Any American company can import the chemical 4-propylbenzaldehyde. But only one patented its use in manufacturing a clear plastic that makes water bottles and other products.
That company, Spartanburg, S.C.-based Milliken and Co., wants to import it cheaply, so it petitioned GOP Rep. Mick Mulvaney — just as it did his predecessor, Rep. John Spratt (D) — to ask for a reduction on the tariff of buying mass quantities of it from Japan.
But don’t call it an earmark.
Mulvaney is one of 65 freshman House Republicans who last week signed on to a letter to Speaker John Boehner (R-Ohio) asking that he allow these miscellaneous tariff bills.
House rules prohibit “limited tariff bills,” or reduced taxes on imports that benefit 10 or fewer manufacturers. So in order for Mulvaney’s bill to be aboveboard, the company had to prove that
although it profits every time the product is used, at least nine other companies benefit, too.
“It has to benefit the market and the industry generally, not just the people in my district,” Mulvaney said. “It’s used in literally thousands of different products.”
Some 600 of these tariff bills are set to expire at the end of the year, most covering chemicals named with an indecipherable amalgam of letters and numbers but which play an integral part in the construction of everything from Styrofoam cups to military tanks.
So to keep the cost of these products from going up, Members must submit bills to the Ways and Means Committee by the end of the month asking for tariff reductions and must prove they benefit multiple importers, manufacturers, retailers and so on.
House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.) will bundle them into a package and try to pass it.
So unique are most of these chemicals, however, that only one or two companies even deal in them, said Dave Beck, director of the Office of Tariff Affairs and Trade Agreements at the International Trade Commission, which has to approve the tariffs.
“There may not even be 10 people that would use it,” he said. “When you talk about who’s benefiting, there’s usually one or two companies who may be involved in asking for a bill, but then it’s up to the Hill to decide who’s really to benefit.”
Sage Eastman, a spokesman for Camp, said the difference from prior years is that there is a new process by which the committee will scrutinize each bill.
“The whole point is to not earmark something as a benefit to one company,” he said. “There will be months of public review of the new bills to ensure they are written properly and meet all the stringent guidelines.”
But bills deal with generic products and chemicals, not their brand names. The committee was unable to provide an example of how a bill subject to the new scrutiny will look any different from past tariff bills.
Still, Congress’ job is to make the reduced tariff broadly available, said Rep. Kevin Brady, chairman of the Ways and Means Subcommittee on Trade, and if only a few companies take advantage, so be it.
“We can’t anticipate who in this $15 trillion economy might take advantage of it,” the Texas Republican said. “An earmark is for a specific town, a specific state, a specific organization. And these are not. These are available, frankly, to anyone who’s importing it or using it.”
The idea is that if taxes on importing these products are low enough, more companies can get into the business, said Rep. Tom Reed, who spearheaded the freshman letter.
“Hopefully, what we’ll see is a blossoming of U.S. manufacturers that will far exceed 10 or more,” the New York Republican said.
But there is no guarantee. Already, outside groups and Senate Republicans are skeptical. Senate Minority Whip Jon Kyl said they are looking at other approaches because Camp’s approach doesn’t solve anything.
“I don’t see that they’re doing anything,” the Arizona Republican said. “So we’re going to find a different process, I think, whereby these requests can be dealt with in a way that clearly doesn’t violate any Senate rules.”
One such process is laid out in a bill from Sen. Jim DeMint (R-S.C.), which would take Congress out of the equation and have companies directly lobby the International Trade Commission.
Some House Republicans, though, argue that it is the constitutional duty of Congress to deal with tax measures and that it would be improper to remove Members from the process.
Adding to the problem is that allowing the tariff bills could open a Pandora’s box of appropriators calling for their earmarks to be returned, as well.
House Appropriators Chairman Hal Rogers (R-Ky.) said he thinks the tariff bills are no different from earmarks. One of his cardinals, Rep. Jack Kingston (R-Ga.), said that if the tariffs are allowed, there’s no reason earmarks should be banned.
“What my resentment has always been is what’s the difference between this and a well-vetted road project for the transportation bill or a research project on the agriculture bill?” said Kingston, who chairs the Appropriations subcommittee that deals with agriculture and rural development. “If you can give a tax relief, could you not do the same on a well-vetted expenditure that has broad support?”