Bloomberg News

Republicans Fail at Business Role in Defying Chamber

April 03, 2012

Sen. Bob Corker, Republican from Tennessee, outside of the Senate at the U.S. Capitol in Washington on Sept. 20, 2011. “Ex-Im is likely to be reauthorized,” says Corker, “and if a final highway bill can be paid for appropriately and doesn’t add to the deficit, I think it will pass.” Photographer: Chip Somodevilla/Getty Images

Sen. Bob Corker, Republican from Tennessee, outside of the Senate at the U.S. Capitol in Washington on Sept. 20, 2011. “Ex-Im is likely to be reauthorized,” says Corker, “and if a final highway bill can be paid for appropriately and doesn’t add to the deficit, I think it will pass.” Photographer: Chip Somodevilla/Getty Images

Business groups counting on Republican gains in Congress to deliver their legislative agenda are voicing frustration over obstacles within a party usually allied with their interests.

At least two measures are hitting snags -- long-term highway construction funding and authority to keep the Export- Import Bank in business beyond May 31. Many of the Republicans elected in 2010 lean too heavily toward the demands of the Tea Party and other anti-spending groups, business leaders say.

“There are a number of Republican members, particularly new members, who are against the federal government having a large role in transportation issues,” said Pete Ruane, president of the American Road and Transportation Builders Association in Washington, D.C. “I don’t understand that,” Ruane said. “Their larger idea of cutting off federal spending trumps their support for transportation.”

Bruce Josten, top lobbyist at the U.S. Chamber of Commerce, said Tea Party-backed lawmakers have focused the congressional agenda on the deficit and debt. “It’s entirely appropriate if you look at the numbers,” he added.

Still, Josten criticized the anti-spending Club for Growth, which rates lawmakers in part on whether they join it in opposing the highway and bank bills.

“Just saying no to everything is not a contribution to the debate,” Josten said.

Export-Import Prospects

Business groups will probably see a resolution of both issues this year, some lawmakers say.

“Ex-Im is likely to be reauthorized,” said Senator Bob Corker, a Tennessee Republican, “and if a final highway bill can be paid for appropriately and doesn’t add to the deficit, I think it will pass.”

Other Republicans maintain that the party won control of the U.S. House in 2010 and gained Senate seats because voters wanted restraint on government spending, not an agenda aligned entirely with business. New House members react to that and pull the debate their way, they say.

“This is actually a very free-market-oriented majority,” said Representative Tom Cole, an Oklahoma Republican. “It’s focused more on the deficit, the long-term tax structure, than things individual industries might like. But it’s getting really big issues taken care of.”

The business lobby, he said, should take heart in last year’s passage of three free-trade agreements with Panama, Colombia and South Korea and other gains.

“Nobody gets everything they want every day,” Cole said. “Welcome to the world of politics.”

Shutdowns Possible

A stymied debate on the highway-funding and Export-Import Bank bills is replaying a scenario familiar in Washington: carrying government operations important to companies close to a shutdown. Businesses, including Boeing Co. (BA:US) and Caterpillar Inc. (CAT:US), count on the bank to provide loans, loan guarantees and insurance to foreign companies to buy U.S.-made products. Companies like Clark Construction Group LLC seek to win contracts underwritten by highway funds.

Congress voted March 29 to extend highway funds through June 30, the ninth short-term extension since 2009. President Barack Obama signed the measure, which will keep construction projects going and 3,500 federal workers on the job.

House leaders’ effort to create a long-term bill stalled amid disputes among Republicans over how to pay for projects and whether mass transit should keep getting gas-tax money.

$109 Billion Bill

The Senate passed a two-year, $109 billion highway spending plan March 14 on a 74-22 vote. Yet the struggle to agree on a multi-year bill has dragged on so long that the Highway Trust Fund, which pays for highway and mass transit projects, is almost insolvent.

The Export-Import measure also is hitting roadblocks.

Senate Republicans refused to advance a measure March 20 to reauthorize the bank for four years and boost its lending limit by 40 percent to $140 billion. Republicans said they didn’t want to debate it as part of a bill on Securities and Exchange Commission rules. House Republicans proposed a one-year renewal lifting the bank’s lending cap by 13 percent.

Bank Chairman Fred Hochberg said March 23 a one-year extension would signal the bank can’t be relied on for steady funding. It probably will reach its $100 billion lending limit before the charter expires May 31, he said.

More than 300 trade groups and businesses, including United Technologies Corp. and Textron Inc. (TXT:US), sent a letter March 29 urging congressional leaders in both parties to act quickly to renew the bank.

‘The Only Tool’

“Ex-Im is the only tool manufacturers have to offset the financing support our competitors receive from their governments,” they wrote. “The ability of U.S. companies to maximize their exports is more important than ever.”

Business groups favoring the highway and lending programs face opposition from groups like the Club for Growth and Tea Party Express, which support companies’ desires for low taxes yet disagree when business wants more spending on programs such as energy production and transportation.

“There’s a difference between being pro-business and being pro-free market,” said Barney Keller, a Club for Growth spokesman. His group wants states to pay a larger share of highway projects and calls the Export-Import bank “another form of corporate welfare” picking economic winners and losers.

Sal Russo, political director of the Tea Party Express, says it doesn’t use “litmus tests,” though it endorses lawmakers who question the wisdom of expanding government programs such as the Export-Import Bank.

Government Versus Banks

“Governments don’t make good decisions with banks and with loans,” said Senator Rand Paul of Kentucky, a first-term Republican elected with Tea Party backing. “When Republicans are in charge, they give the loans to their friends; when Democrats are in charge, they give the loans to their friends.”

“If you want to be a critic of deficits, you should criticize them” no matter who they’re helping, Paul said. “You should be against big government.”

Some of the anti-spending groups are starting to rival business in campaign donations and activism, and are trying to replace Republican incumbents they don’t like with small- government challengers.

Founded in 1999, the Club for Growth has a super-political action committee that can raise and spend unlimited amounts in federal elections. It has raised $5.2 million for 2012 elections and spent more than $574,000.

Upton, Lugar

The group is working to defeat House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, and Senator Richard Lugar of Indiana, the top Republican on the Senate Foreign Relations Committee. It says they don’t do enough to curb the size of government.

The U.S. Chamber of Commerce spends more, yet centers its efforts on the general elections. So far in this campaign, it has spent $3.9 million for network TV ads in House races and $5.5 million in Senate races, according to Kantar Media’s CMAG, which tracks campaign ads. Many of them support vulnerable Republican incumbents and help party members seeking open seats.

As Republicans split over business bills, some Democrats say their party may benefit. Tea Party influence leaves congressional Democrats more closely aligned with business interests than Republicans, said Senator Charles Schumer of New York, the chamber’s third-ranking Democrat.

“The hard right is pretty far away from the mainstream business community,” Schumer said, “and there are many issues where Democrats are closer to them now than the Republican Party because they’ve moved so far to the right.”

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net; Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net


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