The payroll tax cut fight worked beautifully for Democrats because it left the Congressional GOP divided and vulnerable to charges that it was willing to put the recovery at risk in order to please the ideologues in its ranks. It pitted those who recognized that not extending the tax cut would be terrible politics against the Tea Party wing, which decided that a tax cut for working people suddenly needed to be opposed at all costs.
Dems now think they have hit on another issue that could divide the GOP: The coming battle over the U.S. Import-Export Bank. It could pit the party’s business wing against “populist” conservatives, allowing Dems to portray the GOP as so in thrall to the Tea Party that it’s willing to jeopardize the recovery.
The gist of the looming fight: The bank could hit its $100 billion loan limit by the end of this month. Obama and Dems want the limit lifted, because a lack of financing from the agency could make it harder for American companies to get the financing they need to export their products, at a time when Obama has prioritized boosting exports to keep the recovery moving.
Business groups like the U.S. Chamber of Commerce have mounted a campaign for lifting the limit. But some House conservatives, backed by the Club for Growth, strongly oppose any such move. They insist that the bank subsidizes certain companies with taxpayer money — picking “winners and losers” — and sullies the sanctity of the free market.
Dem messaging chief Chuck Schumer is challenging House Republicans to agree to the request — and signaling Dems will use this as a wedge issue if they don’t. In a statement sent my way, Schumer said:
“It’s not every day Republicans oppose the Chamber of Commerce, but that’s how far overboard some in the House have gone. This shouldn’t be a fight, but if House Republicans oppose a no-brainer like this, it will be a colossal mistake just like the payroll tax cut debate was. They will be on the wrong side of a jobs issue, and they will be divided.”
House GOP aides have said they are working on a compromise to bridge the divide by dealing with the “subsidies” the bank allegedly gives to the private sector. But this has alarmed the business groups. They insist the bank doesn’t subsidize anybody and that it doesn’t cost the goverment any money to provide financing, which is covered by fees. Failure to reauthorize it, they say, would cause catastrophic economic damage.
A battle over a tax cut for 160 million working Americans is politically easier for Dems than one involving lobbyists and trade associations. But Democrats think the general contours will be the same: Obama and Dems — in league with the GOP’s pro-business wing — want action to keep the recovery moving forward, while the House GOP’s increasingly marginalized Tea Party wing throws up ideological roadblocks that risk sending the recovery back into the ditch.