How The Populist Assault On Cronyism Draws New Battle Lines
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How The Populist Assault On Cronyism Draws New Battle Lines

Slowly but surely, Washington is waking up to the idea that the current surge in populism is not some flash in the pan, but a real and sustained trend in politics on the right and left. Distrust and frustration with an economic and political system that rewards, defends, and bails out the wealthy, powerful, and well-connected while leaving the middle and working class to get squeezed by stagnant wages and the higher costs of the basic staples of life, has made things which were once considered humdrum politics as usual suddenly controversial.

The most recent hot-button issue to attract populist frustration was highlighted in yesterday’s hearings on Capitol Hill concerning the Export-Import Bank, an institution not many in politics could even name a few months ago. As a test case for how both parties are responding to this issue, the arguments yesterday over ExIm served as an illuminating example of the political shifts taking place in response to the populist frustrations with corporate cronyism.

Republican Financial Services Committee Chairman Jeb Hensarling opened today’s hearing on the Export-Import Bank by excoriating corporate welfare and calling out big businesses by name in something of a populist speech: ‘Who benefits? Overwhelmingly — and indisputably — it’s some of the largest, richest, most politically-connected corporations in the world — like Boeing, General Electric, Bechtel and Caterpillar. … And big Wall Street banks apparently benefit as well. As reported in the press recently, one former JP Morgan and Citigroup banker said of Ex-Im’s credit guarantees, “it’s free money.” So if you’re a politically-connected bank or company that benefits from Ex-Im, no doubt you would like it to continue. After all, it’s a sweetheart deal for you. Taxpayers shoulder the risk and you get the reward.’ …

On the other side of the aisle, Democrats were singing hosannas to corporate America. Rep. Denny Heck, D-Wash., warned darkly that if Ex-Im dies, we might “wake up in 20 years” in a world with no Boeing. Rep. Carolyn Maloney, D-N.Y., pointed to the Chamber-of-Commerce-led lobbying effort to save Ex-Im and declared, “865 businesses and associations can’t be wrong!”

It seems the Democrats are going to ignore calls to reconsider the defense of this corporatist entity, even as investigations into its corruption have shifted the position of past defenders. Picking winners and losers is just that appealing. But the more interesting battle lines over ExIm are going to be on the right, where there really are people arguing that “Corporate welfare in the defense of liberty is no vice.”  Did you know that the ExIm bank won the Cold War and is critical to the cause of human flourishing? Neither did I.

The populists have a challenge: as a practical matter, there are simply not enough Republicans who agree with and share their views to shift policy priorities on the big issues. So they have to pick fights like ExIm to highlight these problems in ways that are clear-cut. They can rely on members like Jeb Hensarling to speak their language, but they need something more: they need people who recognize where the political winds are blowing, and adapt to these priorities.

There’s an interesting contrast here between Thad Cochran and Kevin McCarthy. Cochran is headed back to Washington after surviving a runoff thanks to a deluge of political activity from Haley Barbour and his family, Mitch McConnell, the NRSC, and the Chamber of Commerce to turn out Democratic voters for their candidate.  As a Senator, Cochran is little more than a puppet operated by traditional corporate and K Street interests - a life-long appropriator with no real ideology, and someone whose Coping With Senility process is going on in the public eye. If Republicans take the Senate, Cochran is in line to take over the Appropriations Committee, and with his re-election, his backers will stand to benefit enormously, where he is expected to bring back the old appropriations culture and “restore some of the spend-along-to-get-along spirit of bipartisan collegiality that drives insurgents on the right absolutely nuts.”

It’s no accident that the Barbour family’s role includes leading the lobbying effort to defend ExIm, and they and their clients stand to benefit enormously from this arrangement. That’s discouraging, but what do you expect – it’s politics as usual.

On the other side of the Hill, however, Kevin McCarthy’s new position on the Export-Import bank is an encouraging sign, particularly given its status as his first big shift post-election as Majority Leader. McCarthy is indicating that he’s happy to be swayed by conservatives when they’re on the same page as the WSJ editorial board, and he’s not going to go out and sacrifice himself over the plate on the first at bat to save some cronyist pocket change. This is another reason why ExIm was a smart play for a populist assault – Republicans don’t actually have to do anything in particular to kill ExIm, they just have to sit on your hands and let it die.

Here, we have a good test case for how Republican leadership will treat fiscal conservatives going forward. If McCarthy’s not even willing to let anti-cronyist policies happen that way, he’ll be a problem. But if McCarthy does keep his word, it could indicate why, on balance, it’s sometimes better for conservatives to have a pragmatic operator like McCarthy as a leader as opposed to the likes of Mitch McConnell (whose approach in the Senate has been to say the right things and vote the right way, but work behind the scenes to make sure K Street always wins and cronyist institutions like ExIm survive).

McCarthy’s not a dumb guy. He knows his position as leader isn’t very secure. With elections again after November, he’s basically an interim coach with a few months to win the permanent job. The chief difference between McCarthy’s and Cantor’s relationship with the conservative members is that McCarthy doesn’t think he’s a leader, either. And he seems to be okay with that: he’s a glad-hander, not an arm-twister. He just wants everybody to have a good time at the party, and if that takes an extra keg of Sierra Nevada, Kevin McCarthy will get those suds for you.

That’s why the new battle lines over cronyism are so interesting in charting the country’s political future. The always-too-simplified lines of establishment and conservative movement are already completely outdated. One of the important lessons for easily discouraged conservatives to remember about politics is that when political winds change, windsocks move too. And when the wind moves the GOP in this populist direction, it appears politicians like McCarthy will move with it, even as politicians like Cochran don’t.

It’s an intriguing possibility which indicates that maybe, just maybe, the Republican Party could reject some of its corporatist pro-business past and get serious about free market policies. We’ll see if McCarthy’s as good as his word on ExIm over the next few months, and particularly in the upcoming lame duck session, where – if candidates like Cochran prevail and the GOP as a whole underperforms in November – K Street will smell sweet, sweet taxpayer-funded blood.

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Photo By: Medill DC
Ben Domenech is the publisher of The Federalist. Sign up for a free trial of his daily newsletter, The Transom.
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