GE’s Outsized Reaction to Ex-Im Expiration
General Electric recently announced it would not move its headquarters to Cincinnati. The reason for this earth-shattering news is that some members of Ohio’s congressional delegation oppose reauthorizing the Export-Import Bank. GE is a major beneficiary of Ex-Im financing.
The announcement costs GE nothing to make, as the top contenders for relocation apparently include New York and Georgia. It expects to reach a decision by year’s end. GE, currently headquartered in Connecticut, is mulling a move as it sells off most of GE Capital, its financing arm. Connecticut’s high taxes and unfavorable business climate are also factors in GE’s relocation decision, though apparently GE only pays the state minimum in corporate tax–$250 (GE and its employees pay plenty of other taxes, though). Most of GE’s Connecticut employees work for GE Capital, whereas most of its other operations are elsewhere—including, ironically, Ohio.
GE also announced that, because of Ex-Im’s uncertain future, it is moving 500 jobs overseas. Then again, this isn’t exactly big news, either. GE has roughly 307,000 employees, so this is equivalent to about one sixth of one percent of its workforce. GE’s natural turnover from retirements, hirings, and firings is orders of magnitude higher. Also worth pointing out: about 55 percent of GE’s employees are already overseas.
Rep. Jeb Hensarling, one of the House’s leading Ex-Im opponents, made the astute point that GE “is leaving Connecticut because the state’s taxes are too high and is choosing to send jobs overseas because U.S. taxpayer-provided subsidies are too low.” In short, GE is making dire-sounding but insignificant announcements to make a political point. GE wants special government treatment that most other companies don’t get. Since some of those favors are being threatened, the company is throwing a tantrum.
Most congressmen are skittish creatures, eager to avoid angering large companies and their public relations departments. GE’s chest-beating may well throw many members back into line. But at least some members are willing to call shenanigans in this case. But are there enough backbones in Congress to prevent Ex-Im’s upcoming reauthorization attempt? Time will tell.