| A Circle Has No End — GE and the Corporate State |
February 24, 2012, 12:41 pm
The arch-corporate-statist – and official manufacturing company of the Obama Administration is feeding at the trough again. Apparently a perfectly profitable company cannot buy assets from another profitable company without a large subsidized loan from taxpayers. In this case, the Obama Administration is funding the KCS in its purchase of 30 new locomotives from GE. The Obama Administration has recently doubled-down on its backing of the US Ex-Im bank, which has been helping to fund Boeing aircraft sales to foreign airlines (each of which, surprise!, has a couple of GE engines on it).
GE knows how this political game is played, with resources allocated based on quid pro quo. Just the other day, GE announced that it would help bail out Obama and Government Motors buy mandating that all its company vehicles be Chevy Volts, in effect committing to buy more Volts than Chevy sold to consumers all last year. Of course, the circle has no end, so in turn GE will be rewarded with $90,000,000 in government subsidies for its 12,000 Chevy Volts, a number that could increase to $120 million if Obama’s proposal to increase the per car subsidy is accepted.
By the way, the Obama Administration has criticized oil companies like Exxon-Mobil for earning excessive profits and getting overly large tax breaks. In 2010, Exxon paid a whopping 40.7% of its income in taxes ($21.6 billion in taxes on $53 billion in profits). In the same year, Obama subsidiary General Electric paid 7.4% of profits in taxes.