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Opinion

Private-jet lobby defends federal financing of private jet exports

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Beltway Confidential,Opinion,Timothy P. Carney,Subsidies,Air Travel

I've got nothing against private jets and helicopters (also known as "business aircraft," and "general aviation,"). I argued it was a cheap shot for Obama to claim there was some special tax break for corporate jets. But I don't like federal subsidies for them (or just about anything else), as I made clear in my column.

Today, the General Aviation Manufacturers Association wrote to object to my arguments. See their full letter below:

To the Editor:

I’m perplexed by Tim Carney’s April 1 opinion piece (“Obama subsidizes private jets for high-flyers abroad”), which completely misses the point about the financing services provided by the Export-Import Bank of the United States and its impact in creating jobs for aviation manufacturers.

Last week, I joined government and industry leaders to celebrate the important economic and job impact of general aviation in Texas. These leaders got to look into the eyes of about 700 manufacturing employees from 24 companies—big and small—and see how excited our workforce is about the highly skilled and technical work they do every day. We’ve done similar events in other states, like Kansas, Iowa, Georgia, Ohio, and New Mexico, to give policymakers and the local community a first-hand look at the value aviation manufacturing provides to their community and economy.

One of our manufacturers, Air Tractor, in Olney, Texas, makes agricultural and firefighting aircraft. It reached record production in 2012, in large part due to exports financed by the Ex-Im Bank. Its products are now in use across the world, including Argentina, Brazil, China, Australia, and Spain. Air Tractor’s loan from the Ex-Im Bank supported 50 of the company’s 200 jobs.

Mr. Carney mentioned the role Ex-Im played in sales of Gulfstream aircraft in Asia. However, he failed to connect the fact that a $300 million deal helped support 2,100 jobs in Savannah, Georgia. The leaders of these companies have credited the Ex-Im Bank with helping them grow their number of employees. And this doesn’t even count the thousands of suppliers and the high-quality jobs embedded in the aviation supply chain. For example, ICE Corporation in Manhattan, Kansas, a supplier of high-tech aviation equipment, benefits from the Ex-Im bank’s financing of general aviation products made by Kansas companies such as Cessna and Beechcraft.

Finally, it’s worth noting that the Ex-Im Bank provides loan guarantees for purchases of general aviation aircraft at competitive rates. These aren’t subsidies and they aren’t gifts. They help customers move off the sidelines to purchase aircraft and assist banks in making loans. They also provide handsome investment returns—some $1 billion in the last fiscal year—to U.S. taxpayers.

Our industry—and our workers—were hit hard by the recession. After several tough years, we are starting to stabilize and create new jobs, in part thanks to the kind of targeted financing offered by the Ex-Im Bank. This is a government agency that returns money to the taxpayer and helps create jobs. That’s something Mr. Carney ought to celebrate, not criticize.

Pete Bunce

President and CEO,

General Aviation Manufacturers Association

As with Ex-Im's response to my column, I've got objections to GAMA's arguments, but I've had my say for today.

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