Below, I noted that the Chamber of Commerce is reportedly considering primarying Republicans who’ve been standing up to big business when it demands big-government giveaways, like the expired Ex-Im Bank. but this isn’t the only way Ex-Im fans are fighting back.
This morning, Reuters reports the chairman of Boeing, Jim McNerney, is once again threatening moving ”key pieces” of its operations to other countries (a threat we’ve also heard from GE) if the giant exporter doesn’t get its Ex-Im subsidies back:
“We are now forced to think about this differently,” McNerney told hundreds of executives during an interview hosted by the Economic Club of Washington, noting that Boeing is looking at countries that offer export credits . . .
McNerney’s comments reflect U.S. industry’s growing frustration about deep partisan divides that have paralyzed Congress since the rise of the right-wing Tea Party in 2010 and the imposition of mandatory spending cuts that have hit revenues at the defense division of Boeing and other arms makers.
GE’s chief executive, Jeff Immelt, last month told the Economic Club his company would move manufacturing jobs to Canada and Europe if the Ex-Im bank closed.
McNerney said he was more worried than ever that Congress could fail to reauthorize the bank.
It’s worth noting that (understandably) when Boeing executives talk to their investors the story is quite different. For instance, the WSJ reported that during a conference call to discuss the company’s second-quarter earnings, the company’s chief executive officer, Dennis Muilenburg, said that “Boeing Co. won’t feel near-term financial pressure if Congress fails to reauthorize the Export-Import Bank in coming days.” He added what we already knew: ”There are multiple commercial credit sources available today. . . . [The current financing market] doesn’t create risk for us.”
#related#However, if, as McNerney says, Boeing wants other countries to subsidize its exports, let them! The academic literature shows that export subsidies like Ex-Im may help the subsidized industry, but they tend to hurt the economy overall. If other countries are foolish enough to want to hurt their economy further, we shouldn’t emulate them.
Besides, I wonder how credible Boeing’s threat really is. As a lawyer friend of mine who follows the issue very closely raises some great points:
First, they still get huge subsidies from various states (e.g., WA and SC).
Second, they have long-term supplier/labor/real estate contracts in the USA that would make moving operations very, very difficult.
Third, there aren’t any good alternative investment locations – no chance they can move to the EU (Airbus) or China (which is creating its own civil-aircraft company). So where? Japan? Brazil? India? Huge problems with all of those places (including high tax rates, aging labor force, corruption, protectionism, etc etc.)
Fourth, they’d get KILLED by the US state/federal politicians (and lose their political clout) – remember what happened when they moved to SC? multiply that by 10000.
I agree. At the same time, Boeing’s hollow threats may backfire: There may come a time when lawmakers will decide that the appropriate response to such threats isn’t to consider renewing the Ex-Im subsidies but to take away all the other subsidies that Boeing is getting. You may think I’m dreaming, but if the trend continues, we could very well see companies losing a lot more of the power they currently have over Congress.
McNerney says he needs to “think differently.” Okay, here’s an idea: Boeing should spend its huge lobbying budget on the fight to overhaul the U.S.’s awful, byzantine, burdensome corporate-tax system and burdensome regulatory regime, which would benefit Boeing and all the other companies and industries that do business here.