Ex-Im, exemplar of crony capitalism

Reports have surfaced indicating that Boeing has successfully leveraged its political muscle to woo and strong-arm legislators into granting the corporation a basket of favors, ranging from tax breaks to government contracts. According to some reports, “Boeing got $7,250 in tax breaks for every $1 it spent lobbying” in Washington State, for example. 

Sadly, these kickbacks come at the expense of everyday Americans and businesses.

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This has proven to be true on the federal level as well, where Boeing has seen its lobbying efforts pay off handsomely, most notably with the Export-Import Bank of the United States (Ex-Im Bank). The Ex-Im Bank is a federal agency that provides loans and other financial guarantees with preferential rates and terms, undercutting private sector financial institutions. Notably, it is backed by the American taxpayer and missioned with supporting U.S. jobs.

Yet, Ex-Im’s actions have not been consistent with its Congressional charter. 

Ex-Im has been stamped as “Boeing’s Bank” by Beltway insiders and for good reason. In 2012, Boeing received more than 80 percent of Ex-Im’s total loan portfolio. Furthermore, the Bank annually gives foreign and even state-owned companies billions of dollars in financial guarantees to purchase Boeing manufactured goods. 

Boeing’s reliance on this institution of corporate welfare is alarming, especially since it generates over $80 billion in revenue each fiscal year and has billions of dollars of cash on hand, enough to underwrite at least some of its own loans. What these loans really equate to is a massive corporate subsidy. 

Most worrisome is that the Boeing gives nothing back despite all that it receives from the federal government. Last year, Boeing reportedly paid no federal income tax, all the while taking the Ex-Im Bank for billions of dollars of worth of financial incentives and winning numerous federal government contracts.

Ex-Im is poisoning the free market and harming American jobs. Its loan guarantees codify government intrusion into the free market, which is in no small order. This government intervention comes at high price, often to the detriment of domestic companies and American jobs. 

The airline industry has been victimized by Ex-Im’s loans, as they are typically excluded from the Bank’s preferential deals and thus their foreign competitors are given a market advantage. As a result, The Wall Street Journal reports the Bank has caused the airline industry to hemorrhage $684 million and as many as 7,500 jobs. Notably, some of the foreign carriers based in the Middle East that benefit from Ex-Im’s largesse have deeply troubling track records, including failing to recognize Israel in their operations and even training airline staff to target Jewish passengers.

Boeing’s government sponsored funding is not just granted by the good graces of Congress and the company’s merits alone. According to Bloomberg, Boeing had “two of Washington’s highest-paid lobbying firms” on retainer. Moreover, between 2011 and the end of 2012, the Bank doled out over $30 million to lobbyists, more money than most small businesses generate over many years. This pay-to-play environment is a clear subversion of our political system, representing all that people despise about Washington.

Even President Obama, who once said as a senator that the Bank was “little more than a fund for corporate welfare,” has been converted by Boeing’s army of lobbyists into a steadfast adherent of the Export-Import Bank. In 2012, the president completely contradicted his earlier position, stating that “the Bank will continue to do what it does best – help our nation’s workers compete globally and support U.S. jobs at no cost to American taxpayers.”

Later this year, the Ex-Im Bank’s charter needs to be reauthorized by Congress for it to continue to operate. Given the power that Boeing and its lobbyists wield in Washington, there will be legislators who want to capitulate to their demands. 

The Bank’s charter must be severely reformed if it is to remain in existence. No more corporate giveaways to Boeing. The scope of their activities must be slashed and if that is not achievable, it should go away completely.

It is critical that members of Congress coalesce around this issue and address this symbol of crony capitalism. Companies like Boeing don’t need corporate subsidies, especially when it comes at the expense of American jobs and exposes taxpayers.

DeMaura is the president of Americans for Job Security, a pro-business organization.