The Republican Party is in the midst of some impressive political jiu-jitsu. Not only are they conducting their own post-election autopsy, but simultaneously they have convinced well-funded outside groups to spend money defending their unilateral proposal to raise taxes.
Some right-leaning pundits are providing air cover, trying to frame the offer as a strategic retreat that allows the GOP to live again to fight another day. The desire to hide from the left’s class warfare rhetoric was predictable and misguided. Caving on taxes will not inoculate the Party from Alinksy-style demagoguery; it will only serve as justification for further attacks.
What the Republican Party should do – and could have done earlier this year – is take the Washington establishment’s “big” problem head on. In 2008, then-Senator Barack Obama called the U.S. Export-Import Bank “little more than a fund for corporate welfare.” He was right, and Republicans should have called him out for his hypocrisy. Instead, Republicans in the House and the Senate held hands with their Democrat colleagues to extend and expand the program.
It was an embarrassment.
Fortunately, Ex-Im Bank is set to expire in 2014, giving Republicans yet another opportunity to prove to the American people that they are not a political party turned corporate pass through.
To be clear, supporters of the taxpayer-backed bank, which functions like a Fannie Mae for exporters, avoid characterizing it as big business corporate welfare. When the Export-Import Bank opened a new office in Seattle, the local NPR affiliate ran a story on the Bank’s support for a local coffee shop owner who wanted to “start a business in his native country of Ethiopia to sell milk.” That’s right, under the guise of helping small business and increasing exports, taxpayers are essentially guaranteeing a startup milk distribution business in Ethiopia.
Of course, the Bank does much more than this. Recently, the Bank announced it “will guarantee up to 90 percent of $450 million in liquidity offered by a JPMorgan Chase loan to suppliers of Caterpillar Inc.” To state the obvious, these are not small companies; in fact, they have market capitalizations of $162 billion and $58 billion, respectively. Yet, taxpayers are on the hook, potentially, for $405 million.
Amusingly, earlier this year, Senator Dick Durbin (D-IL) mentioned small businesses four times in his floor speech, but concluded with a plea for big businesses, including “Caterpillar in my State.”
On the Ex-Im Bank, the old adage that good policy is good politics rings true. Not only could Republicans eliminate the Fannie Mae for exporters, but they could also paint Democrats as the party of cronyism and big business.
A quick glance at the Bank’s website reveals just how easy it is to make a case against this taxpayer-backed scheme. United Solar Systems, Evergreen Soar, Southwest Windpower, Abound Solar, Amonix….the list of green energy companies – many of which has failed – goes on and on.
The opportunities also exist beyond schemes like the Export-Import Bank.
Just this past week, Senate Republicans demonstrated some principle, killing a two-year extension of the Transaction Account Guarantee (TAG) program, which was created in the midst of the 2008 financial crisis. Heritage’s David John called it “bad policy.”
Over at the Examiner, however, Tim Carney offered a note of caution, explaining, the “GOP vote against TAG should be considered mostly a protest against Reid’s undemocratic ways.” He compared it to a “replay of last year’s fight over the Export-Import Bank” during which “Senate Republicans lined up against reauthorizing that export-subsidy agency at first, in protest of Reid’s heavy-handed management of the Senate.” But, as we now know, most Senate Republicans voted to reauthorize the Bank.
Unfortunately, Carney may be on to something. Just 20 Senate Republicans voted against TAG on the initial procedural motion. It was only after Harry Reid shut down the amendment process before it began did Republicans rally to kill the bill.
Flip-flopping would be a mistake, though.
Right now, Republicans should be shouting from every mountaintop that Democrats are the party of big business. Earlier this year, Mark Calabria explained most of the TAG-eligible deposits are “concentrated in the largest banks. The 19 largest banks, each with assets in excess of $100 billion, hold two-thirds of TAG deposits, more than the remaining 7,288 U.S. banks combined.”
Only one Senate Democrat voted to kill the program. The Obama administration supported it, despite testimony from their own Treasury Secretary that it wasn’t really needed. Which party is the party of big business? The GOP would be wise to seize this opportunity.