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“Whose side are you on?”
That’s the Democratic mantra for the 2014 elections. It’s the same “people versus the powerful” line that Democrats trot out every two years, because it works.
But this year Republicans can turn this narrative on its head and make the midterm elections a referendum. Are you on the side of the Republicans, taxpayers and free enterprise? Or are you on the side of President Obama, K Street and corporate welfare?
Two high-stakes corporate welfare issues could be on the table this year: taxpayer-backed subsidies for big exporters and Obamacare’s insurer bailouts. Democrats are shackled to the corporate-welfare side on both these issues. Republicans — if they side with their free-market principles over their big business donors — can run against crony capitalism.
Republicans can be the party of the people this time around.
Sen. Marco Rubio, R-Fla., has already declared war on health insurers expecting a bailout from Obamacare. Rubio introduced a bill earlier this year to block the subsidies to insurers authorized by the Affordable Care Act’s “risk corridor” provisions.
Risk corridors and similar provisions were created as something of a profit-sharing program. Insurers who profit more than expected pay an extra tax, while those who miss their profit forecasts get a check from Uncle Sam. Obama issued rules earlier expanding insurer access to this money.
Although originally envisioned as revenue-neutral, the tax on the lucky insurers would cover the payouts to the unlucky ones. Risk corridors could cost the taxpayers big time if the whole industry suffers, which looks more likely in Obamacare’s first year.
Obama and congressional Democrats stand with the industry and defend the risk corridor program.
Another corporate welfare fight could loom even larger: what to do with “Boeing’s Bank.”
The Export-Import Bank of the United States is a federal agency that subsidizes U.S. exports by extending taxpayer-backed credit to foreign buyers. Ex-Im’s main tool is the long-term loan guarantee. Under Obama, an overwhelming majority of Ex-Im’s long-term guarantees have gone to subsidize Boeing sales.
Boeing and Ex-Im defend these subsidies by pointing out that Airbus, the European jumbo-jet maker, gets so much in subsidies that it’s practically a government agency. Also, Ex-Im borrowers have defaulted so rarely that the bank has actually returned a profit.
Of course, government-sponsored enterprises Fannie Mae and Freddie Mac made profits for years – until they didn’t, and taxpayers bailed them out.
Whatever the policy defenses of Ex-Im, the political basics are this: It’s a government subsidy for corporate America, and it overwhelmingly benefits big, politically connected companies — and Obama is a huge booster.
Obama’s National Export Initiative, a pillar of his economic policy, depends heavily on Ex-Im. Obama has boosted Ex-Im activity, and in 2012 he fought fiercely to reauthorize the agency. In that battle, Democrats aligned almost unanimously in favor of Ex-Im, while 93 House Republicans and 19 Senate Republicans voted against it.
The two most important nay votes may have been Sen. Mitch McConnell, R-Ky., and Rep. Jeb Hensarling, R-Texas.
Hensarling chairs the House Financial Services Committee, which has jurisdiction over Ex-Im. He said last June that “many taxpayers feel that it is indeed time to exit the Ex-Im.”
McConnell, of course, is the Senate minority leader.
Ex-Im’s current authorization expires on Sept. 30, weeks before the midterm elections.
Do McConnell and Hensarling have the stomach to have this fight amid the battle to control Congress? Are they willing to demand Ex-Im be scaled back or wound down? Will they filibuster or hold the bill until Democrats agree – stepping on the toes of their K Street friends in the process?
McConnell will get some pressure in this direction from the backbenchers: Sens. Mike Lee, Rand Paul and Ted Cruz are staunch critics of corporate welfare. Lee and Paul both voted against Ex-Im in 2012, and Lee has introduced a bill to wind down the agency over three years.
Hensarling has happily fought Big Business before, recently pushing financial-reform proposals that would give Wall Street a bit of a haircut.
So if Republicans want to make 2014 an election about “whose side you’re on,” they can pick fights over the insurance bailout and the Export-Import Bank. Obama and Democrats will stand firmly with Big Business in these fights.
These aren’t easy issues for Republicans. They divide the party between its pro-business donor base and its pro-free enterprise voter base. So GOP lawmakers will have to decide whose side they’re on.
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