Well, this was predictable. House Republicans last week acceded to an extension of the Export-Import Bank for at least the next nine months. The Export-Import Bank is far from the worst example of government-business cronyism. I just completed a history of American political corruption and actually had to leave Ex-Im on the cutting room floor. Its cronies are pikers compared with the corporate moguls that take advantage of tax preferences like the G.E. and Apple loopholes. They also cannot hold a candle to the American Medical Association, which is basically free to write the reimbursement rates for Medicare Part B. And nothing compares to Fannie Mae and Freddie Mac from 1991-2008. The two mortgage giants kept the entire D.C. political class bent over a barrel for almost 20 years as its top executives reaped enormous bonuses while putting the broader economy at risk.
What makes Ex-Im noteworthy is how narrow its coalition of beneficiaries is. With most modern corruption, you see some sort of logroll. The farm bill, for instance, ensnares not only dozens of commodity groups but also a vast array of interests that have seemingly little to do with agriculture. Similarly, Fannie Mae and Freddie Mac survived for so long by roping in realtors, primary mortgage lenders, and home builders, all of whom benefited from the same sorts of policies.
Ex-Im’s list of beneficiaries basically starts and ends with Boeing. This should in theory make it more vulnerable. Our perverse system of interest group pluralism tends to favor policies that rally multiple groups. Ex-Im does not really do that. Further, its economic justifications are slender indeed. On top of that, all congressional Republicans have to do is nothing; absent action by Congress renewing the bank, it disappears.
Ex-Im is the lowest of low-hanging fruit in the sprawling tree of American political corruption. And yet House Republicans cannot seem to pluck it.
There is a lesson in this—an unhappy one, but one that must nevertheless be learned if conservative reformers hope to win: The Republican party is part of this problem, and always has been. Today, the foundation of the party’s electoral coalition is the conservative movement, but that’s a historical novelty. The forebears of today’s conservatives used to be spread between the two parties (with Southerners in the Democratic party and small-town Midwesterners in the GOP). The Republican party predates the conservative movement, and in important respects simply tacked on its voters to an extant set of interests.
The purpose of the party at its creation was to oppose the Kansas-Nebraska Act and generally halt the spread of slavery. The GOP succeeded in this, and much more, but by the 1870s it had lost its motive force. Initially opposed to the machine-style politics of the Buchanan administration, it came to embrace the patronage regime wholeheartedly. Under Ulysses S. Grant this system metastasized into a full-blown epidemic of corruption.
As Senator James Grimes of Iowa put it in 1870, “It looks at this distance as though the Republican party were going to the dogs. . . . Like all parties that have an undistributed power for a long time, it has become corrupt, and I believe that it is today the [most] corrupt and debauched political party that has ever existed.”
This corruption was quite different from the modern variety, currying favor with business interests. Of course, Republican machines in Michigan, New York, and Pennsylvania did deal with businesses. But they had their own streams of revenue to manage their operations, so they were not in hock to them. Ultimately, party bosses in the Senate relied on the federal spoils system to take control of state government patronage, thereby setting themselves up as satraps. Businesses could be part of the process, but bosses like Roscoe Conkling were just as likely to use the Port of New York to extort businesses as to favor them.