Despite turning a profit of more than $5 billion over the last year, Boeing plans to lay off up to 300 workers at its satellite assembly plant in El Segundo, Calif. -- and the company’s CEO Jim McNerney threatened to move many more jobs out of the United States.
The reason? Boeing officials are blaming the expired charter of the so-called Export-Import Bank.
President Obama has been urging Congress to reauthorize the bank, saying in July at the White House that, “This should be a no-brainer.”
The Ex-Im Bank offers low-interest loan guarantees when foreign companies order American goods. Boeing is by far the biggest beneficiary. In 2013, Boeing customers received credit of $8.3 billion, 40 percent of the Ex-Im Bank’s loan guarantees that year.
The U.S. Senate passed a bill reauthorizing the Ex-Im Bank, but it hasn’t come up for a vote in the House. The little known lender has become a political football within the Republican Party, pitting Tea Party conservatives against House Speaker John Boehner.
Critics call the bank crony capitalism. And some, like Kentucky Sen. Rand Paul, are echoing that accusation on the campaign trail.
“I think they have every ability to borrow money,” Paul said during a recent stop in Seattle. “Money’s cheap in the marketplace right now, so I don’t see any reason why the government needs to be involved.”
The foreign airlines that benefited the most all turned huge profits over the last year.
Ryan Air received the most Ex-Im support, and has turned a profit of $930 million the last four quarters. Emirates Airline also has purchased Boeing planes, taking advantage of the low Ex-Im Bank rates. The Dubai-based airline is currently flying high, raking in profits of $1.2 billion in the last 12 months. Korean Air has made $375 million in profits, while at the same time obtaining U.S. taxpayer-backed credit courtesy of the Ex-Im Bank.
Veronique de Rugy, a researcher at George Mason University’s Mercatus Center who has been studying the Ex-Im Bank for several years, questioned the wisdom of the bank.
“These companies are not entitled to have their profit, year after year, artificially boosted by government intervention,” de Rugy said.
But Ex-Im supporters argue the bank, which has been in existence since the New Deal in 1934, doesn’t cost taxpayers anything because default rates are very low.
“The government has always been the backstop for our businesses to go and sell and say, ‘we expect that they’ll pay, but if they don’t the banks aren’t going to lose their money,’” said Rep. Jim McDermott, D-Wash.
While Boeing is certainly the biggest Ex-Im beneficiary, small companies also benefit. Hilliard’s Beer in Seattle now sells about half its craft brew in Sweden. The Ex-Im Bank allowed them to get paid faster so they could grow their business.
“The Ex-Im Bank is doing really great, valuable things for our economy on the global stage,” said owner Ryan Hilliard.
Dan Springer joined Fox News Channel (FNC) in August 2001 as a Seattle-based correspondent.