Boeing has just received the largest state subsidy in the history of the United States--netting $8.7 billion in tax breaks--courtesy of the Washington State Legislature and its taxpayers.
Such subsidies are one of the many perks of being able to afford the best lobbyists that money can buy. In fact, it is a perk that Boeing has used to its fullest advantage, securing billions of dollars in federal subsidies from the Export-Import Bank of the United States (Ex-Im Bank) for more than a decade.
The Export-Import Bank is backed by the American people. It operates much like a regular bank with the exception that its scope is primarily limited to providing favorable financial loan guarantees to American companies doing business with companies abroad. Despite being a federal agency that is supposed to act independently, Ex-Im has been beholden to special interests and the lobbyists that represent them.
Boeing has employed a legion of consultants to lobby the Ex-Im Bank for federal assistance. Last year, the company reportedly hired not one, but two of the largest lobbying firms in Washington. Over the past five years, the company has reportedly spent $75 million on its lobbying efforts. Lucky for Boeing, its investment has paid off. So much so that Boeing receives the bulk of Ex-Im’s financial assistance, accounting for more than 82 percent of Ex-Im’s total loan guarantees. What is perhaps most preposterous about all this is that Boeing certainly doesn’t need financial assistance, considering the company has revenue streams exceeding $81 billion a year.
And while these loans unquestionably improve the financial situation of Boeing and its employees, it also has severe and negative consequences on other American employers. Ex-Im’s loans allow foreign airline companies to purchase Boeing aircrafts at discounted rates and with preferential terms. Such rates and terms are often unobtainable at a standard bank and Ex-Im has historically provided the loans exclusively to foreign companies.
This means that foreign airlines receive a better financial loan package than their American counterparts. These favorable loans allow foreign carriers to increase profit margins while giving them a competitive edge. In the airline industry, where profit margins are very slim to begin with, this advantage can be a game changer. According to some reports, the American airline industry has lost as many as 7,500 jobs and $684 million because of Ex-Im’s actions. The Bank is a federal agency that is supposed to be helping American companies, but it is in fact hurting them and costing Americans their livelihoods.
In recent years, there has been a groundswell in the number of Ex-Im critics. Boeing and its lobbyists have responded by arguing that Ex-Im is essential to its operations. Yet, when the federal government shutdown and the Ex-Im Bank was forced to cease its operations, Boeing somehow managed to get by and the same would be true if the Bank’s charter is revoked.
Members of Congress have also kept a keen eye on Ex-Im Bank, renewing the Bank’s charter on the condition that before approving any deal, the Bank must analyze the economic impact of its transaction on American businesses. Unfortunately, as the Washington State Legislature subsidy and the continuation of Ex-Im loans to foreign airlines prove, Boeing’s lobbyists are simply too powerful and many elected officials too weak.
Members of Congress should take a stand and revoke Ex-Im Bank’s charter, so that Boeing can no longer take advantage of its insider connections and extort billions of dollars from the Bank, all the while leaving the American taxpayer on the hook for the guaranteed loans while losing thousands of precious jobs.