Crony Capitalism At Work - Boeing Threatens To Leave US If Ex-Im Subsidy Yanked

Tyler Durden's picture

Submitted by Veronique De Rugy via The National Review,

When has crony capitalism really gotten out of control? How about when a major U.S. corporation (a huge defense contractor, no less) is publicly threatening government officials to leave the country if the federal government doesn’t continue to boost their profits through government handouts:

Boeing is stepping up pressure on opponents of the US Export-Import Bank with threats to shift manufacturing abroad if the agency that finances purchases by foreign customers is killed off next month.

 

The threats come as a new push is being made in Congress to find ways of wresting reauthorisation of the bank from a committee controlled by one of the agency’s fiercest opponents.

 

Scott Scherer, Boeing’s head of regulatory strategy at Boeing Capital, said the aerospace and defense group would “not sit idly by” if the ExIm Bank’s mandate was not renewed by the end of June. “Boeing is not going to let itself be hurt by the lack of an ExIm Bank,” he said in an interview with the Financial Times. “If it means sourcing … to other countries who will support us we may have to look at that. Other countries have more aggressive export policies. We will find an alternative.”

First, let me state the obvious: This basically sounds like blackmail to me, and I don’t think lawmakers should look at this kind of behavior favorably.

Second, it’s time for Boeing executives to understand that it’s not the role of the federal government to guarantee that they can sell as many planes as possible — they’ve benefited from the U.S.’s relatively free-market system; they should have to live with it.

And finally, I don’t think Boeing’s threat is very credible. Will Boeing really pick up its factories and move abroad if Ex-Im isn’t reauthorized? Is the possibility other governments might subsidize it really worth the transition costs and the risks of losing billions in defense contracts?

Thankfully, Jeb Hensarling, chairman of the House committee with jurisdiction over Ex-Im, called Boeing’s bluff:

The Republican chairman of the House Financial Services Committee rejected reports that Boeing Co. or other companies might move production overseas if Congress doesn’t reauthorize the U.S. Export-Import bank.

 

“I doubt I believe it,” Representative Jeb Hensarling of Texas said at a Washington press conference Tuesday about whether failing to extend the bank’s charter would drive major corporations out of the U.S. “I think it’s frankly a bit of bluster.”

 

Boeing, based in Chicago, might move some manufacturing overseas if Congress doesn’t extend the bank’s charter beyond June 30, the Financial Times reported May 17. It cited an interview with Scott Scherer, head of regulatory strategy at Boeing Capital.

 

Hensarling said he and others who oppose reauthorizing the Export-Import Bank are trying to “lead the party in a new direction” that will give priority to free enterprise over individual business interests.

Letting the Ex-Im Bank’s charter expire will go a long way to show that Republicans understand the difference between being pro-business and being pro-market — even if Boeing doesn’t.

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TeamDepends's picture

Airports are little more than prisons with Starbucks. Fuck flying.

boogerbently's picture

I'm betting Northrop and Lockheed are greaing some palms, right now !

SafelyGraze's picture

"Boeing Threatens To Leave US"

don't let the door hit you on your way out

hugs,
northop n lockheed 

suteibu's picture

No more soup (defense contracts) for you!

AlaricBalth's picture

The largest beneficiary of Ex-Im subsidies is airline giant Boeing, which has donated between $1 million and $5 million to the Clinton Foundation. Another top beneficiary, General Electric, has given between $500,000 and $1 million. ...

Boeing can leave if it wants to, as long as they take the Clintons with them.

Hillary recently went out of her way to endorse the Export-Import Bank, a little-known government agency that guarantees loans so that American corporations can sell products overseas.

While secretary of state she shilled for the Ex-Im Bank. In 2009, she appeared in Moscow with officials of the Russian airline Rosavia to tout its pursuit of Ex-Im funding. This is how she put it: “This is a shameless pitch for Rosavia — I’ve said what you wanted me to say, Sergey — to buy Boeing aircraft. Right? The Ex-Im Bank would welcome an application for financing from Rosavia to support its purchase of Boeing aircraft, and I hope that on a future visit I’ll see lot of new Rosavia-Boeing planes when I land in Moscow.”

Whoring for the Ex-Im Bank in Russia on Boeings behalf (after Boeing donated millions to the Clinton Foundation). The sleeze just oozes out of her every orifice. I need to take a shower after just thinking about how sordid this is.

Stackers's picture

I dont have a problem with Ex-Im bank as longs the "loans" are repaid. Does anyone know what the Non-Performing Loan ratio is for the Ex-Im bank ?

 

Here is the Ex-Im FY 2013 financial report.... can anyone make heads or tails of it ?

http://www.exim.gov/sites/default/files/oig/Final-Report-FY-2013-Audit-o...

ThroxxOfVron's picture

A brightly colored self-congratulatory advertising brochure.

OR

A stringently detailed exorcise in accounting and auditing.

DollarMenu's picture

Fuckin' corporate leeches. (bloodsucking parasites).

Make sure that the management gets their asses out of America as well.

No hangin' around Chicago, pimpin' for bucks for blow.

Management ranks right up there with the politicians for their ability to screw American workers while making puffy nests for themselves.

Pack of 3 inch hardons they are.

Screw 'em; piss off Boeing.

Anusocracy's picture

That's unfair.

Boeing is just listening to Simon Black.

N2OJoe's picture

CONgress: Ok Boeing, have fun in another country with zero US.gov contracts. Grummond et al thank you.

GeezerGeek's picture

Expecting Boehner and McConnell to stand against Boeing is like expecting Pelosi and Reid to stand against abortion. Or either couple to stand against Obama.

 

prmths2's picture

@Stackers: Thanks for the link. Page 12 shows defaults at $176 million for FY2013; however, it appears that the overall performance hasn't been that bad, the real problem is the continued exposure of the taxpayer to risk:

http://www.washingtonpost.com/blogs/fact-checker/wp/2015/04/09/does-the-...

zhandax's picture

Look in 'Notes to the Financial Statements', page 18.  'Outstanding Defaulted Loans':  $1.3289 billion, FY2013.  I think that $176mm is how much their lawyers spent on hookers and blow to not worry about it.

prmths2's picture

The $1.3289 billion is cumulative and reflects defaults and recovery. It improved slightly between FY2012 and FY2013. Management’s Discussion and Analysis of Results of Operations and financial Condition is an exercise in self-promotion and I can see why the Washington Post took them to task. The statement that " All Ex-Im Bank obligations carry the full faith and credit of the U.S.government" is a nod and a wink to potential clients that the U.S. taxpayer is the only one that will get screwed if things go south.

 

http://archive.exim.gov/about/library/reports/annualreports/2013/FY%2020...

 

 

 

ZippyBananaPants's picture

Yea, 89 million in admin for 2013. WYF? To hand out loans?

lunaticfringe's picture

We can only pray that there is a special hell for the Clintons. Perhaps when the Obamas arrive, the four of them can sit down and play Bridge whilst taking turns cheating one another.

RaceToTheBottom's picture

That special Hell is getting pretty crowded.  
Every President is there and all business executives.  The place is chocked full of Banksters.... 

lunaticfringe's picture

We can only pray that there is a special hell for the Clintons. Perhaps when the Obamas arrive, the four of them can sit down and play Bridge whilst taking turns cheating one another.

philipat's picture

US Airports are little more than prisons with Starbucks. Fuck flying.

Fixed it for ya....

TeamDepends's picture

You're so right. In Amsterdam, you can board a plane with no identification whatsoever with a bomb in your boxers.

JuliaS's picture

UK is similar or worse from personal experience. In other countries it depends. Went through the Czech republic during a terrorist scare. The Prague airport that was typically quiet had MP5 equipped guards with german shepherds.

Don't let peaceful-looking airports fool you.

cheech_wizard's picture

Back many years ago, when being flown back to the states from the airport in Rome, all indeed looked very peaceful in the terminal. That was until you cast an eye upwards to notice the Italian military walking on catwalks carrying what appeared to be uzis.

 

Divine Wind's picture

 

 

Boeing is scared, alright.

Now that Space X has been approved to boost all but the largest DoD / NRO payloads into orbit, United Launch Alliance (a joint venture between Boeing and Lockheed Martin) suddently has serious competition. The loss of revenue they are expected to incur over the next few years could be significant.

Next, there is SIGNIFICANT pushback in Congress of ULA's reliance on the Russian RD-180 engines for launch operations. Each engine cost a cool $10 million. Considering the ongoing tensions with Russia, this leaves ULA / DoD / NRO / NASA in a bit of a pickle.

Further, as the global economy continues to slide, this all but assures that there will be fewer orders for commercial aircraft.

Yup, Boeing is scared, alright.

 

Paveway IV's picture

"...Will Boeing really pick up its factories and move abroad if Ex-Im isn’t reauthorized?..."

Is that a rhetorical question or a joke? Boeing and Israel go way back. Wichita and Long Beach manufacturing jobs already went to Israel and were then outsourced by them to some other shithole. Soon: St. Louis manufacturing jobs will be 'exported' and next: Chicago HQ jobs. Mention this at Boeing and your career is instantly over.

Boeing probably already has the land picked out in Haifa. Ex-Im and tax breaks are noise. Boeing is headed to tax-free (for them) and arms-export psychopaths' paradise: Israel. There will be laws passed in congress that force us to buy their Israeli-manufactured crap for the next thousand years. Israel is just as interested (if not more) in all the defense electronics crap as they are the aircraft manufacturing. They'll always keep some token manufacturing here - mostly the big lines that are too hard/to expensive to move. But anything that they can unbolt and put in a crate to Haifa or some other third-world shithole subcontractor is - for all practical purposes - gone. This is just the theatre for the HQ move.

You didn't think those dual-citizens in congress were there just to give away money and arms to Israel, did you? They want the whole industry. They want to make sure the major arms manufacturers look nowhere else BESIDES Israel for their new tax avoidance homes. Congress HAS to preserve Ex-Im for their business/profits wherever they skulk off too. Congresses' job is to preserve Ex-Im WHILE Boeing is secretly bailing out of the U.S. piece-by-piece. Congress is also expected to fight anything (like the Boycott-Divest-Sanction Israel movements) to make sure the 'new' Boeing isn't hurt financially by their association with Israel. 

rubiconsolutions's picture

Don't let the hanger door hit you in the ass on the way out.

NoWayJose's picture

Why would any company want to keep a factory open in Amerika?

MASTER OF UNIVERSE's picture

To launder money, store methamphetamine, cocaine, and weapons?

WhackoWarner's picture

Boeing is after all 'A Person"  so has every right to change citizenship.

 

USA USA see what comes home to roost.

WhackoWarner's picture

Maybe they have to have ex-Prezzie Bill give a speech of 2 more????

RaceToTheBottom's picture

I did not have sex on that airplane.....

i_call_you_my_base's picture

Leave. See if you can survive without the american government.

Oldwood's picture

 I can sympathize with the feeling that they are bullying or trying to pressure to get their way, but to counter your argument, I'm sure you are aware that many many businesses have already left.

Our government has created a corrupt and complex set of rules that business has tried to rationalize through their planning and capital expenditures, so I don't think it is unreasonable that they will resist change.

The system is corrupt and if anyone, from Boeing on down, wants to financially succeed, they MUST participate in the CORRUPTION, as we ALL are.

This must change and its going to cause a lot of pain....and anger.

i_call_you_my_base's picture

In a free market system without a baseline the most corrupt entitity sets the bar. The upside is reinvested in defeating all others.

Oldwood's picture

It seems that people fear the free market far more than corruption. On a level playing field many feel pretty vulnerable. Everyone seeks advantage to compensate what they see as their competitive weaknesses.

The "little woman" with a big gun in her purse.

Government is the source of power that we all rely on for protection, be it in war or in legal contracts. This power is corruptible and as such, has been corrupted. The constitution was an attempt to eliminate the source of corruption by limiting their power, but like erosion, it can be advanced or slowed but never stopped.

sadly it seems that a full collapse of confidence in government is the only thing that will allow us to start again. Unfortunately, this reset will likely be very painful.

Augustus's picture

The Boeing problem is that other governments supply financing for aircraft sales from their countries.  If boeing does not have the same financing assistance for buyers it will have trouble selling planes.

 

The people posting that the loss of boeing operations in US would make no difference are full scope dumb asses.

Dragon HAwk's picture

We make something here in America... ? come on quit pulling my Leg..

WhackoWarner's picture

Yeah,  You guys make war.  And kill your kids in the name of Boeing et al.

GeezerGeek's picture

We can't kill them all in Chicago and Baltimore, so we must send them elsewhere to die.

Coke and Hookers's picture

"Yes you're welcome to leave. You'll never get a government contract again and 50% tariff will be placed on your civilian products that enter US territory." 

angel_of_joy's picture

Sure dude, we all gonna start buying Airbuses...

free's picture

Yeah, Boeing - you think it's so great over ...

Where ya gonna go?

free's picture

Yeah, Boeing - you think it's so great over ...

Where ya gonna go?

Brokenarrow's picture

here's a novel idea: have a contract group of soldgiers show up at his house around 3am, arrest him and his cunt wife, and they wake up in a foriegn prison tomorrow. Let's see the next interview he gives to a foriegn news source.

Oldwood's picture

Sounds like a place I would like to live. not

It is funny that so many are screaming about oppression and their solution is about ten times worse.

Pet Rock's picture

When the same federal government won't let them move from a strong union state to a right to work state to make more profit and have a better work force then why the fuck not?  Good for them.  

Yen Cross's picture

   ExIm isn't a bank, it's organized government racketeering.

  Future Indictments of Export-Import Bank Officials Likely

joego1's picture

I wonder how much of Boeing's Aircraft are actually made in the U.S. anyway. I heard a bunch of parts were made in China.