A dysfunctional Congress didn’t give businesses much to celebrate in 2014, but there were some winners at the intersection of money and politics. Here are five:
The political establishment
The Tea Party remains a powerful force in the Republican Party, but with one notable exception (the defeat of Eric Cantor), the GOP’s traditional pro-business wing regained much of its strength in 2014.
Take the U.S. Chamber of Commerce, for example. The chamber spent $35 million on the 2014 election, not only helping Republicans win control of the Senate, but also beating back Tea Party challengers in key GOP primaries. Chamber-backed candidates won 14 out of the 15 primary races, runoffs and special elections in which the business organization invested.
Meanwhile, the $1 trillion spending bill enacted by Congress should help political parties regain some of the clout they’ve lost. Tucked in the 1,603-page bill was a provision that will enable wealthy individuals to donate as much as $777,600 to party committees every year, up from the previous limit of $97,200. Campaign finance reformers decried the move, but so did Tea Party activists, who fear the Republican Party will use this money to defeat insurgent candidates in primaries.
Then there’s the 2016 presidential candidate. We could see another Bush vs. Clinton battle, since former Florida Gov. Jeb Bush leads a crowded pack for the Republican nomination, and former Secretary of State Hillary Clinton is the overwhelming favorite to win the Democratic nomination. You can’t get more establishment than that.
Wall Street
The end-of-the-year spending bill included a nice fat bonus for Wall Street: repeal of a provision in the Dodd-Frank Act that required banks to trade their riskiest derivatives in affiliates that aren’t backed by federal deposit insurance.
Banks contended this provision was onerous and prevented business customers who used derivatives to hedge risks from doing all their business with one institution.
Supporters of the provision said it was a key part of the Dodd-Frank Act because it prevented banks from making risky bets with taxpayer-backed dollars.
How important was it to Wall Street to get rid of this provision? Important enough that Jamie Dimon, chairman and CEO of JPMorgan Chase, personally called members of Congress urging support of the move to gut the so-called “pushout” requirement.
Populists
Populists on the left and right lost their fight against the spending bill, but they did discover they could find common ground on this issue. That could lead them to work together on more issues in the future, leading them to become bigger headaches for the Washington establishment.
Progressives, for example, rallied around Sen. Elizabeth Warren’s fight to block the spending bill unless the provision repealing the Dodd-Frank Act “pushout” requirement was removed. This raised the Massachusetts Democrat’s profile even further and led some Democrats to criticize President Barack Obama for caving in to Republicans on this issue.
Tea Party Republicans, meanwhile, found themselves in the strange position of voting with House Minority Leader Nancy Pelosi against the spending bill.
Losing this battle could help insurgents in both parties in the long run, because slapping together a massive spending bill at the last minute and then adding special-interest provisions to it showed Congress as its worst.
Export-Import Bank
The Export-Import Bank authorized $20.5 billion in financing to support 3,476 overseas transactions by American businesses in fiscal 2014. Nearly 90 percent of these transactions benefited small businesses, but big businesses such as Boeing and Caterpillar accounted for most of the dollars involved.
The export credit agency not only was self-sustaining, it actually made money for the government.
So why did Ex-Im Bank come close to going out of business this year? Free-market conservatives don’t think the government should be involved in export financing — it’s a form of corporate welfare that distorts the market, they argued. Plus, they question the agency’s accounting — Ex-Im could be a money loser for the government if their financing deals go bad. Look at Fannie Mae during the financial crisis.
These ideological objections to Ex-Im Bank were nothing new, but this year the committee in charge of reauthorizing the agency was led by a staunch opponent, Rep. Jeb Hensarling, R-Texas. As a result, Ex-Im Bank — and the business groups that support it — had to fight for the agency’s life this year.
They finally won at least a temporary reprieve for the agency: Faced with a Sept. 30 expiration date, Congress reauthorized Ex-Im Bank through June 30, 2015.
Small Business Administration
The SBA finally got a permanent administrator in April: Maria Contreras-Sweet, a former community banker and California state official.
That ended a power vacuum at the agency, which had been without a permanent leader for more than a year.
The SBA, meanwhile, cranked out the loans to small businesses this year. It approved nearly $19.2 billion in government-guaranteed loans through its flagship 7(a) loan program in fiscal 2014, up 7.4 percent from 2013 and the second-largest total ever.
Except for some pesky oversight from the House Small Business Committee, Congress treated the SBA well: It responded to increased demand for SBA loans by increasing its authorization limit, and increased funding for the agency’s entrepreneurial development programs by $24 million.
