Michael O'Leary/AP - Boeing's 1,000th 777 aircraft rolls out of the jet maker's factory in Everett, Wash. on Feb. 14. President Obama will tour the factory Feb. 17 to press his plan for building a stronger economy.
Debating the costs
The debate over aircraft subsidies provides one of the sharpest examples. Delta and other carriers say Ex-Im Bank support for Boeing sales allows foreign airlines to buy jets for about $5 million less in financing costs per year than U.S. carriers can.
“If we’re unable to meet prices established by airlines operating with U.S. government subsidies, we end up not entering the market or exiting the market,” said Ben Hirst, Delta’s general counsel.
The airline industry claims that the policies have cost thousands of jobs.
But many government officials and executives argue that the government has to provide financial support for foreign customers if American manufacturers want to get their business. Many foreign airlines might not be able to afford the cost of financing multiple $200 million-plus jets from Boeing without a subsidized interest rate.
Boeing officials note that Ex-Im activities support the company’s 80,000 aviation workers.
The U.S. government is not unusual in supporting exports. It is common practice for countries to subsidize their industries.
Supporters of Ex-Im point out that in Europe, for instance, three countries provide export financing to Airbus, Boeing’s chief rival in Europe.
“If you didn’t have it,” said Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics, “you’d surrender a large part of the market to Airbus.”
And when Delta has had the chance, the carrier has taken advantage of export financing support provided by Canada and Brazil.
Obama has championed Ex-Im, recently heralding it for helping seal a $22 billion deal between Boeing and Lion Air of Indonesia. And he has called for raising the total amount of funding Ex-Im can provide to $140 billion from $100 billion. That proposal has run into opposition from some Republicans in Congress.
Agency officials say that unless action is taken soon to lift the agency’s caps, government support of exports will come to a sudden halt.
“Any halt in export financing will . . . embolden foreign competition to question the reliability of Ex-Im financing to U.S. companies and their workers,” Fred Hochberg, president of the Ex-Im Bank, said by e-mail. “And as the last several years have demonstrated, export credit is increasingly essential to competing in the global marketplace.”
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