nominations in 2010 over establishment-anointed candidates, and thus all of them were opposed by the business lobby in their primaries. Many could vote to abolish the Bank.
This tension between freshman conservatives and the business lobby melded with the anti-bailout fervor of the Tea Party to create a cadre of congressional conservatives instinctively distrustful of Big Business, especially after the Chamber of Commerce backed the stimulus and after the drug, hospital, and doctor lobbies supported Obamacare.
Ideological purity and old grudges aren't the only reason some Republicans and conservative institutions are fighting corporate welfare. Some see a political advantage. One conservative trying to rally Republicans against the bill told me a fight over Ex-Im helps "paint President Obama as the one who wants to dole out corporate welfare to a few politically connected big companies."
Obama is indeed tight with Ex-Im's corporate clients. Boeing CEO Jim McNerney chairs Obama's exports council. General Electric, famously close to the Obama White House, is another leading recipient of Ex-Im subsidies. Siemens this year won a $638 million direct loan from Ex-Im. The company's VP for federal lobbying, David McIntosh, is an Obama administration alumnus and an Obama donor. (This donation is OK by the Obama campaign because McIntosh is not registered as a lobbyist.)
Republican congressional leaders could join with DeMint and his Tea Party band and decide to fight Ex-Im's reauthorization. More likely, as the Jobs bill goes to the House-Senate conference committee, the GOP leadership could try to lower Ex-Im's loan cap or wind down the agency over time.
Imagine an election-year debate over corporate welfare, with Obama standing shoulder-to-shoulder with Boeing, GE, the Chamber of Commerce and the big banks who like Ex-Im's loan guarantees that allow them to profit at taxpayer risk.
This is the GOP's opportunity to do well by doing good, and to gain politically by standing on principle.
Timothy P.Carney, The Examiner's senior political columnist, can be contacted at email@example.com. His column appears Monday and Thursday, and his stories and blog posts appear on washingtonexaminer.com.