Republican control of Congress has not slowed the influence of the DC insiders’ push for bigger government. Regrettably, Republicans are dancing with Democrats to the lobbying tune of big business special interest groups, calling for a tax increase and the renewal of the corrupt Export-Import Bank.
The Export-Import Bank increases sales of U.S. multinational corporations by providing government-backed loans, loan guarantees and other credit mechanisms to foreign based countries and companies.
The debate over the Ex-Im Bank exposes the sad truth that the alliance of elected officials from both political parties and big business remain a key barrier to limited government. The first troubling sign of collusion was when a handful of Senate Republicans started talking about backing an increase in the federal gasoline tax.
The betrayal of conservative principles over the gasoline tax was followed by 58 House Republicans that are supporting legislation to reauthorize the U.S. Export-Import Bank. The legislation (H.R. 597) introduced by Representative Stephen Lee Fincher (R-TN) would extend the bank for five years and would make changes to its operation that would reduce risk to taxpayers.
Democrats embracing taxes on gasoline is not surprising, but their backing of a big business ticket item such as the Ex-Im Bank illustrates liberal hypocrisy at its best. Populist and capitalism-bashing Senator Elizabeth Warren (D-MA), for instance, supports keeping taxpayer funding of the bank, as does President Obama.
Bipartisan support for corporate welfare and a corporatism state provides compelling evidence that in the end, it is money and power -not ideology- that drives the DC insider establishment.
Republican defection from conservative free market values is tied to the big business lobby. The U.S. Chamber of Commerce, as well as establishment lobbyist and former Congressman Steve LaTourette, are pushing to keep the Export-Import Bank funded.
In addition, companies that benefit from the bank’s role in backing loans of foreign countries and businesses are also lobbying hard to keep their taxpayer-supported bank in operation. Boeing, Caterpillar, Deere and General Electric are significant beneficiaries of the Ex-Im Bank, and their lobbying impact can be seen in Illinois where three of these companies are headquartered.
So far, seven of the eight Representatives in Illinois have signed on to the bill, and both Senators Democrat Dick Durban and Republican Mark Kirk want the bank in operation.
Heavy equipment maker Caterpillar, based in Peoria, IL, is particularly desperate to keep the bank supporting its business. The company’s stock price is on a downward trajectory - losing about 25 percent of its value since last summer.
Caterpillar’s business woes in the mining and energy sectors of the economy have famed short-seller Jim Chanos of Kynikos Associates targeting the company. A Wall Street Journal article last June described Caterpillar’s massive lobbying effort that included pushing the business lobby trade groups (including the National Manufacturing Association, the U.S Chamber of Commerce and the Business Roundtable) to keep the Ex-Im Bank functioning.
The company also mobilized thousands of its employees to contact their representatives, urging them to vote for the bank’s reauthorization.
A 2013 Ex-Im Bank press release illustrates why Caterpillar needs to keep corporatism at work. The bank touted a $694 million loan to finance an Australian mining company’s iron-ore project that was contingent on the company buying mining equipment from Caterpillar and locomotives from GE.
The press statement included quotes from Caterpillar and GE executives touted the economic benefits of the project. Missing from the statement was any mention that funding of the Australian mine was going to harm the U.S. iron-ore mining operations of Cliffs Natural Resources and domestic steel making.
Ohio-based Cliffs Natural Resources is concerned that an added supply of iron-ore from Australia will reduce demand from its mines in Minnesota and Michigan and also favor steel production in Asia over the U.S. Under this scenario, Caterpillar and Illinois win, while Cliffs Natural Resources, Minnesota and Michigan (as well as miners and steel workers) lose because the economic gods at the Ex-Im Bank are picking winners and losers.
Instead of drawing a clear policy distinction over corporatism and making the Democrats own the label of “the party of big business and special interests,” Republican backers of the Ex-Im Bank are blurring the lines between the parties and tarnishing the GOP’s brand.
House conservatives surrounded by Democrats, ideologically bankrupt Republicans and big business money, will likely be overwhelmed unless conservative activists voice strong opposition against the Ex-Im bank.
Tom Borelli, Ph.D. is a Senior Fellow with FreedomWorks and contributor with Conservative Review.