While Republicans mounted a chorus of opposition to earmarks in spending bills this week, Sen. Jeff Sessions has been quietly blocking a routine tax measure to demand the addition of what is basically an earmark: a new tariff that would benefit a single small business in his state.
The fight over Sessions’ demand for tariffs on sleeping bags from Bangladesh highlights the unintended consequences of the GOP’s newfound hawkishness against earmarks.
Although Sessions has sought earmarks before, over the past year he has fallen in line with Republican leaders who, spurred on by the tea party’s furor over the deficit, have sought to make ending earmarks a central part of their talking points on fiscal austerity.
While fellow Alabama Republican Sen. Richard Shelby voted against an effort on the Senate floor earlier this month to ban all earmarks, Sessions backed the proposal, as well as the GOP Conference’s unilateral vote to abstain from earmarks next year.
But the Sessions case shows that banning earmarks could limit the help Republicans can provide to small businesses trying to recover from the recession.
Sessions is arguing for a tariff on Bangladeshi sleeping bags to benefit an Alabama company called Exxel Outdoors, which claims to be the only U.S. manufacturer of discount sleeping bags.
CEO Harry Kazazian told Roll Call the tariffs are needed to close a loophole in the Generalized System of Preferences, which allow for duty-free import of certain products from developing nations.
Enacted during President George H.W. Bush’s presidency, the law applies to goods that would not provide direct competition to domestic manufacturers and was designed to help the economic growth of developing nations.
Since it was passed, the legislation has largely gone unnoticed. Aides in both parties said it has typically been renewed through unanimous consent agreements and has become one of the background bills agreed to during evening wrap-ups in the Senate.
But over the past year, Exxel has found its business threatened by the GSP, as companies have begun importing inexpensive sleeping bags from Bangladesh essentially duty-free.
Kazazian said Wednesday that could spell the end for his Haleyville, Ala., company.
“I spend more on health care in one month than they spend all year on labor,” he said, explaining that while he doesn’t want to shut down his facility, he may have to.
“We try not to think about that … [but] ultimately, I can’t keep a plant open that’s losing money,” Kazazian said.
Exxel previously shut down manufacturing facilities in China in order to keep its Haleyville plant open, but if the GSP earmark is not passed, Kazazian may be forced to move his operations back to China.
At which point, he says, “I’ll be vilified as that guy who moved offshore.”
While Exxel’s plight hasn’t gotten national headlines, it has certainly attracted the attention of Sessions, whom Kazazian lauds as standing up for American jobs. “The Superman here is Sen. Sessions,” Kazazian said.
Earlier this year, Sessions sought to include language in the renewal of the GSP to close the loophole and save Exxel’s Alabama plant, but he has been unable to reach an agreement with Democrats and Republicans, who are pushing to pass the bill as is.
After numerous proposals to address the situation, Sessions opted to place a hold on the bill, which at this late date in the session means the GSP is likely to lapse at the end of the year.
Sessions flatly denies the provision he is seeking is an earmark. His office claimed he is trying to undo an old earmark.
“Bangladesh gets to ship sleeping bags to America without paying a cent of taxes, and they get to use materials from China without paying a cent of taxes either,” Sessions spokesman Stephen Miller said Wednesday. “This outrageous earmark for Bangladesh is crushing America’s top sleeping bag manufacturer, Exxel, and threatening their workers’ jobs.
“Sen. Sessions is trying to end that injustice, and eliminate that earmark, by ensuring that Bangladesh and China have to play by the same rules as everyone else in the world. He is fighting to close a gaping loophole in our trade laws so that companies in America are at least allowed to compete on the same playing field. We need to stop giving Bangladesh workers an earmark so we can give these Alabama workers a fighting chance. Or is the message we want to send this Christmas that we will keep this loophole in place, even as our nation struggles with crippling unemployment?”
But that argument isn’t sitting well with Democrats or Republicans.
“Sen. Sessions is putting politics ahead of a remarkably successful program that supports more than 80,000 U.S. jobs and sustains economic growth and employment in Alabama and across the U.S. and the globe. Rather than working to sustain thousands of American jobs and small businesses — including many in Alabama — Sen. Sessions is looking to carve out protections for one single sleeping bag producer,” a Senate Democratic aide said.
A GOP aide agreed, arguing that, “You can call it whatever you’d like, but when you’re holding up legislation that effects a wide swath of the economy for a carve-out benefiting one company, it certainly doesn’t look good.”
The aide pointed out that the Senate GOP’s internal earmark ban for next year would bar not only traditional earmarks such as line-item appropriations, but also tax provisions and tariffs that would benefit an individual company.
Even the Senate’s earmark disclosure rules clearly define the tariff change Sessions is seeking as an earmark. For instance, the rules require the disclosure of any “congressionally directed spending items, limited tax benefits, or limited tariff benefits.” Limited tariff benefits are specifically defined by Senate rules as “a provision modifying the Harmonized Tariff Schedule of the United States in a manner that benefits 10 or fewer entities.”
Republican Senators have vilified Democrats over the past few days for proposing an omnibus spending bill for the rest of fiscal 2011 that contains more than 6,000 earmarks worth over $8 billion. Sen. John McCain (R-Ariz.) said on the Senate floor Tuesday that “the majority has not learned the lessons of last month’s election. The American people could not have been more clear. They are tired of wasteful spending. They are tired of big government. They are tired of sweetheart deals for special interests.”
But Kazazian is unmoved by that argument.
“They talk about numbers, but we’re talking about lives,” he said.