Barack Obama’s choice of corporate executives to headline his jobs summit Thursday provides a window into Obamanomics: If business wants to thrive under Obama, it had best get cozy with government.
Executives from Boeing, Siemens, Disney, and Dow were among those headlining the summit. These companies all depend on government aid or regulation for their profits. In this way, they were fitting icons for Obama’s economic vision.
Boeing, for instance, might be the corporate welfare king of America. To begin with, Boeing has an entire federal agency dedicated primarily to subsidizing it: the Export-Import Bank of the United States. Ex-Im subsidizes U.S. exports, primarily by guaranteeing private bank loans to foreign buyers, who in turn buy U.S.-made goods. In fiscal 2008, two-thirds of Ex-Im’s itemized subsidy dollars underwrote Boeing sales.
Known as “Boeing’s Bank,” Ex-Im frequently spends a majority of its subsidy dollars on the jet maker, but it is not Boeing’s only source of corporate welfare. Chicago and the state of Illinois both gave millions in handouts to Boeing when the company moved its corporate headquarters there in 2001.
The Washington state legislature held a special “Boeing session” in 2003 in which the state larded on new subsidies for the jet maker. The governor who signed the subsidy package, Gary Locke, is now Obama’s commerce secretary.
Beyond the straight-up corporate welfare, Boeing is a clear-cut Beltway bandit, deriving its income primarily from taxpayers. In 2008, for instance, the company pulled in $24 billion in U.S. government contracts, about 40 percent of its total 2008 revenue. Ex-Im subsidized another $5 billion in Boeing financing, meaning at least half of Boeing’s sales were underwritten by the taxpayer.
Disney’s Bob Iger was there too. Journalist RiShawn Biddle wrote in Reason magazine in 2004: “Few have panhandled for taxpayer dollars as successfully as Disney. … It has received at least $4.5 billion in subsidies, low-interest loans, land grants and ‘joint venture’ investments from governments in Florida, Pennsylvania and Hong Kong. It even managed to get a handout from the French government.”
Most importantly, Disney has succeeded in pushing through Congress copyright extensions that keep Disney characters out of the public domain. Because Disney was clearly the biggest beneficiary of the 1998 law giving corporate-created content 120 years of copyright protection, critics dubbed it the “Mickey Mouse Act.”
Pete Solmssen of Siemens was at the table, too. Siemens, which makes Sylvania light bulbs, helped craft the 2007 light-bulb law that effectively outlawed regular incandescent bulbs.
Siemens just happens to be the leader in efficient light-emitting-diode bulbs, which are more expensive than incandescents, and soon — thanks to regulations — will be in much higher demand.
Of course, Obama had small-business owners at the summit, as well as chief executive officers from corporations less government-dependent than Boeing. But Boeing, Disney, Dow, and Siemens really are poster children for the Obama era.
But government subsidies cannot create jobs, because subsidy involves taxing productive behavior and redistributing the wealth to politically favored enterprises. Were government not taxing the money, individuals would spend it or invest it — thus creating jobs.
While Obama hasn’t been shy about offering subsidies to the likes of General Motors, General Electric, and Boeing, he has made sure to let small business in on the bonanza. On Thursday, he touted an increase in Small Business Administration loans.
But handouts to small business are not the correct means to open up the economy. Stopping the flood of bailouts, taxes, and regulations is the best way to foster job creation — these government interventions kill the real job creator: new business.
The Kauffman Foundation reported this fall that two-thirds of new jobs came from businesses that were five years old or younger. Obama’s regulations and taxes, meanwhile, act as barriers to entry, which keep out new businesses-which is one reason big business often supports these regulations.
More importantly, Obama has ramped up the bailout policies of George W. Bush. He has repeatedly propped up failing companies. By not allowing companies to disappear, Obama is crowding out new business.
Unsurprisingly, Obama’s job summit didn’t send us down the path to job recovery. It did however, shine a light on Obamanomics.
Timothy P. Carney is The Washington Examiner’s lobbying editor, His K Street column appears on Wednesdays.
