The Washington Examiner
written by Timothy P. Carney
February 11, 2011
General Electric today notes, "Recently, several commentators have alleged that GE is dependent on the government for its revenues and that it has been the beneficiary of government largess in the form of bailouts and special treatment."
Considering that I am one of those commentatros, I thought I'd run their response, in full, below:
The facts are actually quite different. GE’s revenues from doing business with the U.S. government are just 4% of total revenues, and 75% of that government business is performed in support of the U.S. military (GE provides jet engines for military aircraft). Non-defense work with the government actually amounts to just 1% of GE’s total revenues.
On the stimulus program, GE received grants of about $200 million out of the $800 billion in government spending. While any use or receipt of a single taxpayer dollar is significant, even more so given current economic conditions, GE’s portion of stimulus dollars is nevertheless relatively small — about 0.025%, or 1/4000, of total stimulus spending. GE received these funds over the course of several years. If received in one fiscal year, it would represent about 0.1% of GE revenues.
Additionally, GE never received a bailout from the U.S. government, and did not participate in TARP. GE did willingly participate in other programs widely available to hundreds of financial institutions that were designed to stabilize the economy, including the Temporary Liquidity Guarantee Program (TLGP) and the Commercial Paper Funding Facility (CPFF). In both these programs, taxpayers actually profited from GE’s participation through fees and interest.
GE is proud of its work on behalf of all its customers, especially its support of the U.S. military. However, the facts clearly demonstrate that GE is not dependent on the U.S. government and implications to the contrary are simply false.
There are important clarifications here, but the conclusion, "GE is not dependent on the U.S. government," is where I take issue. GE apparently redefines "dependen[ce] on the U.S. government," to refer to government contracts and bailouts. Nowhere in this supposed refutation does GE address subsidies it receives.
Here's a sample of federal subsidies (though as GE's Ecomagination boss Steve Fludder says, “I’d prefer not to think of words like ‘subsidies’ and that type of a construct. I think it is more supporting the creation of scale.”) benefitting GE, just off the top of my head:
- The Production Tax Credit for renewable energy
- The Investment Tax Credit for wind
- Export-Import Bank subsidies
- Federal spending on high-speed rail
- Government spending on a "Smart Grid
- Federal subsidies for embryonic stem-cell research
- Obamacare subsidies for health-care spending
- Subsidies for battery factories
And here are some regulations that drive business GE's way:
- Lightbulb efficiency standards
- Greenhouse gas regulations
- Renewable Energy Standards
- Clean coal subsidies
- Loan guarantees for nuclear power plants
And if government dependence seems so abhorrent to GE, it's odd that their CEO says stuff like "Germany is the model" on manufacturing, because "The companies roam as a pack. They stick together. And the government supports the companies to be exporters."
And why does he lament that ""for so long, we've said, 'It just doesn't matter. Let whatever happens happen' "?
And why does the CEO describe government as "an industry policy champion, a financier, and a key partner"?
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