Mike Lee’s Agenda Could Make 2014 Elections about Crony Capitalism

Main St. Agenda by from Washington Examiner, May 9, 2014

Republicans can make the 2014 election a referendum on corporate welfare, forcing Democrats to defend government handouts to well-connected big businesses. That is, if Republicans actually oppose government handouts to well-connected big businesses.

The Obama administration and congressional Democrats line up squarely with K Street on many pressing issues today. Congressional conservatives and activist groups are itching for a fight. And there are many potential battlefields.

Sen. Marco Rubio, R-Fla., has proposed to kill the insurer bailouts included in Obamacare. The 2010 health care law included a “risk corridor” provision, effectively taxing insurers for excess profits and subsidizing them if their profits were too low. For 2014, this could amount to bailouts to health insurers. Rubio’s bill would prevent that.

Obamacare is unpopular. Insurers are unpopular. Corporate bailouts are unpopular. And the Democrats are pinned against the wall—they have to defend these bailouts. This is an easy win for Republicans—if they’re willing to buck the business lobby.

Sen. Mike Lee, R-Utah, has proposed a bill, with Rep. Justin Amash, R-Mich., to abolish Obama’s favorite export agency, the Export-Import Bank of the United States.

Ex-Im finances U.S. exports at taxpayer risk. It’s mostly a subsidy to a handful of big manufacturers like Boeing and Caterpillar, their foreign customers and the banks who get to offload their risk to U.S. taxpayers.

The Lee and Amash bills have no chance of passing, especially because Democrats unanimously support Ex-Im.

But this fall provides an opportunity for Ex-Im opponents: The agency’s charter expires Sept. 30, five weeks before Election Day. If Republicans want to kill Ex-Im, they can—if they’re willing to fight.

Ex-Im and risk corridors were two of the fights Lee mentioned in an important April 30 speech at the Heritage Foundation.

Lee advocated a free-market populist agenda for the GOP: policies to materially help the working class, to enhance opportunities for the middle class and to curb politically granted privileges for the elites.

Lee’s approach is good policy because corporate welfare distorts the economy, creating inefficiencies. It’s also good politics because it aligns the GOP against crony capitalism and forces Democrats to defend their corporatism. More importantly, battling cronyism allows the Right to make the moral case for free enterprise.

“The more power government amasses,” Lee said, “the more privileges are bestowed on the government’s friends, the more businesses invest in influence instead of innovation, the more advantages accrue to the biggest special interests with the most to spend on politics and the most to lose from fair competition.”

Lee marked off other battlegrounds on which an anti-cronyist GOP could fight in coming months.

Democrats’ 2010 financial reform didn’t end “Too Big to Fail.” It may have codified it. Conservative Sens. Pat Toomey, R-Pa., and John Cornyn, R-Texas, have proposed changes to the bankruptcy code so that failed big banks are wound down in an apolitical manner. Lee even gave an approving nod to Brown-Vitter, a bill that would effectively break up big banks.

Rep. Mike Pompeo, R-Kan., has been trying for years to pass a bill ending all tax credits for energy—fossil fuels and green energy.

There are other obvious targets, like the ethanol mandate and the sugar program. Another Texas Republican, House Financial Services Committee Jeb Hensarling—who is leading the fight against Ex-Im—is also trying to make sure mortgage subsidizers Fannie Mae and Freddie Mac aren’t resurrected.

The GOP could win many of these fights, like Ex-Im and the ethanol mandate, because winning involves letting corporate welfare lapse.

Others, like the insurer bailout, are written into permanent law, and so the Democratic Senate could save them.

Win or lose, though, these fights would paint an interesting picture going into the 2014 elections: Republicans for free markets, and Democrats for Big Business.

But there is no GOP consensus on killing corporate welfare, as the House of Representatives showed May 8.

Ed Royce, chairman of the House Foreign Affairs Committee, quietly stuck into the “Electrify Africa Act” a provision to reauthorize the Overseas Private Investment Corporation.

OPIC is a sister agency of Ex-Im that provides taxpayer backing to companies doing business overseas.

For instance, when an American businessman (and friend and donor of Vice President Joe Biden) built a Porsche dealership in Ukraine, OPIC provided a $20 million loan.

After free-market advocates Club for Growth and Heritage Action opposed the bill, most Republicans voted no. But Royce and the GOP leadership still pushed passage.

Republicans have long been torn between being pro-market and pro-business. Typically, the business lobby wins this tug of war. This year, politics is pulling in the opposite direction.

© 2014 by the Washington Examiner. Reprinted with permission.