Ex-Im: Boeing’s Bank Once More
The Export-Import Bank (Ex-Im), a federal agency that subsidizes U.S. exports primarily through loan guarantees, dedicated a majority of its guarantee dollars again last year to subsidies for Boeing sales, according to the agency's annual report. Weighted by dollar value, Boeing directly benefited from 52.2% of Ex-Im's long-term loan guarantees—the only transactions Ex-Im itemizes in its report this year. Over the last nine years, Boeing’s share of Ex-Im loans and long-term guarantees is 52%.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
With the agency's authorization expiring this year, Ex-Im officials have been touting their support for small businesses—an issue that lawmakers raised last time Ex-Im came before Congress for reauthorization.
Also, the Bush Administration's Office of the U.S. Trade Representative has been applying legal and diplomatic pressure on European governments to cease their subsidies of Airbus, Boeing's only competitor in the business of making large passenger jets.
Ex-Im and Boeing officials defend the agency’s heavy support for one company. “Airplanes are expensive items,” Amanda Landers, Boeing spokeswoman, told HUMAN EVENTS. (Boeing planes sell for at least $45 million and as much as $250 million.) Landers also pointed out that Boeing is America’s top exporter.
Ex-Im spokesman Phil Cogan attributed Boeing's large share of Ex-Im financing to the fact that Boeing “sells big-ticket items,” and that “Ex-Im is a demand-driven institution.” Cogan pointed out that Boeing has 6,600 U.S. suppliers, of which 2,900, Ex-Im says, are small businesses. Indeed, Ex-Im has produced a poster with a headline, “When Boeing exports … small businesses all over America work.” The poster features a map of the U.S. plotting Boeing's suppliers in almost all 50 states.
Currently, the U.S. is actively pursuing a trade case against European Union states over their subsidies for airbus. In May 2005, then-USTR Rob Portman declared it was the administration's goal to “negotiate to end subsidies for large civil aircraft.” Boeing's Landers points to Europe’s subsidies as a reason that Boeing needs Ex-Im. “Airbus has three Export Credit Agencies. We only have Ex-Im. If you take away the [Ex-Im] Bank, we’d be at a severe disadvantage—and that would probably cost jobs.”
Ex-Im officials point out that in FY 2005, 2,617 of Ex-Im’s 3,128 transactions “directly benefited small businesses.” Typically, these small business subsidies were comparatively small-dollar transactions and are not itemized. Ex-Im’s annual report shows that, by dollar amount, small businesses benefit from about 19.1% of all Ex-Im transactions.
In its 2002 reauthorization, Congress required Ex-Im to set aside 20% of its financing, dollar-wise, for small business. In none of the years since then has Ex-Im reached that mark.
Further, in every year since 2002, Boeing has received more than 50% of Ex-Im's loan and long-term guarantee dollars. In FY 2003, for example, $4.4 billion of Ex-Im’s $6.5 billion (68.2%) in loans and long-term guarantees subsidized Boeing sales. This last year Ex-Im guaranteed $4.2 billion to subsidize Boeing aircraft, and only $3.9 billion for all other U.S. exporters combined. (Ex-Im issued no direct loans in FY 2005.)
On top of all its airplane subsidies, Ex-Im guaranteed $137.7 million for a sale by another Boeing division, Boeing Satellite. In addition, Boeing has benefited from Ex-Im subsidies even when another exporter is the seller of record. On Nov. 12, 2004, for example, as Ex-Im approved a $529.6 million guarantee to Emirates, the state-owned airline of the United Arab Emirates, Ex-Im also approved a $129.2 million guarantee for the airline to purchase “Commercial Aircraft Engines and Installation” from General Electric.
Ex-Im's loan guarantees on Boeing sales—about $32.6 billion over the last nine years—put U.S. taxpayers at risk if the foreign airline cannot cover its debt. Landers pointed out that Boeing's customers have an excellent record of paying off their debts, but in December, Air Nauru, the state-owned airline of Nauru, a tiny island nation, defaulted on the Ex-Im loan it used to buy a Boeing Jet. The nation was forced to turn over the 767-400 to Ex-Im, which is currently auctioning off the plane.
Boeing brought in $54.8 billion in 2005, up 5% from 2004. On Tuesday, Boeing stock closed at a record $83.30 per share, and Boeing Commercial Airplanes Chief Executive Alan Mulally has pulled in $6.7 million in bonuses already in 2006, according to the Seattle Times.
On Tuesday, Boeing also announced plans to lay off 900 workers in its Wichita, Kan., factory.