Last month President Obama boasted that he deserved a gold watch for his efforts to sell Boeing aircraft abroad. But Reuters says that it is the American taxpayer who should get credit for Obama's salesmanship.
That's because Boeing gets help from the government-run and taxpayer subsidized Export-Import Bank, which was formed in 1934 to assist small businesses who wished to sell their goods to the Soviet Union. The USSR is gone and Boeing--a great firm by the way--is anything but small. The Washington Examiner two years ago wrote, "Of the $9.3 billion in loan guarantees Ex-Im issued in fiscal 2009, $8.4 billion subsidized Boeing sales."
Delays in producing the 787, likely caused by the NLRB overreach in regards to the South Carolina stand-off, has compelled the aerospace giant to pay $500 million in compensation to Air India, which received Ex-Im Bank funding for their 787 purchases. But the low-cost airline, which The Economist last year called "a state-owned zombie," wants more compensation.
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| University of Chicago |
Air India competed with Delta Airlines, an American firm, in the USA to Mumbai routes, but Delta dropped those flights last year. The Atlanta-based carrier does not receive Ex-Im assistance when it buys planes. In January the Ex-Im extended $1.3 billion in financing to Air India because the airline has been a "good customer" of the bank.
This "good customer" is $8 billion in debt. Air India can't run itself properly--why are we subsidizing their purchase of jets? So this "zombie" can drive an American airline off of another route?
As for the Ex-Im Bank, it reminds me of a quote by the brilliant University of Chicago economist Milton Friedman: "Nothing is so permanent as a temporary government program."
Meanwhile, the aforementioned Examiner says the GOP can soar by opposing the Ex-Im.
Related post:
Kill the Export-Import Bank
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