The Years-Long, Koch-Funded, Libertarian Campaign to Kill the Export-Import Bank Is About to Succeed

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June 30 2014 6:30 PM

Ex-Im Exit

The years-long, Koch-funded, libertarian campaign to kill the Export-Import Bank could finally succeed.

House Majority Whip Kevin McCarthy.
New House Majority Whip Kevin McCarthy may spell doom for what he calls “crony capitalism.”

Photo by Mark Wilson/Getty Images

It was Sept. 22, 2008, at the dizzying height of the financial crisis and the moment when Barack Obama took a commanding lead in the presidential race. He was campaigning in Wisconsin, a state he’d win easily. He softened a speech about Wall Street greed with some examples of government at its worst.

“There are some [programs] that have been duplicated by other programs that we just need to cut back,” said candidate Obama, “like waste at the Economic Development Agency [sic] and the Export-Import Bank that’s become little more than a fund for corporate welfare.”

The line landed with a quiet thud. None of the media on the scene bothered to print Obama’s quote about a New Deal-era agency that guarantees loans for companies selling overseas. The AP led with Obama’s promise to “slash federal spending on contractors by 10 percent,” the Green Bay Press Gazette with Obama accusing John McCain of “flip-flopping,” and the Chicago Sun-Times with a note about the “uncharacteristic number of empty seats” in the arena. (Someone named Sarah Palin had been a bigger draw.)

David Weigel David Weigel

David Weigel, a former Slate politics reporter, is a reporter for Bloomberg Politics

But people aren’t ignoring Ex-Im (as it’s universally abbreviated) anymore. A government agency that was too dull to write about is suddenly the perfect libertarian target. It took years of messaging, much of it by groups funded by the omnipresent Koch network, but Ex-Im has emerged as a test for whether “libertarian populism” can win a vote in Congress.

Obama’s own Ex-Im quote stayed rather obscure until March 2012. That was when the Club for Growth, which predates the growth of the Koch network but has benefited from it, began attacking the bank’s May 2012 reauthorization vote. The bank periodically needs to be reauthorized by Congress, a process that has happened more or less routinely every few years since the 1940s. It needs to be reauthorized by Sept. 30, 2014, or it will shut down.

But the Club was not ideally positioned to lead this charge against Ex-Im, because the Club’s own president, former Indiana Rep. Chris Chocola, had a family business, CTB, that had benefited from Ex-Im assistance. When Chocola denounced the bank’s “corporate welfare,” its defenders had an exploding cigar with his name on it.

 “I never heard the words ‘Ex-Im Bank’ once when I was CEO,” Chocola says today. “Apparently someone had, because apparently we did use some of their financing in our sales. But we never once, in our sales and budgetary planning, ever talked about Ex-Im Bank and said it was critical to our success. It made no difference to us. It didn’t save one job. It didn’t create any opportunities that didn’t exist before.”

The Club targeted Ex-Im despite the Chocola embarrassment, using the Obama sound bite to make its case. American Commitment, a new group launched by Phil Kerpen, formerly of the Koch-funded Americans for Prosperity, joined the charge against Ex-Im in 2012 too.

The initial 2012 attack failed: John Boehner’s House of Representatives extended the Ex-Im charter in an easy, 330–93 vote. Republican Rep. Gary Miller had sponsored the reauthorization, and every Democrat who hadn’t abstained had voted for it. The extension squeezed in a few reforms, requiring quarterly reports from the bank. Rebellion crushed, story over, victory party over at the Chamber of Commerce, open bar.

But the libertarians never gave up. After the 2012 elections, which plenty of conservatives blamed on Mitt Romney’s cufflinked public image, Rep. Jeb Hensarling, an Ex-Im critic, took over the House Financial Services Committee. Throughout 2013, into 2014, Heritage Action and David Koch’s Americans for Prosperity worked with the libertarians who’d always hated Ex-Im. AFP went for the giving-money-to-foreigners angle. “Washington politicians have sent billions to countries like China, Russia, Venezuela, and Saudi Arabia,” tsk-tsked a narrator in a recent video, “through the taxpayer-backed Export-Import Bank.”

In 2013 a polling group called Public Notice created a virality-destined parody of 1980s action figures—the Kronies—who personified all the ways that rent-seeking ripped Americans off. Captain Corn represented mandates for ethanol (“You don’t want me, but you can’t stop me!”). Bankor represented the beneficiaries of TARP (“Oh no, I’m underwater, I need a bailout!”). After months of dormancy, after the Koch-funded Generation Opportunity had taken over the property, the Kronies returned in a cartoon about convincing dumb members of Congress to back Ex-Im.

For a long time, as candidate Obama had demonstrated in 2008, it was liberals who opposed the bank. They’d scored points on corporations by asking if they were really so poor and beleaguered and ganged-up-on that they needed Uncle Sam to guarantee their sales.

“I think a lot of conservatives are keyed in on this issue now because the automatic expiration creates a situation where you can actually end a government program through inaction—which in this town is a whole lot easier than accomplishing something that required legislation,” explains Phil Kerpen. “There has always been hostility to Ex-Im among libertarians and free-marketeers, but Obama's lightning-rod loans to Solyndra and Petrobras have made it easier to message to a broader audience.”

When you spend years crafting an argument, its success looks almost eerily speedy—almost accidental. On June 22, Rep. Kevin McCarthy, the new House majority leader, stepped gently over Eric Cantor’s corpse and told Fox News that he would kill the “crony capitalism” of Ex-Im.

On June 25, Hensarling held a well-covered hearing on the bank, tarring it as a “sweetheart deal” that only benefited companies “like Boeing, General Electric, Bechtel, and Caterpillar.” Republicans spent a day decrying “crony capitalism.” Democrats, meanwhile, pleaded for everyone to imagine the horror of a world without Boeing. (Pause to consider the irony of Republicans attacking Boeing as Democrats defend it.)

Less than a week later, in an NBC News interview, the roles had reversed so completely that Bill Clinton was chiding Republicans for even talking about ending Ex-Im. “That’s not a Wall Street crony capitalism deal!” he said. “That's a financing device that allows us to compete with the 60 other countries of the world who are trying to save jobs in their countries.”

In six short years, the bank had gone from a Democratic target, to a quixotic libertarian target, to a political loser. The Chamber of Commerce was already watching immigration reform flail, thwarted by a Republican House it had helped elect. Now it is having to fight for Ex-Im?

“It’s unfortunate that we have to do this in an election year,” says Christopher Wenk, senior director of international policy at the Chamber of Commerce. “This really is an inside-the-Beltway game that’s being played right now. We’re in a difficult place right now, but we’re pushing. I don’t sense that there’s a massive grassroots opposition to Ex-Im. I sense there are groups in town that feel really strongly about Ex-Im.”

The Chamber still might win the battle to save Ex-Im. Wenk explained that key Republicans (41 so far) have committed to Ex-Im in the House, which is enough if all Democrats join them.

Even if the bank survives the vote, the Koch network and libertarians will have won the rhetorical battle, having put the onus of defending “crony capitalism” on Democrats. An issue too small to notice when Obama put it in a stump speech would have become a growing burden for his party.

“We at the Club think the small things matter,” says Chris Chocola. “If you can’t accomplish the small things, you’re never going to accomplish the big things.”

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