Washington State Taxpayers Taken For A Bumpy Ride By Boeing

David Williams President, Taxpayers Protection Alliance
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Politicians in Washington State are receiving a rude awakening. They jumped through hoops to offer massive tax incentives to Boeing, their “hometown hero” corporation founded in Seattle in 1916, and in return, the company uprooted thousands of Washington jobs and moved them to the Midwest.

In this round of political gamesmanship, the Olympia operators got hoodwinked by the corporate bigwigs. Of course, anyone who has followed Boeing’s feeding at the trough of the taxpayer-funded Export Import (Ex-Im) Bank and their recent lobbying efforts at the national level knows this is only par for the course.

It’s easy to understand Washington state politicos’ cozy relationship with Boeing – even putting aside the obvious allure of the aviation giant’s free-flowing campaign cash. The company’s roots in the state are indeed very deep. It was born in the boathouse of one William Boeing, a former Yale engineering student who set out to build his own seaplane and took it on a test flight by himself.

That humble first flight spawned a company that employs nearly 170,000 people around the world, including 81,000 in Washington State. They pulled in more than $86 billion in revenue last year. It’s not surprising that local elected officials would want to keep them happy.

That was what Democratic Governor Jay Inslee was attempting to accomplish in 2013 when he signed legislation giving Boeing $8.7 billion in tax breaks. The state legislature was called into a special session in November 2013, and passed what the Washington Post called “the single largest tax break any state has ever given to a single company.”

After being handed these record-shattering tax incentives on a silver platter, Boeing has now repaid the generosity of Governor Inslee and legislature by creating thousands of jobs… in Missouri and Oklahoma. The company has announced their intention at the end of September to transfer some 2,000 jobs out of Washington, most of them to St. Louis and Oklahoma.

To add insult to injury, the company followed that announcement with news that their St. Louis plant would be building wing and tail parts for the new 777X wide-body jet. That means a further 700 jobs for Missouri, not Washington.

Keeping the 777X project was an implicit goal of last year’s massive tax incentives, and the mood in Olympia is turgid. One state senator told the Washington Post, “This is the way Boeing thanked us, by placing the 777X in the Midwest. We’ve been had.”

Indeed. But Boeing strives to get their way, no matter how many bridges they need to burn or blow up to get there. For further evidence of this, one need only consider the recent fight over the Ex-Im Bank of the United States.

The Ex-Im Bank is supposed to support U.S. exports by funding deals for foreign companies who buy American products. In practice, some 60 percent of that funding ends up lining the coffers of ten major U.S. corporations, including Boeing. In fact, Boeing receives more Ex-Im funding than any other corporation – nearly $8 billion in 2013. The Ex-Im Bank favors Boeing to a point that the government agency is known as “Boeing’s Bank” because many of Ex-Im’s deals involve the sale of wide-body Boeing jets to foreign airlines, many of which are owned or supported by their own country’s governments.

These sales are the source of a major point of criticism against Ex-Im: they end up giving foreign airlines a competitive advantage over American carriers, which has cost the U.S. airline industry more than 7,000 jobs.

This summer, when members of Congress began questioning the wisdom of renewing the Ex-Im Bank’s charter, Boeing leapt into battle. They mounted a lobbying blitz costing more than $4 million, and deployed a platoon of lobbyists from both their internal shop and outside firms. And as a result, they got the Ex-Im Bank’s charter extended until next June.

And here’s the real kicker: their own finance staff has admitted that they would do just fine without the extra Ex-Im giveaways. They don’t need that extra $8 billion, but they just want it. And in Washington, D.C. as in Washington State, Boeing gets what Boeing wants. The rest of us are just left to eat their jet exhaust. They may take it in Olympia, but it’s time for a change in the nation’s capital. This June, Boeing should find someone else to finance its activities, so the U.S. government can get out of the business of crony capitalism.

David Williams is the president of the Taxpayers Protection Alliance.