General Electric Should Stop Bullying Congress Over the Ex-Im Bank
Let GE whine. The company doesn't need a subsidy.
Merriam-Webster's definition of a bully is: "a blustering browbeating person; especially one habitually cruel to others who are weaker." Sound familiar, Congress? That's because this is what General Electric's Jeffrey Immelt has been doing to you for months, first by threatening to leave the country and withhold contributions and now by threatening to move jobs overseas as retaliation for the end of the Export-Import Bank of the United States.
In June, a revolt against the unhealthy marriage between the government and large corporations put the mother of all crony programs, the Ex-Im Bank, in liquidation. Being the second-largest beneficiary of the bank's largesse and one of the 10 mega-corporations collecting 64 percent of its overall activities, GE is upset. It wasted millions of dollars in lobbying, yet Congress still cut off its access to cheap loans.
A recent GE press release notes, "With no U.S. export financing available, GE has pursued non-U.S. options to meet customer requirements." The result, we are told, will be "500 GE jobs moving outside the U.S." Of those, 400 could move to France.
Don't be fooled. The idea that there is no export financing without Ex-Im is ludicrous. Over 98 percent of U.S. exports take place without any help from Ex-Im—proving that export financing is readily available. That's true for GE, too. As The Heritage Foundation's Diane Katz writes, "General Electric Capital Corporation holds assets of $499 billion (and) posted net income of $7 billion last year." She adds, "Lending to GE is a pretty safe bet considering that the company has a market cap of $255 billion and annual revenues of $149 billion." There is no reason that GE cannot continue to finance its customers as it has done for years.
Also, the jobs that GE claims could go to France because Ex-Im expired never existed in the first place. According to reports, those 400 jobs would be created by GE in France if GE's bids were to beat out the competition and if the French export credit agency were to subsidize the deals. Better yet, it is quite obvious that the French jobs have nothing to do with the demise of Ex-Im. As Tim Carney at The Washington Examiner reports, GE had already promised the French government that it would create 1,000 jobs there in exchange for approving a merger with French power giant Alstom. In other words, blaming Ex-Im for the possible job creation in France is disingenuous.
"The real story is that GE, along with Boeing and other top beneficiaries of the government bank, are trying to scare Americans into further subsidizing their hugely successful multinational operations," Katz rightfully notes.
There is nothing wrong with a U.S. company's creating jobs abroad, as it often improves its bottom line—which is to the advantage of American workers and the economy. What is problematic is that GE is using its merger with Alstom and its promise to create jobs in France as a political weapon against members of Congress to scare them into renewing Ex-Im. Lawmakers sensitive to this bullying should ask themselves whether GE would bring back all its foreign jobs if Ex-Im came back to life. Knowing that the answer is no should open their eyes to GE's real motives.
Lawmakers who think that "if only we revived Ex-Im, that would give an incentive to GE to create 400 jobs in the U.S. instead of France" should remember that protectionist policies in the name of job creation come at enormous cost. Even if the use of credit support is good for GE, it doesn't make it good for the country as a whole. Export subsidies boost the profits of the subsidized industries by shifting jobs, economic growth and capital from the non-subsidized ones. If the French government wants to hurt its economy by subsidizing GE, so be it—but this Congress should abstain. Besides, it's not Congress' job to artificially boost GE's profit, no matter how loudly the company complains.
Bullying is ugly no matter who does it. However, it's outrageous when it comes from massive companies that have it all but still want more at the expense of everyone else.
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