President Obama's export initiative, his "insourcing" campaign, and his agency-consolidation plan all hinge on a little-known export financing agency that used two-thirds of its loan-guarantee dollars last year to subsidize one company: Boeing. Under the radar, that same agency also gave a $10 million subsidy to Solyndra, the bankrupt manufacturer of solar panels.
Obama's increasing reliance on the Export-Import Bank of the United States, which is backed by American taxpayers, highlights how his industrial policy is inextricable from corporate welfare and crony capitalism, with subsidies seemingly designed to appeal to swing-state voters.
Obama played blue-collar populist last Wednesday when he hosted a thinly veiled campaign rally under the guise of promoting "insourcing." Of manufacturing jobs, Obama said, "I want them taking root in places like Michigan and Ohio and Virginia and North Carolina," conveniently naming four swing states.
To help these jobs "take root," though, Obama is not proposing to clear the land and till the field -- by cutting tax rates, reducing regulation, tethering the out-of-control National Labor Relations Board, or allowing businesses to deduct up front the full cost of their capital investment. No, Obama wants Washington to be the landscape architect, relying on subsidies and targeted tax breaks for favored businesses -- while also doling out some punishment for those companies that dare move jobs overseas.
Simply getting government out of the way of manufacturing would provide more economic benefit, but less political benefit. The free market might choose less-favored companies (like those that support Republicans) or put new factories in non-swing states like South Carolina (where Obama's NLRB forced Boeing to kowtow to his union supporters). The Obama model (regulate, tax and subsidize) allows for a more strategic -- that is, more political -- development of manufacturing: Put new factories in right-to-work states, helping the pro-Democratic unions; support the "green industries" that Obama constantly celebrates; reward the businesses that play ball with the administration; and subsidize new plants in the states crucial to Obama's re-election.
On the day Obama gave his "insourcing speech," North Carolina's Democratic Sen. Kay Hagan unveiled a $635 million direct loan from the Ex-Im to a Saudi power company that has agreed to buy gas and steam turbines from Siemens, which will make the turbines in Charlotte. Charlotte happens to be the site of the Democratic National Convention, and North Carolina happens to be the state Obama won by the smallest margin in 2012. If the Saudi company fails to repay the loan, Ex-Im pays Siemens, ultimately with the backing of U.S. taxpayers.
Siemens is an ally of Obama administration on energy regulation, having lobbied, through the U.S. Climate Action Partnership, for mandatory caps on greenhouse gas emissions. David McIntosh, Siemens vice president for federal lobbying, is an alumnus of Obama's Environmental Protection Agency, as well as his presidential transition team. McIntosh is an Obama donor (he gets around Obama's "ban" on lobbyist donations by not being registered to lobby, meaning that Siemens' veep for federal lobbying supposedly spends less than 20 percent of his time on lobbying).
Obama's subsidy-reliant industrial policy not only fosters cronyism and politicization, but it also opens the door for exploitation by the biggest corporations, who tend to have the biggest lobbying budgets. Consider Ex-Im's loan-guarantee portfolio. According to the agency's recent annual report, Ex-Im issued $10.2 billion in loan guarantees to benefit Boeing last year alone, which is 66.8 percent of all the agency's guarantees in that time period. Yes, more than two thirds of Ex-Im's guarantees benefited one company, and that doesn't even include Ex-Im's $700 million direct loan to the United Kingdom to subsidize a Boeing satellite sale. This is Boeing's standard share. The South Carolina standoff was just a lover's spat.
Boeing Chief Executive Officer Jim McNerney chairs Obama's Export Council, and the nearly $200,000 Obama received from Boeing executives and employees in 2008 is easily the most any politician has ever raised from the jet maker.
Ex-Im's 2011 annual report tells other interesting stories about Obama's industrial policy. Solyndra, which went bankrupt in August after benefiting from a $500 million loan guarantee from the Energy Department, pocketed an Ex-Im subsidy last year too: As Solyndra stumbled in February 2011, Ex-Im leant a hand by approving a $10 million loan guarantee to help Solyndra sell solar modules to Belgium. (Solyndra delivered the product to Belgium, and so the $10 million taxpayer exposure is not affected by the company's bankruptcy.)
Create taxpayer-subsidized jobs in a politically important state, win the loyalty of a huge and vulnerable company, and try to bail out a failing green-energy poster child -- Obama couldn't do any of these things if he took a laissez-faire approach. That's why, for politicians, agencies like Ex-Im are so crucial.
Timothy P.Carney, The Examiner's senior political columnist, can be contacted at email@example.com. His column appears Monday and Thursday, and his stories and blog posts appear on washingtonexaminer.com.