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Opinion: Op-Eds

Business is too big when it needs government subsidies to succeed

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Op-Eds,Fiscal Policy,Federal Budget,Big Government,Export-Import Bank,Analysis,Subsidies

It's one of the great miracles of corporate cronyism: Revenues exceeding $81 billion for American aerospace giant Boeing haven't led to greater independence in the marketplace for the firm.

Instead, the firm's unsavory reliance on a taxpayer-backed government lending stifles competition.

The manufacturer's preoccupation with keeping open its access to the government dole comes at a moment when most companies are practicing fiscal restraint, a time when some small businesses are struggling merely to hover at parity in their ledgers.

Yet Boeing has deployed a battalion of high-priced lobbyists and administration palm-greasers to secure billions of dollars' worth of taxpayer handouts.

Recently, both the Wall Street Journal and Reuters reported the company had begun aggressively seeking additional funding for government-backed loan credits from the Export-Import Bank and that Boeing's customers are "nervous" about whether the taxpayer-backed pipeline will remain available.

These worried customers are predominantly foreign airlines that use Ex-Im's loan guarantees to purchase Boeing aircraft at discounted prices, and with favorable purchase terms, no less.

Foreign airlines are concerned because it could mean the loss of a strategic competitive advantage over American carriers, since Ex-Im's loans largely benefit airlines that employ workers outside the United States.

In fact, these very loan guarantees and special terms have had a perverse impact on the U.S. airline industry. When foreign airlines are presented with the opportunity to secure Boeing aircraft at below-market level rates, they are effectively able to reduce their costs, which in turn allows them to reduce ticket prices. In order to remain competitive with these foreign airlines, U.S. carriers must match the prices and cut back in other areas, often personnel.

Some experts estimate that the Export-Import Bank's financing of foreign competitors has caused the U.S. airline industry to lose as many as 7,500 jobs and $684 million, according to the Wall Street Journal.

It is outrageous that a government agency is financing foreign entities at the expense of American jobs in the first place, but what is equally disconcerting is the high percentage of Ex-Im's business done with Boeing.

In 2012, Boeing received more than 82 percent of Ex-Im's total loan guarantees. Ex-Im has become so intertwined with Boeing that it has established a reputation as "Boeing's Bank."

Members of Congress have belatedly taken note and acted in a bipartisan manner to pass legislation reauthorizing Ex-Im's charter on the condition that it analyze its financial transactions to ensure that no harm is done to American jobs.

The decision has caused consternation among Boeing and its foreign customers because they now worry about losing taxpayer-backed special deals.

In reality, Ex-Im has done little to curtail its activities and continues to provide foreign airlines and Boeing -- a corporation with yearly revenue approaching $100 billion -- with plum loan guarantees.

It's time to end Ex-Im's showering favors on Boeing and costing Americans jobs. Congress should pass the Ex-Im repeal proposal by Sen. Mike Lee, R-Utah, and Rep. Justin Amash, R-Mich.

Congress has attempted to reform the Bank and it has not worked. It is time for Boeing to figure out how to survive on its own and without the corporate welfare.

Stephen DeMaura is president of Americans for Job Security.

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