“Boeing’s Bank” Exposed

PROCEEDS OF “CRONY CAPITALIST SLUSH FUND” BENEFIT A SELECT FEW … WHILE COSTING CONSUMERS This website has consistently called for the elimination of the U.S. Export-Import Bank – a.k.a. the “Ex-Im Bank,” or “Boeing’s Bank.” “It’s basically a crony capitalist slush fund, doling out taxpayer-guaranteed loans to a select few…


This website has consistently called for the elimination of the U.S. Export-Import Bank – a.k.a. the “Ex-Im Bank,” or “Boeing’s Bank.”

“It’s basically a crony capitalist slush fund, doling out taxpayer-guaranteed loans to a select few foreign corporations – the vast majority of whom turn around and buy airplanes from Boeing,” we wrote last month.

That’s exactly what it is … and while those loans certainly help pad Boeing’s profit margins, they hurt American airlines and raise fares for American travelers.

Anyway, David Stockman over at Contra Corner  has written perhaps the definitive rebuke of “Boeing’s Bank,” a fact-laden tome in which he breaks down the numbers behind this government-subsidized scam.

“In the most recent year (2013), its credit guarantees and other programs accounted for $37 billion of exports or less than 2 percent of the $2.2 trillion of exports generated by the U.S. economy,” Stockman writes. “Moreover, by the bank’s own reckoning only about $12 billion of these Ex-Im deals deployed taxpayer subsidies in order to ‘meet competition from a foreign, officially sponsored export credit agency.'”

Yeah … so much for the argument that the Ex-Im bank is a necessary subsidy because “foreign countries are all subsidizing their aircraft industries.”

Stockman also delves into the marginal impact the program has on Boeing’s earnings – equating the Ex-Im’s contribution to roughly $0.75 of each share of Boeing stock (which is trading at $126.32 as of this writing).

“Needless to say, that modest spread has no bearing on the pubic interest whatsoever,” he writes.  “And the loss of $0.75 per share of taxpayer largesse most likely would not even crimp the style of the fast money traders who move in and out of Boeing’s stock, either.”

In addition to dissecting the numbers, Stockman also hits the nail on the head in assessing the “deeper stakes” of this battle.

“In a general sense, the true evil of crony capitalist subsidies—whether through credit, grants or tax breaks—is that the incidence of the benefits rarely accrues to the greater public good of jobs and GDP, as advertised,” he writes.  “In the case of Ex-Im Bank, the route of subsidy capture is crystal clear: it goes overwhelmingly to the shareholders of Boeing and GE, and to the respective bonus and stock option pools of their top executives.”

Amen, dude … Amen.

“Boeing’s Bank” is nothing but a command economic boondoggle benefiting a select few … while leading to reduced competition and higher ticket prices for the rest of us.  All of which is why Congress must resist the special interest push and vote against its reauthorization.

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CNSYD July 9, 2014 at 1:09 pm

Let’s see. US airlines should stop buying those crony capitalist Boeing planes. They should buy the “free market” Airbus planes instead. You know Airbus. The consortium of Euoprean governments owned manufacturer. That will teach them damn yanks.

Will Folks aka Sic July 9, 2014 at 1:13 pm

You clearly didn’t read the article. If Boeing builds a better, cheaper plane – then by all means companies should buy it. And beyond that, you’d think companies would pay a premium to get American-made planes, right? That’s the point, though – these decisions should be made by the free market, not command economists.

CNSYD July 9, 2014 at 1:36 pm

Oh this was a new article? I thought you were just regurgitating your weekly diss of Boeing.

GC July 9, 2014 at 2:23 pm

The two big boys in commercial aircraft are Boeing & Airbus, both get incentives. Stop Boeing’s, Airbus continues with subsidized incentives, Boeing goes out of business, 10’s of thousands laid off. The free market at work=Great Depression!

witty1 July 9, 2014 at 2:36 pm

10’s of thousands? try over a million….
Boeing alone has over 140,000 employees. and think of the hundreds of thousands employed by their partners that supply parts.

Thomas July 9, 2014 at 2:53 pm

The point is this. Defense contracts are being cut. If Boeing does not keep money flowing, they shut their doors. You can not resurrect a shuttered Boeing when we need military aircraft. In other words, to keep our military superiority in aircraft manufacturing, it is cheaper to keep Boeing alive through subsidizing their civilian production. Remember, Boeing bought McDonnell Douglas Corporation in 1996. Boeing is all we have to build new C-130’s or F-35’s. We need a Boeing to keep the fucking peace on a planet where Russia and China nationalized their military production while using slave labor. Savvy?

Smirks July 9, 2014 at 3:01 pm

Boeing is all we have to build new C-130’s or F-35’s.

Methinks we could do without the F-35’s.

aikencounty July 9, 2014 at 9:17 pm

A-10’s ROCK!!!!

Deo Vindice SC July 10, 2014 at 11:21 am

Best there ever was for close support ! Made by Fairchild-Republic by the way. UUUURRRR !!!

Hippocritter July 9, 2014 at 3:04 pm

I love watching “conservatives” crowing for government subsidized business.

Anti-Critter July 9, 2014 at 3:35 pm

I don’t see where any of the commente’rs against Folks simply minded thinking on how an economy works has titled themselves as conservatives. Besides that is a big umbrella, people can be conversative on social issues and more moderate on economic concerns.

Hippocritter July 9, 2014 at 6:02 pm

“I don’t see where any of the commente’rs against Folks simply minded thinking on how an economy works has titled themselves as conservatives.”

I’m no longer responding to idiots comments, so sorry.

CNSYD July 9, 2014 at 3:21 pm

This is the exact point missed by many. Same applies to ship building. We (the US) must keep our ability to manufacture military ships and aircraft alive. That ability is not only facilities but also workers. Posters will want to divert attention from this fundamental principle (See Smirks and Hippocritter below).

SamAdams2010 July 9, 2014 at 4:41 pm

Do you mean assemble raw parts, electronics, transistors and chips that are manufactured in China, Vietnam and Cambodia into US military ships and aircraft? Plausible.

Hippocritter July 9, 2014 at 6:03 pm

So says the man that gets a paycheck from said activity.

CNSYD July 10, 2014 at 2:46 pm

Since it closed in 1995, where have all my checks from then gone? Haven’t seen one.

aikencounty July 9, 2014 at 9:20 pm

Seems as if I remember during the first Gulf War the National Guard from Wisconsin was sent to battle without the ceramic inserts for their flak jackets.
“How could this happen?”, you might ask.
Our government had sourced them from……………..CHINA!

You have to wonder... July 9, 2014 at 9:36 pm

I once received a call from a procurement specialist that was looking to have tank turrets that were cast in China machined….I deferred and asked no questions…but was quite shocked when I got off the phone.

Manray July 9, 2014 at 4:37 pm

Wait! I don’t understand. These “command economists” are Republicans. Don’t they all fall to their knees before the idol known as “The Free Market?” Oh, you mean that’s just campaign bullshit too? They don’t really love “The Free Market?” Then WHAT do they stand for?

Deo Vindice SC July 9, 2014 at 7:52 pm

Check again.

scotty July 9, 2014 at 1:29 pm

Did you check todays business news, middle east airline drops eurocrap in favor of Boeing. I guess billion dollar orders for American workers is bad news!!!

Crony capitalism FTW! July 9, 2014 at 2:38 pm

When it comes out of their paychecks, it still might be!

Deo Vindice SC July 9, 2014 at 7:46 pm

I checked, and the news was not as you said. Boeing is a VERY powerful CO. Tell us why ? I really want to know, Thomas’s point is valid. A shit load of people work for B. Other makers of aircraft in the US have been snubbed. IS competition in Aircraft in the US over ? Will it always be Boeing as lately. ?

Yep July 9, 2014 at 9:34 pm

All valid questions….when companies reach favored status they become increasingly unable to compete over time…it’s a death spiral…like GM.

There is no faith in free markets anymore, so planned economies are in favor for now…and I’m sure the end result will be that of all planned economies over time.

Deo Vindice SC July 9, 2014 at 10:03 pm

Planned enoconies ? What ?

Yep July 9, 2014 at 10:13 pm

If you don’t understand the word groupings I don’t have the patience to explain it.

Deo Vindice SC July 9, 2014 at 10:38 pm

So, I must a agree with you. Boeing now has a world monopoly. Thanks for the education.

Deo Vindice SC July 9, 2014 at 10:50 pm

When will my new Boeing apartment, and desired cars be available ? I paid for it ? I will sue soon. Boeing subjected me to other laser type drops without glasses in the 90’s. My eyes are not right. Boeing, I ask for help

aikencounty July 9, 2014 at 1:32 pm

Once upon a time Ronnie RAYGUN appointed a Bechtel man to head the world bank.
Bechtel man immediately loans money to India, and a few other un-developed nations, so they could build nuclear power houses.
Contracts awarded to BECHTEL!
It ain’t just started.
BTW, Ronnie brought roughly 50 Bechtel executives to Washington with him.
A lot more than just Schultz and Casper Weinberger.

Yep July 9, 2014 at 9:38 pm

Let us not forget that Stockman was a Reagan man and for sure knows where some bodies are buried.

Deo Vindice SC July 9, 2014 at 10:08 pm

I see 1 provider coming for US security, and control. Bless your mothers, and kiss your your ass goodbye. Long live the Marine Corp !!! I will fight you forever.

GrandTango July 10, 2014 at 8:26 am

Stockman seems a lot like FITS, he got fat and rich, soaking the tax payer, and using political influence to get ahead…

Now he thinks he’s going to be trusted as the “Watch Dog.”…Maybe he is onto something, but these “turncoats” are very suspect. Usually just playing the other side of the fence, because they have milked the other side dry.

Guido Sarducci July 11, 2014 at 5:18 pm

Boing’s got enough cash to cause some serious problems for the local pols and pundits…..just sayin’.


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