Late last month, William Schubert, the president of a small infrastructure export firm outside Houston, led a group of Texas business leaders to meet with Senator Ted Cruz’s chief of staff.
Their mission: To rid the firebrand Republican senator of his ardent desire to kill the federal Export-Import Bank, which they said would greatly harm the export-driven small businesses that Cruz of Texas often extols.
The result: failure.
Illustration: Mountain People
“At the end of the meeting, there were a lot of angry Texans there,” said Schubert, who identifies himself as a Tea Party Republican. “We didn’t come there to talk the talking points. We were there to talk the complexities of international trade.”
The Export-Import Bank guarantees loans to overseas customers of thousands of US companies. Without congressional reauthorization, it will cease to exist after June 30 — an 81-year-old institution felled by the passions of the Tea Party movement.
Conservatives hold the bank up as the essence of crony capitalism, a market-distorting favor factory for huge companies like Boeing and Caterpillar. Its death, they argue, would herald a new era of free-market governance.
In the past two weeks, the battle over whether to save it or let it die has begun in earnest.
For conservatives, frustrated by their failure to overturn the Affordable Care Act or stop US President Barack Obama’s immigration policies, killing the Export-Import Bank has taken on enormous importance. They do not have to overcome a presidential veto or beat a Democratic filibuster. They simply have to refuse to bring it to a vote. Republicans have no excuse, said Michael Needham, chief executive of Heritage Action for America, one of the groups demanding the bank’s demise.
“All Congress has to do is nothing, which they have proven themselves to be pretty good at,” he said.
The business leaders who are pleading for a reprieve, many of them Republicans, are in disbelief and are promising retribution.
“Crony capitalism, crony capitalism, that’s all they ever say, over and over again,” said Randy Barsalou, a Republican and an owner of BCH Trading Co, a small lumber exporter in Hot Springs, Arkansas.
Barsalou is pressing his state’s congressional delegation to support the bank.
“If my guys don’t get behind this, I can tell you I won’t be voting for them,” he said.
For Republican lawmakers, the calculation is that killing the bank is not likely to hurt them politically. Powerful business groups like the Chamber of Commerce and the National Association of Manufacturers might say they ardently support the Export-Import Bank, but other Republican positions on low taxation and light regulation will keep them from exacting a price on Republican lawmakers for the bank’s death.
That is one reason Republican presidential hopefuls like Jeb Bush, former Florida governor, who once supported the bank, and Wisconsin Governor Scott Walker have recently joined Cruz and senators Rand Paul and Marco Rubio in embracing its demise.
“It’s a top priority for the chamber, and we’ve made that very clear,” said Blair Holmes, a spokeswoman for the group. “But we are not a single-issue organization. Our ‘How They Voted’ scorecard is based on a cross section of congressional votes on issues important to the business community.”
Still, the chamber, the National Association of Manufacturers, the Aerospace Industries Association and 46 other business associations assembled the Exporters for Ex-Im Coalition. The coalition flew in more than 650 small-business leaders, suppliers and local chambers of commerce members for 400 meetings with representatives, senators, staff members and committee aides on Capitol Hill on Feb. 25.
On Jan. 28, Representative Stephen Fincher introduced legislation to reauthorize the bank for five years, gathering 57 Republican co-sponsors. Heritage Action responded last month with automated telephone calls in the districts of 31 of those Republicans, blasting them for supporting “a slush fund for corporate welfare.”
Business groups and the bank’s biggest beneficiaries, like Boeing, General Electric and Caterpillar, have hired lobbyists and consultants. Conservative groups like the Koch brothers’ Americans for Prosperity are rallying the Tea Party grassroots.
Starting this month, Americans for Prosperity (AFP) has committed to spending “well into the six-figure range” to kill the bank, said Levi Russell, a spokesperson for the group. That will go for television and digital advertising, phone banks, direct mail and activist visits to lawmakers’ Capitol Hill and district offices. The targets are 93 House Republicans who they see as willing to block action on the bank’s reauthorization, enough to commit a majority of the Republican majority to the bank’s demise.
“Before, there were two kinds of people: People who didn’t know it exists and people who love it because they use it,” Russell said of the bank. “This year, the education component is done. We’re now in position to ramp up the grassroots side. This is very important for us. You’re going to see AFP put significant resources into the fight.”
So will Club For Growth, a well-financed conservative political action committee, which vowed on March 4 to back any members of Congress who opposed the Ex-Im Bank if they were attacked by any establishment groups.
On the day of the pro-bank “fly-in,” Representative Jeb Hensarling, chairman of the House of Representatives Financial Services Committee, which has jurisdiction over the bank, wrote a letter to all Republican members proclaiming his opposition to its reauthorization and in effect telling them not to listen to the business leaders at their doors.
Less than 1 percent of 1 percent of small businesses benefit from Export-Import Bank, he wrote, while US taxpayers’ money goes “to help foreign corporations, including businesses that are owned by the governments of China, Russia, Saudi Arabia and the United Arab Emirates.”
“The best way to level the playing field for American exporters and manufacturers is not with taxpayer subsidies, guarantees and politically driven lending, but instead with more opportunity,” he wrote. “A pro-growth agenda — including fundamental tax reform, American energy independence, cutting burdensome red tape and reducing abusive lawsuits — will do more to help our exporters, manufacturers and small businesses than the Export-Import Bank ever could.”
The business leaders who use the bank say they are baffled at such vehemence. The bank operates on fees it charges its users and, so far, has made money for the government. More important, it has created jobs — many of them. The bank contends that through its export financing, it has helped maintain 1.2 million private sector jobs since 2009.
Acrow Corp of America makes the modular, prefabricated bridges that helped win World War II and now proliferate in developing nations. However, customers in countries like Cameroon and Zambia cannot readily get private bank loans to finance large infrastructure projects without backup. European and Chinese competitors have their own government-backed export credit agencies. Acrow, which is based in Parsippany, New Jersey, has the Export-Import Bank, said Paul Sullivan, the company’s director of international business development.
“We are already hearing from customers that our competitors are in their offices saying, ‘You cannot rely on an Acrow bridge deal because their financing mechanism is not likely to stay alive,’” Sullivan said.
He suggested that the death of the bank would cost 200 jobs, many at Acrow’s manufacturing plant in Pennsylvania.
“For us to pull another arrow out of our quiver, it’s irrational, it’s terrifying and it’s inappropriate when one considers the reality of the global marketplace today,” he said.
Barsalou uses the Export-Import Bank differently. To finance lumber exports, his company needs upfront cash that customers in Greece and Egypt will not provide, nor will his Wells Fargo Bank, without the Export-Import Bank’s guarantee.
“They say banks should do that,” he said, referring to opponents of the Export-Import Bank. “Well, banks don’t do that, and that’s the reality.”
To the bank’s opponents, such opinions are almost beside the point. Supporters might trot out small-business owners like Barsalou, but the bank’s big efforts are on behalf of big companies. It is, after all, derisively called the Bank of Boeing.
“I have no doubt Boeing, GE and Caterpillar will continue to thrive as great American companies if Ex-Im goes away,” Needham said.
Hensarling has taken to posting the “Egregious Ex-Im Bank Deal of the Day,” like one aiding mining projects in the Democratic Republic of Congo, which he said one human rights group had labeled the “rape capital of the world.”
Russell said: “Sometimes when you’re the beneficiary of something that’s helping your business, you personally, it’s hard to look at something objectively.”
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