CQ TODAY ONLINE NEWS
May 9, 2012 – 12:23 a.m.
Business Groups Win Out in Ex-Im Debate
By Joseph J. Schatz, CQ Staff
Nearly two months ago, the Republican Study Committee, the most conservative wing of an already-conservative House caucus, hosted a closed-door debate over the fate of the Export-Import Bank.
As more than 100 Republican staff members watched, representatives of the Club for Growth and the Cato Institute, two groups that call the bank a form of corporate welfare, squared off against officials from the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM). The business officials defended the trade financing agency, a key element of the Obama administration’s export strategy, whose lending is often questioned but rarely actually challenged by congressional authorizers.
Today, the business side clearly has won the argument, as a three-year renewal of the bank’s charter — along with a few changes aimed at increasing its transparency — heads to the House floor Wednesday with bipartisan backing. If the House passes the bill (
But it has been a far tougher road than expected.
Instead of a routine reauthorization, the usually obscure export credit financing agency has provided an unlikely test of the House GOP leadership’s ability to keep the majority caucus unified in the face of ideological division. That’s because the bank’s activities fall at the fault lines between the party’s traditionalist wing and the staunchly conservative force that used tea party support to help the GOP reclaim a House majority in 2010.
The divide between the business community and the “free market” team has complicated the Republican agenda.
“I think we were a little bit taken aback by the over-the-board, over-the-top arguments being made” by bank opponents, said Christopher Wenk, senior director for international policy at the U.S. Chamber of Commerce. “We did not expect them to come out swinging like they did. We were forced to respond in kind.”
And although the bank’s future now seems secure, some Republicans will face an awkward choice this week when they’re presented with “key vote” warnings from both the business community and opponents such as the Club for Growth.
The vote comes as some in the GOP are still engaged in primary fights where conservative groups are pressuring from the right. But it also comes as the Chamber, whose political arm spent $33 million during the 2010 campaign, mostly in support of Republican candidates, gears up for the 2012 general election.
The rift was evident during the debt ceiling debate last summer, when business groups were appalled at the prospect of a possible default on government debt. But it’s been more evident on the margins, with issues such as highway funding and temporary tariff suspensions, where the stakes are lower and some lawmakers are more willing to take a stand.
Not a New Debate
The Ex-Im Bank, which provides direct loans, credit financing and loan guarantees to back the purchase of U.S. goods and services overseas, has taken on an importance to business allies and conservative groups far disproportionate to its influence on the economy or the federal budget. The bank’s medium- and long-term financing programs equal 0.6 percent of total U.S. exports, according to a recent Government Accountability Office report. And although critics argue that it distorts the market, the bank’s lending activities actually bring money into the Treasury.
House Majority Leader
Business Groups Win Out in Ex-Im Debate
Cantor on Tuesday said he had tried to take a “distorted” trade policy and fix it, while ensuring that U.S.-based manufacturers did not find themselves at a competitive disadvantage internationally. “It is the reality that we don’t want to unilaterally disarm American businesses,” he said.
The final product, which would gradually raise the bank’s lending cap to $140 billion, from $100 billion, clearly tilted toward the business community because there was little chance of winning over the most ardent opponents with anything short of a measure terminating the bank’s charter.
The bank’s largesse to big companies has faced criticism from the far left and the far right before: In 2002, 50 Republicans and 26 Democrats in the House opposed a reauthorization. But its existence rarely faces a threat.
This time around, the Club for Growth, along with Heritage Action for America and other outside conservative groups that have been pushing the caucus to the right, has been aggressively targeting the bank. In a barrage of press releases, editorials and key vote notifications, the group has tried to link its lending to all sorts of nefarious activities, from bankrupt solar panel manufacturer Solyndra to Mexican drug cartels.
Such arguments pushed the Chamber and NAM to step up their actions. They brought business owners to Washington to warn that orders were being canceled because of uncertainty over Ex-Im’s future, and blanketed the freshman class with visits and examples of how the bank supports local businesses seeking export markets.
With members of the Republican Study Committee split on the issue — and Senate Democrats doing their best to exploit the split — RSC members
Luetkemeyer says he met with about 10 members and made the case, noting House leaders “were happy that we got engaged.”
‘Window Dressing’ Compromise
The fight has included a string of briefings and debates like the one in mid-March, which featured John Murphy, the Chamber’s vice president for international policy, and Frank Vargo, NAM’s vice president for international economic affairs, debating the Club for Growth’s vice president for government affairs, Andy Roth, and Sallie James, a policy analyst at Cato.
Vargo argued most Ex-Im transactions benefit small businesses, because even products by large companies such as Boeing Corp., the single largest beneficiary of Ex-Im’s support, include components from many smaller firms.
James said the bank, by definition, puts taxpayers’ money at risk, because it makes loans private banks are unwilling to make.
“It was kind of a bit odd,” she said, because on most issues, all the debaters “would be on the same side.”
And the final agreement doesn’t seem like much of a compromise to James. “It seems like all the compromise is on the window dressing stuff about transparency and business plans, which really doesn’t get to the heart of the problem,” she said.
Business Groups Win Out in Ex-Im Debate
The Club for Growth also opposes the deal but is likely to lose the battle as most Republicans get in line and Democrats claim a victory in a measure supported by the business community.
Philosophically, the group is “where the conference would like to be,” says Rep.