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October 26, 2014

McCarthy Rewards Insurgents in First Big About-Face

leadership009 061914 445x296 McCarthy Rewards Insurgents in First Big About Face

McCarthy changed his mind on Ex-Im Bank reauthorization. (Tom Williams/CQ Roll Call)

It took less than 72 hours after his election for Kevin McCarthy to reveal an unambiguous and extremely consequential way he’ll be different from his predecessor.

In what’s looking like the year’s hottest dispute between small-government crowd and the business community, the incoming House majority leader took a surprising side on Sunday. The Californian is joining the hard core fiscal conservatives who want to close the Export-Import Bank, which for eight decades has been one of the main tools at the government’s disposal for helping American businesses.

The agency steps in when private credit is scarce or expensive. Using money borrowed from the Treasury, it either makes or guarantees loans so U.S. companies can expand their exports of aircraft, farm machinery, power generation equipment, telecommunications hardware and even gourmet food. The right reviles this as a prime example of corporate welfare and derides the Ex-Im Bank as an agent of crony capitalism.

During his time in the Republican leadership Eric Cantor was an anchor for the opposite side, which argues that such credit financing is a no-risk way to leverage taxpayer dollars in the interest of creating jobs and sustaining the nation’s manufacturing base. The Virginian was more responsible than anyone else for steering the Ex-Im Bank to temporary safety two years ago, when the waves of conservative criticism first got big enough to pose a potential threat. He was so well known as a defender of the bank that stock in one of its biggest customers, Boeing, plunged 3 percent the day after Cantor lost his primary, wiping away all its gains so far in the year.

The anxiety was fueled in part by anticipation that the Ex-Im Bank’s most influential House critic, Financial Services Chairman Jeb Hensarling of Texas, would run for majority leader. When he demurred, allowing the majority whip to secure his promotion with ease, the big companies relaxed a bit — because McCarthy had been on Cantor’s side in 2012 in supporting the current reauthorization of the agency.

But all elections have consequences, and two of them were on display when McCarthy revealed his 180-degree change of position on “Fox News Sunday.” The winner’s pivotal bloc of supporters will need to feel rewarded sooner than later, so it was only a matter of time before the new floor leader would need to stake out a strong position on legislation that’s a top priority of his allies in the tea party faction.

Not to mention an important rival who took a pass this time around could change his mind as soon as November, when leadership elections for the 114th Congress will be held. So it made sense for McCarthy to act quickly to shrink some of the ideological daylight between himself and Hensarling.Asked if he would like the Ex-Im Bank’s charter to expire, McCarthy was quick to say yes, “because it’s something that the private sector can be able to do.”

He volunteered that, “One of the biggest problems with government is they go and take hard-earned money so others do things the private sector can do. That’s what the Ex-Im Bank does.”

The pronouncement from the House’s new No. 2 sounds like a potential death sentence for the agency — or foreshadowing of a period in limbo, at a minimum. In the absence of congressional action, the bank would not be allowed to back any new financing after the end of September and would have to begin winding down its loan portfolio.

The new majority whip, Steve Scalise of Louisiana, was among the 93 GOP members who voted against reauthorization last time. So did Paul D. Ryan of Wisconsin, who is becoming a main voice for the party on trade policy as the presumptive next chairman of the Ways and Means committee. Among the 19 Senate Republicans who voted in 2012 against keeping the bank going: Minority Leader Mitch McConnell.

Speaker John A. Boehner has signaled he will not seek to impose an outcome either way, although if he were to bend the informal “majority of the majority” rule a reauthorization bill would very likely pass with the votes of almost all Democrats and several dozen Republicans with would-be loan recipients in their districts. Solid bipartisan support for the bank also still seems certain in the Senate. And on Monday the new White House press secretary, Josh Earnest, said that the bank’s a good deal because it “helps American companies create and support jobs here at home at no cost to taxpayers.”

It’s impossible to imagine the U.S. Chamber of Commerce, Business Roundtable or National Association of Manufacturers will permit the bank to get shuttered without an intense and potentially expensive fight. (The contours of such a campaign could become clear as soon as Wednesday at a hearing on the agency’s future that’s been in the works at Hensarling’s House Financial Services Committee for a couple of weeks.)

Saving the Ex-Im is not the only reason those K Street powerhouses will go all-in on this fight. The outcome is also a proxy for whether big business is going to see its collective clout diminished under the new House power structure. It’s an urgent matter for corporate interests because also hanging in the balance this election year are several other priorities. Principal among them is a renewal of the federal backstop for property and casualty insurers after significant losses because of terrorism, which conservatives also label corporate welfare, and the belated renewal of several dozen tax breaks for businesses.

With Wall Street favorite Cantor now in exile, the leadership is going to be more sensitive to the populist, anti-corporate sentiments that have been building in the House Republican Conference since the tea party takeover election of 2010. The only questions are how much more sensitive, and for how much longer.

 

  • Michael Fjetland

    The GOP really knows how to KILL jobs. This move will wipe out at least 200,000 jobs. Ex Im bank actually makes a profit! It helps keep manufacturing jobs here as we sell our stuff globally. More stupid from the tea morons.
    I wrote about winning the globl economy in “Agenda for American Greatness” at this link…www.bettertimesaheadAprilFool.com
    its based on reality, unlike DC.

    • the viceroy’s gin

      Let Boeing move to South Carolina, like they wanted, before Obama’s Labor Department blocked them. That will generate them thet necessary cash they need to be profitable and finance that work the ExIm Bank is financing today. And the taxpayer isn’t out anything.

      • stevenharnack

        The tax payer isn’t out anything….except the taxes that some decent wages make possible, a well trained and educated work force, and a better made, safer product.

        • the viceroy’s gin

          The taxes are being paid in South Carolina, son. So the taxpayers are out nothing, as mentioned.

          The workforce in South Carolina is well trained and educated, son… that’s why Boeing is moving there.

          The product is just as sell made and safe in South Carolina, son … again, that’s why Boeing is moving there.

          What’s different is that Obama and his political allies are illegitimately blocking that move. It’s cronyism. It’s despicable.

  • ShadrachSmith

    Re: “close the Export-Import Bank,…”

    Reducing the amount of money the government controls always reduces the dollar value of government corruption. We are at a point in our history where reducing government corruption should be a shared goal.

    Government control of commerce isn’t the solution,
    Too much government control of commerce is the problem.

    • stevenharnack

      And the other side of your mouth blames the government for lack of jobs. GOP schizophrenia in all its glory.

  • PILover

    Not to be nitpicky, but the sentence “Not to mention an important rival who took a pass this time around could change his mind as soon as November, when leadership elections for the 115th Congress will be held,” is incorrect. It will be for the 114th Congress.

  • Bob Viering

    What this really tells us is that McCarthy is spineless and will bend to the will of those that elevated him. It’s all about staying in power and pandering to the far right since they control Republican politics today. It’s not going to take long for the Chamber of Commerce and other business groups to conclude that maybe they should start supporting some Democrats instead of blindly supporting Republican policies that in the end are damaging America.

    • the viceroy’s gin

      So the Left supports crony capitalism, is that it?

      • Bob Viering

        referring to the Ex-Im Bank as “crony capitalism” shows you have no imagination other than parroting right wing media. What I support is an institution that helps sell American goods overseas and therefore supports American workers and American shareholders. Don’t be naive and think that other countries aren’t doing the same thing. The trade deficit is an issue and this bank helps reduce it. So, if supporting American companies, American workers and American shareholders along with the myriad of small businesses that supply these companies is “crony capitalism” then I am proud to plead guilty.

        • the viceroy’s gin

          Yes, it’s crony capitalism. It sends government favor to select cronies.

          It doesn’t matter what other countries do, son. If they want to go bankrupt, let them.

          But it’s instructive to know that you of the Left support crony capitalism. It means you’re corrupt and hypocritical both.

  • dav

    Issa tough row to hoe mac !

  • not a liberal

    the double standard – it’s disgusting. The Export-Import needs to go. Open the playing field for all private sector business. It is funny to see the Progressives crying out to keep in place one of their corruption devices. Kevin may prove to be a true commonsense person after all.

  • Johngobacktoschool

    Nice try by republicans at economic suicide. While Chinese companies get all the support they want to trounce american firms. Hope Chinese enter the IT sector too soon enough to send microsoft, oracle etc packing and closing down.

  • Johngobacktoschool

    The country that doesn’t support its companies in international arena soons becomes redudant. Americans should n’t worry about immigrants, as ten years from now, they themselves would be searching for avenues to move legally or illegally.

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