Democrats and big business may hand Donald Trump his biggest defeat yet if they can convince a few Republican senators to oppose Trump's nominee to a federal export-subsidy agency.
The Export-Import Bank of the United States is a federal agency that subsidizes U.S. exports by extending taxpayer-backed financing to foreign companies and governments that buy U.S. goods (primarily Boeing jets).
Trump, during the campaign, said he opposed Ex-Im, as "featherbedding" for big exporters, who could find financing in the private market. The last two years have proven him right.
Ex-Im hasn't financed any large deals since June of 2015, when the agency's authorization lapsed for five months. When nearly all Democrats and about half of all Republicans reauthorized Ex-Im in late 2016, the agency's board lacked a quorum. That means the agency can't grant financing deals greater than $10 million. So the jets Boeing sells to Air China and the turbines General Electric sells to Saudi energy companies all get financed without involving the U.S. taxpayer.
Somebody got to Trump in his first couple of months, and Trump flipped from opposing Ex-Im to wanting to revive it, meaning he would appoint new board members, including a chairman.. This cheered the big businesses that had almost uniformly preferred Hillary Clinton to Trump. Then Trump upset his new friends by nominating Scott Garrett as chairman of the board.
Garrett, in seven terms in Congress, was a consistent free-market conservative, which means he constantly infuriated big-business lobbyists. Garrett voted against the Wall Street bailout and the Detroit bailout. He voted to slash the sugar program. Generally, when big business came asking for big government favors, Scott Garrett said no.
In 2015, for example, New Jersey Democrats like Rep. Albio Sires and Rep. Donald Norcross scored higher with the U.S. Chamber of Commerce than Garrett did.
Big business worked to defeat Garrett in the 2016 election, and it succeeded in electing a Democrat to his seat. Now Democrats and big business are teaming up to try to sink Garrett's nomination. The National Association of Manufacturers and other big lobbies are working overtime to kill Garrett's nomination.
But Democrats and big business can't win if Republicans stand united behind Trump's pick — which they should.
Half the Republican Party wants Ex-Im dead. The other half wants Ex-Im alive. A good compromise is to keep Ex-Im, but then reform it. Garrett is the perfect man to do that.
The Republicans who fought to save Ex-Im in 2015 all praised it as a valuable resource for small businesses. In most years before 2015, though, 80 percent of all Ex-Im financing went to big businesses. Typically, Boeing exports accounted for 40 percent of Ex-Im financing, while every small exporter in America combined accounted for about 20 percent.
Ex-Im defenders also say Ex-Im is needed to subsidize deals that wouldn't happen without it. But a cursory study of the deals Ex-Im finances shows this is a joke. The agency subsidized Caterpillar (which has its own finance arm) selling equipment to a licensed Caterpillar dealer in Europe. Ex-Im subsidized Solyndra solar panels that Solyndra had already sold and shipped.
If helping small business and funding deals that wouldn't happen otherwise are the grounds on which Republicans defend Ex-Im, then they have the opportunity to turn Ex-Im into exactly that agency.
Under Garrett and a board appointed by Trump, Ex-Im could keep doing what it's been doing for the past two years: mostly financing small exporters, for whom international finance is harder to find, and eschewing the massive $10 million or $100 million deals that pad the profit margins on Boeing's and GE's exports.
If Republican senators join with Democrats and Boeing to sink Garrett, they aren't voting to save Ex-Im — they've already won that fight. Sinking Garrett is explicitly about preserving taxpayer subsidies for the largest companies in America. Sinking Garrett is about keeping Ex-Im operating as Boeing's Bank, as a font of corporate welfare.
So Republican senators, especially those like Tim Scott and Lindsey Graham being targeted by big business, need to ask themselves whether they really want to buck their party for the sake of corporate welfare.