Conservative Groups Unite Against Export-Import Bank

Powerful coalition fires warning shot at House Republicans divided over the agency favored by business.

Kevin McCarthy speaks at the National Republican Congressional Committee (NRCC) election watch party at the Washington Hyatt on Tuesday, November 2, 2010.
©2010 Richard A. Bloom
Tim Alberta
July 15, 2014, 8:43 a.m.

A power­ful co­ali­tion of con­ser­vat­ive ad­vocacy groups is tak­ing a united stand against the Ex­port-Im­port Bank, rais­ing the stakes in the de­bate over wheth­er to reau­thor­ize the agency that provides for­eign loan guar­an­tees aimed at boost­ing U.S. ex­ports.

The Con­ser­vat­ive Ac­tion Pro­ject, a co­ali­tion of right-wing groups led by former At­tor­ney Gen­er­al Ed­win Meese, has penned a memo ur­ging Re­pub­lic­ans in Con­gress to let the bank’s charter ex­pire at the end of Septem­ber. The memo, ob­tained by Na­tion­al Journ­al, is signed by the lead­ers of Amer­ica’s largest and best-fun­ded con­ser­vat­ive or­gan­iz­a­tions, in­clud­ing Her­it­age Ac­tion, the Club for Growth, Cit­izens United, and Freedom­Works.

“The Ex­port-Im­port Bank dis­torts the free mar­ket by provid­ing loans to polit­ic­ally favored com­pan­ies, at the ex­pense of their com­pet­it­ors who re­ceive no such help. It uses tax­pay­er dol­lars to sub­sid­ize goods and ser­vices that be­ne­fit for­eign re­gimes, in­clud­ing Rus­sia and China,” the memo reads. “To close the door to cronyism, the Ex­port-Im­port Bank should not be reau­thor­ized.”

The memo amounts to a warn­ing shot fired across the bow of the House Re­pub­lic­an Con­fer­ence, whose mem­bers are dis­cuss­ing the sub­ject this week and have been di­vided over wheth­er to ex­tend the bank’s charter.

Fin­an­cial Ser­vices Com­mit­tee Chair­man Jeb Hensarling, who’s weigh­ing a cam­paign for a top lead­er­ship po­s­i­tion this Novem­ber, has made end­ing the Ex­port-Im­port bank a cause de celebre for House con­ser­vat­ives. These mem­bers watched with great in­terest when Kev­in Mc­Carthy, just days after win­ning a pro­mo­tion to ma­jor­ity lead­er, said on Fox News Sunday that he sup­por­ted Hensarling’s push to elim­in­ate the agency.

But Mc­Carthy’s pledge, aimed at mol­li­fy­ing a rest­less rank-and-file that had just gran­ted him a five-month au­di­tion as the House’s No. 2, angered some es­tab­lish­ment Re­pub­lic­ans with close ties to the busi­ness com­munity. More than 40 of these mem­bers ban­ded to­geth­er late last month and wrote a let­ter to top GOP lead­er­ship of­fi­cials ur­ging them to reau­thor­ize the bank.

Caught in the middle are many House Re­pub­lic­ans who have friends on both sides of the de­bate—con­ser­vat­ives push­ing the crony cap­it­al­ism ar­gu­ment, and busi­ness in­terests em­phas­iz­ing the eco­nom­ic sig­ni­fic­ance of U.S. ex­ports—and are thus hop­ing for a com­prom­ise that would reau­thor­ize the bank but only with sig­ni­fic­ant struc­tur­al re­forms.

Still, with the bank’s charter set to ex­pire in less than three months, and Sen­ate Demo­crats poised to vote as soon as this month on reau­thor­iz­a­tion, con­ser­vat­ive out­side groups are draw­ing a line in the sand. They are let­ting it be known to law­makers—par­tic­u­larly House Re­pub­lic­ans, who have the power to hold the line against reau­thor­iz­a­tion out­right—that the only ac­cept­able solu­tion is ab­ol­ish­ing the bank, peri­od.

“The core prob­lems with the bank—mar­ket dis­tort­ing loans to polit­ic­ally favored com­pan­ies—will per­sist un­less Ex-Im au­thor­iz­a­tion is al­lowed to ex­pire en­tirely,” the CAP memo states. “Any plan to by­pass reg­u­lar or­der in the Sen­ate or House to pre­serve Ex-Im con­sti­tutes an end-run around the demo­crat­ic pro­cess and the in­terests of the Amer­ic­an people.”

Con­ser­vat­ives take com­fort in the fact that Hensarling’s com­mit­tee has jur­is­dic­tion over the mat­ter. But they also fear it might not mat­ter. If the bank’s reau­thor­iz­a­tion is tied to a short-term gov­ern­ment fund­ing bill—as law­makers have long ex­pec­ted, since both the bank’s charter and the cur­rent fund­ing blue­print ex­pire at the end of Septem­ber—then the de­bate over Ex­port-Im­port could lead to a po­ten­tial gov­ern­ment shut­down.

Some House Re­pub­lic­ans are already pre­dict­ing how this will un­fold: the GOP lead­er­ship team pro­poses a short-term fund­ing bill that con­tains lan­guage to elim­in­ate the Ex­port-Im­port Bank, but would al­low the Sen­ate to strip out that lan­guage and pass a “clean” fund­ing bill.

If that scen­ario sounds fa­mil­i­ar, it’s be­cause that’s ex­actly what GOP lead­er­ship pro­posed last year as con­ser­vat­ive were mount­ing a last-minute cam­paign to de­fund the Af­ford­able Care Act. The push­back from mem­bers was so vis­cer­al that Speak­er John Boehner and his team were forced to ad­opt a con­ser­vat­ive pro­pos­al that made new gov­ern­ment fund­ing wholly con­tin­gent upon de­fund­ing Obama­care.

The res­ult was a gov­ern­ment shut­down.

If his­tory re­peats it­self this Septem­ber, it won’t be co­in­cid­ent­al. The tim­ing is the same. The di­vi­sions are the same. And the group that worked be­hind the scenes last sum­mer ad­voc­at­ing for the strategy of ty­ing gov­ern­ment fund­ing to de­fund­ing Obama­care? It was the Con­ser­vat­ive Ac­tion Pro­ject.

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