POLITICS

GE responds to charges of crony capitalism

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Politics,Beltway Confidential,Timothy P. Carney

General Electric, with a larger lobbying budget than any other company in America, has long lobbied for and profited from Big Government. Since Obama tapped GE CEO Jeffrey Immelt as Job Czar, this critique has spread throughout the Right.

When it came out that GE's U.S. corporate income tax bill for 2010 was $0, anti-GE sentiment grew on the Left and Right. Finally, at the latest Republcian debate Newt Gingrich attacked GE for profiting from Obama-style green-energy loopholes.

So today, GE responds: "There has been a lot of talk lately about GE and what some call crony capitalism. Unfortunately, those same people don’t want the facts to get in the way of their political rhetoric."

The statement begins by pointing out the ways in which GE does make things better: making better medical devices and better jet engines, and employing people in the process. Since I'm pretty harsh on GE, I'll say, good for them for engaging in commerce, which makes the world more prosperous.

Now here are some more GE claims, and some of my responses

"We are not receiving special treatment"

This is a hard one to believe. GE, again, spends more on lobbying than any other company. Its lobbyists include Linda Daschle, whose husband Tom was the Senate Majority Leader and today is a confidant of Obama. Former senior Ways & Means Committee member Jim McCrery is a lobbyist for GE as is former House Democratic Leader Dick Gephardt. Former Senators Trent Lott and John Breaux are GE lobbyists. Immelt has been an official advisor to Obama through his whole presidency.

I think GE needs to explain what it means by "special treatment."

"Last year, only 4 percent of our revenue came from sales to the U.S. government."

This is really off target. The dig at GE is not that it makes all its money selling to the U.S. government. It's that it finds all sorts of ways to profit off of big government, including subsidies and regulations.

Off the top of my head, here are a few ways:

  • GE is a top beneficiary of Export-Import Bank subsidies.
  • GE launched an embryonic stem-cell business just after President Obama announced the government would start subsidizing them.
  • GE owns half of Greenhouse Gas Services, a business that generates and trades in greenhouse-gas credits -- something that only has value if government constrains GHG emissions.
  • GE is a leading manufacturer of wind turbines, which receive all sorts of federal and state subsidies.
  • GE lobbied for and benefits from the light-bulb efficiency regulations that drive consumers to more expensive light bulbs.
  • On the state level, GE gets generous "incentives" (subsidies) from governments. Consider this Virginia case.
  • GE got $140 billion bailout from the FDIC in 2008.

I would like GE to explain why this isn't corporatism or crony capitalism.

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