— Bud Norman
— Bud Norman
Here in Wichita, Kansas, the “Air Capital of the World,” where general aviation is the backbone of the local economy, we’re always alert to the news stories concerning corporate jets. For the past three and a half years or so the stories have mostly been about Barack Obama’s relentless war on the industry, so you can imagine our surprise upon reading that he’s now offering corporate jet builders a billion dollars in subsidies.
The new policy is apparently an unintended consequence of the protracted debate over the renewal of the Import-Export Bank. We assume it’s unintended, at any rate, as we can’t imagine that Obama has suddenly acquired a new affection for corporate jets or seriously hopes to curry favor with the bitter gun-and-Bible-clinging Kansans who build them.
The Im-Ex, as it is known to those in the know, was established back in the ‘30s to help finance the purchase of American-made products by foreign buyers, but has since acquired a reputation as a dispenser of corporate welfare, with the Boeing Company’s huge airliner business being by far the biggest beneficiary. The bank’s periodic renewal is usually a routine act of Congress, but this time around it faced stiff opposition from several of the more conservative congressional Republicans, who were backed by such free market advocates as The Club For Growth, as well as such aggrieved corporations as Delta Airlines, which believe the bank is unfairly supporting their competitors’ purchases of Boeing products. More centrist politicians from both parties still love such cozy arrangements between government and business, as do such organizations as the U.S. Chamber of Commerce, and even the most stridently anti-corporate Democrats had been brought on board, so the bill had considerable bipartisan support all along, but it wasn’t until the Im-Ex’s head honcho promised to sweeten the deal with money for makers of smaller planes that the bill finally won passage in the Senate.
Obama signed the bill on Wednesday, citing it as an example of the common sense legislation needed to improve the economy, but he didn’t emphasize the corporate jet subsidies. The GOP immediately took to the internet with a reminder that as a presidential candidate in 2008 Obama had promised to eliminate the Import-Export Bank and called it “little more than a fund for corporate welfare.” The Republicans also correctly noted that Obama had previously sought to increase taxes on jet ownership, and had repeatedly given speeches that used business jets as a symbol of wretched corporate excess and immoral income inequality. No explanation for the contradictions has been forthcoming from the White House, so far as we know, nor any indication that Obama has disavowed his previous policies and rhetoric.
There’s a reasonable argument to be made for Im-Ex, which makes loans that are routinely repaid, and even for its special relationship with Boeing, an important American company whose only global competitor is heavily subsidized by the European Union, but the Obama policy of bashing corporate aviation with one hand and lavishing it with a billion dollars from the other hand is simply incoherent. A smarter administration would seek to negotiate a multilateral end to corporate subsidies with the European Union, whose member countries might well be looking for something to painlessly cut out of their budgets these days, and to devise a simplified tax code and reasonable regulatory system that would make corporate jet ownership more and allow the industry to be profitable enough that it would have no need of subsidies.
— Bud Norman
The big story here in Wichita, Kansas, is the expected bankruptcy filing of the Hawker Beechcraft Company. It would be hard to overstate the devastating effect that such a move would have on the “Air Capital of the World,” where the venerable airplane manufacturer has been a mainstay of the local economy and a source of civic pride ever since the legendary aviation pioneer Walter Beech started his world-famous company here back in 1932.
Various reasons have been offered for the company’s financial difficulties, but the ones most often mentioned are the sluggish state of the economy and stiff competition from the rest of the corporate aviation industry, including such local firms as Bombardier Learjet and Cessna. Many Wichitans can’t help thinking, though, that it didn’t help one bit to have the President of the United States and many of his party’s congressional members demonize corporate jet owners and seek to make corporate jet ownership prohibitively expensive.
The rhetorical assault on corporate jets began in the early days of the Obama administration, when Chrysler and General Motors executives were widely criticized by some of the news media and several Democratic congressmen for flying in corporate jets from Detroit to Washington, D.C., to plead for a bail-out. The critics were all in favor of the bail-outs, of course, but apparently felt that the plan would be less offensive to an outraged public if the executives had been forced to endure a Greyhound bus trip in order to gain the money.
With corporate jet ownership thus established as the epitome of wretched corporate excess, Obama proposed eliminating several tax laws that made corporate aviation more affordable and began to feature corporate jet owners prominently in his speeches. He even went to far as to suggest that corporate jet ownership would cause students to lose college scholarships, dangerous storms to go unreported, and tainted food to poison helpless consumers.
It was all nonsense, of course, as the proposed changes in the tax code would have raised only $3 billion or so over 10 years, a mere pittance compared to the $7.2 trillion in deficits that Obama proposed to rack up over the same time span. That’s not counting the tax revenues that would have been lost if the corporate aviation industry were to go bankrupt, or the cost of unemployment compensation and welfare payments to the industry’s former workers.
— Bud Norman