A possible House vote this month on whether to renew the Export-Import Bank carries big risks for Majority Leader Kevin McCarthy.
The California Republican has spent the past year positioning himself as an ardent foe of the bank, which finances overseas investments for U.S. companies.
In doing so, McCarthy has aligned himself ahead of a possible Speakership race next year with a growing faction of GOP conservatives who blast the bank as a blatant example of corporate welfare.
Killing off the bank would give McCarthy, the No. 2 House leader, something to bolster his conservative bona fides. The Ex-Im charter expired at the end of June, and its opponents have its headstone in their sights.
The problem is that Speaker John BoehnerJohn Andrew BoehnerDemocrats eager to fill power vacuum after Pelosi exit Stopping the next insurrection Biden, lawmakers mourn Harry Reid MORE (R-Ohio) has signaled he’ll allow a vote on renewing the bank’s charter later this month.
If McCarthy agrees to schedule it — and Ex-Im is resurrected by Democrats and pro-business Republicans — it could anger conservatives who already are distrustful of the genial Californian.
“There would be absolute frustration because it will be part of a bigger pattern that keeps recurring over and over: The American people are waiting to see the Republican Party lead on matters important to them and not Wall Street,” said Rep. Dave Brat (R-Va.), a Tea Party darling who upset then-Majority Leader Eric CantorEric Ivan CantorRepublicans eager to take on Spanberger in Virginia Virginia emerging as ground zero in battle for House majority McAuliffe's loss exposes deepening Democratic rift MORE in a GOP primary last year, clearing the way for McCarthy’s rise.
“It expired,” Brat added in an interview Monday, “So why in the world would you reauthorize something that would slap conservatives upside the head?”
Democrats and Chamber of Commerce-backed Republicans are banding together in a bid to resuscitate the bank, and they have an ally in BoehnerJohn Andrew BoehnerDemocrats eager to fill power vacuum after Pelosi exit Stopping the next insurrection Biden, lawmakers mourn Harry Reid MORE. He prefers a plan to “wind down” Ex-Im, and has warned about the “thousands of jobs” that might be lost if Congress does nothing.
The Senate this month is expected to approve a critical bipartisan highway and infrastructure bill that would include an extension of the Ex-Im charter. Because federal highway funding is set to expire at the end of the month, the measure is considered a must-pass bill.
The Speaker has promised House Financial Services Committee Chairman Jeb Hensarling (R-Texas) that he’d be able to offer amendments to strip the Ex-Im provision out. But it appears a combination of Democrats and pro-bank Republicans probably have the votes to defeat Hensarling’s amendment.
That means the best way for opponents to kill the bank is to prevent the vote from ever happening.
It’s no secret the controversial Ex-Im issue has McCarthy “constantly looking over his shoulder,” said one senior House Republican aide.
McCarthy is the favorite to succeed Boehner when he decides to step down as Speaker. But leaders of the conservative House Freedom Caucus may try to make the race competitive, and Hensarling is seen as a possible challenger.
“The fight over Ex-Im is no longer just about policy, it’s part of a larger battle between the current power structure and Hensarling,” the GOP aide said. “There is already talk that a vote on a Hensarling measure to strip away reauthorization of the bank is a test vote for his future leadership run.”
A former GOP aide said it makes sense for McCarthy, who once backed the bank, to oppose it so that he and Hensarling have the same position.
“McCarthy’s change of tune certainly makes a lot of sense considering one of his most talked-about challengers for Speaker is chairman Hensarling. Walking lockstep with him on Ex-Im keeps Hensarling from having a wedge issue to tout against him in the future,” the former aide said.
McCarthy was traveling on Monday and unavailable for comment. But when asked about whether the leader would bring up a Senate highway bill with an Ex-Im provision, an aide replied: “Leader McCarthy has two priorities: to make sure must-pass bills pass and to continue the fight against Ex-Im."
Publicly, McCarthy has talked tough about letting the bank expire. Providing such loans are a job for the private sector, not federal taxpayers, he said. McCarthy has even pointed to Ex-Im as a rare issue on which he and Boehner “disagree.”
But GOP sources familiar with the Ex-Im debate insist there’s not much daylight between the two top Republican leaders, and that’s raised alarm bells for conservatives like Brat. McCarthy has been present for most of the Ex-Im discussions between Boehner and Hensarling, including several sit-down meetings, the sources said.
And both leaders have warned the chairman that his committee’s failure to produce an Ex-Im bill has put the House at risk of being “jammed” by the Senate.
Cantor, McCarthy’s predecessor, had been close to Wall Street and a staunch proponent of the Ex-Im Bank. In fact, Cantor had teamed up with Democratic House Whip Steny Hoyer of
Maryland to prevent the bank’s charter from lapsing in 2012.
After Cantor’s primary upset a year ago allowed McCarthy to rise to the No. 2 spot, McCarthy took to the Sunday news shows to announce his opposition to the bank, just days after his election as majority leader.
McCarthy had voted for Cantor’s reauthorization bill in 2012, but aides said he did so because it included reform provisions that would start to wind down the bank.
As the GOP whip, the party’s chief vote-counter, McCarthy had a good sense of where rank-and-file Republicans stood on policy issues, including Ex-Im.
McCarthy “astutely diagnosed” some of the past mistakes that Cantor had made, said Dan Holler of Heritage Action, a conservative group that has been whipping up opposition to Ex-Im. “He understood the conference dynamics on the terrible bills Cantor put on the floor.”
But if Congress breathes new life into the bank, it will make his rhetoric seem “hollow and meaningless,” Holler continued.
Hensarling has been adamant that the Ex-Im fight is just the first battle in a larger policy war. He said that the party’s “focus needs to be on tomorrow’s economy and on reforms that will give every American greater opportunities to succeed.”
“Fundamental tax reform, tort reform and regulatory reform will do more to grow our economy and help small-business entrepreneurs than corporate welfare ever could — that must be our agenda,” Hensarling said.
This story was updated at 8:59 a.m.