Reform stalls as tariff loopholes return to the House
Back in 2010, House Republicans made a bold promise. To show they were serious about reform, they would deny themselves two well-used — but frequently misused — tools of congressional power.
In short, they would stop doing costly favors for the folks back home.
The House GOP banned “earmarks,” which allow a legislator to dole out taxpayer money for hometown projects. They also banned a lesser-known kind of favor, which allowed a Congress member to give a local company a break on its federal tariff payments.
But now, 19 months later, dozens of Republicans have decided they went too far. They want to bring one kind of favor back.
Led by a powerful committee chairman, GOP legislators have joined Democrats in proposing hundreds of those small tariff breaks. Legislators say each would be a mini-boost to the economy: Companies could save up to $500,000.
But this proposal has raised an old question for the “new” House: Are its favors being fairly distributed? Some GOP proposals would benefit just one company, and others would benefit a legislator’s own campaign donors.
To some unhappy conservatives, it all just looks like breaking your word.
“Do you start to whittle away at the commitments we made?” asked freshman Rep. David Schweikert (R-Ariz.). “As cynical as the public is about us — and I think rightly so — we can’t start backing off these promises.”
Last month, Schweikert was one of 56 Republicans who signed a letter calling on House leaders to keep enforcing the new rules and to continue them in Congress’s next term. A spokeswoman for Rep. Sandy Adams (R-Fla.), the letter’s author, said she meant all the new rules — not just the ban on earmarks but the one on small tariff breaks too.
But there may have been some confusion among the 56 co-signers: 13 of them have already asked for tariff breaks this year.
Congress’s role in tariffs
This entire controversy revolves around one of the more obscure jobs that Congress assumes for itself — a 535-member editorial board for the country’s tariff code.
It works like this: Legislators propose temporary loopholes in tariff law to reduce the import duties on something specific. Most bills are about raw materials, imported by U.S. manufacturers. Rep. Joe Courtney (D-Conn.), for instance, has sought tariff breaks on “waste of camel hair,” “camel hair, carded or combed” and “noils of camel hair” for a fabric maker in his district.
Other bills deal with industrial chemicals with tongue-spraining names, such as p-Toluenesulfonyl chloride. At Nation Ford Chemical, a pigment-maker in Fort Mill, S.C., President Jay Dickson needed this chemical and asked the staff of Rep. Mick Mulvaney (R) to help him import it more cheaply.
“There is no process other than a bill in Congress” to get the tariff reduced, Dickson said. He said he’d done no in-person lobbying: “Absolutely no donations, whatsoever, and no special access.”
But if Dickson got his wish with just an e-mail, watchdog groups say it isn’t always that simple. They say the system often works like the one that doled out “earmarks”: It favors companies that donate to legislators’ campaigns, and companies that lobby on Capitol Hill.
And the tariff breaks are like earmarks in another way, said Steve Ellis of the group Taxpayers for Common Sense. Each tariff break can mean a loss of $500,000 or more in government revenue.
“It all equals the same thing,” Ellis said. “More deficit.”
A change in attitude
In 2010, the House’s new Republican majority banned both kinds of favors. The GOP caucus unanimously approved a new “standing order” that prohibited all earmarks and also barred any member from suggesting a tariff change “that benefits 10 or fewer entities.” House Democrats have imposed no such ban on themselves.
Now some House Republicans appear to have changed their minds. So far, 75 Republicans and 60 Democrats have submitted loophole proposals this session, for a total of 1,257 bills. None has yet passed.
The leader of the effort to revive these tariff breaks is House Ways and Means Committee Chairman Dave Camp (R-Mich.). He says he hopes to assemble a larger Miscellaneous Tariff Bill sometime in the fall after all the proposals have been scrutinized. Federal trade officials must certify that the affected goods are not made in the United States.
But what about the ban?
Camp says it isn’t going to stop him. His argument: Tariff reductions shouldn’t have been lumped together with earmarks in the first place.
“An earmark is a designation of [funds] to a particular entity and no others. This is not restricted to one particular entity,” he said. The idea is that the tariffs will be “broadly available” — anyone who can import a particular good gets the tariff benefit. So it’s not just reserved for the hometown company that asked for the favor.
But, in some cases, proposed tariff bills appear highly limited, in spite of the ban on measures with less than 10 beneficiaries.
Rep. Robert J. Dold (R-Ill.), for instance, has proposed extending the reduction of import tariffs on two agricultural chemicals called Etoxazole and Flumioxazin. In both cases, only one company — Valent U.S.A., a subsidiary of a Japanese chemical company — is likely to save on tariffs as a result. Today, under Environmental Protection Agency rules, only Valent can import the chemicals.
Dold’s office responded that the savings would also spread to “small businesses throughout the supply chain, distributors and consumers.”
In other cases, GOP legislators have proposed measures that would help their own campaign contributors. The bills introduced by Rep. Tom Reed (R-N.Y.), for instance, include two that would benefit Corning by reducing tariffs on imported glassware.
Reed signed a form certifying that he did not have a “financial interest” in Corning, but the company has been key to his political fortunes. In two House races, Corning and its employees have been Reed’s top source of donations, giving him $50,800, according to OpenSecrets.org.
“That was completely irrelevant to any decision-making,” Reed said in an interview. “It’s just that they’re a local manufacturer, just like any other manufacturer.”
Division over tariff process
In the House, Camp’s push could produce an uncomfortable situation for Speaker John A. Boehner (R-Ohio), as dozens of his members seek to flout the spirit — if not the letter — of their own rule. Asked what Boehner would do, a spokesman said only: “The House has an earmark ban, and that will continue.”
In the Senate, however, some Republicans are already supporting a measure that would reduce Congress’s role in the tariff process. The legislation, which Sen. Rob Portman (R-Ohio) has co-sponsored with Democrat Claire McCaskill (Mo.), would allow companies to bypass Congress and submit their pleas for tariff breaks directly to the U.S. International Trade Commission.
It would still give Congress final say on the breaks that are approved.
“They won’t have to come up here and kiss the ring,” said Sen. Jim DeMint (R-S.C.), one of the most prominent critics of the return to considering tariff breaks. DeMint said he hoped new Republican members would break with congressional precedent and embrace a favor-free vision of their job.
“There’s nothing in my oath of office,” DeMint said, “that says I’m here to get things for South Carolina.”
Alice Crites contributed to this report.
Alice Crites contributed to this report.