BUSINESS14
THE BOTTOM LINE Boeing has lobbied for $60 billion in aid for the
U.S. aerospace industry. Some critics oppose it receiving aid after
the plane maker spent about $40 billion on stock buybacks.company opposed revisiting the types of assis-
tance conditions imposed after the 2008 financial
crisis, when the U.S. government took equity stakes
as a condition of aid, he said.
The notion that government financial help for
businesses should come without a lot of strings
attached is already facing resistance. That’s espe-
cially true for Boeing, which is seeking taxpayer
largesse after spending about $40 billion on stock
buybacks in the past decade. The company’s repu-
tation has also been hit by a year of devastating rev-
elations about its bestselling jet, the 737 Max, which
has been grounded since March 2019 following two
deadly crashes that killed 346 people.
Government probes of the Max have thrown
a spotlight on Boeing’s behavior, including one
memorable exchange in which a company pilot
told a colleague that the Max had been “designed
by clowns, who in turn are supervised by mon-
keys.” The debacle forced out CEO Dennis
Muilenburg in December, to be replaced byCalhoun, a longtime board member.
After spending billions buying back its stock,
enriching big investors, the company “is trying
to take Congress hostage by demanding $60 bil-
lion in a no-strings-attached, taxpayer-funded
bailout,” says Sarah Miller, executive director of
the American Economic Liberties Project, which
opposes Boeing aid. “Congress ought to refuse this
obscene attempt at blackmail.”
Yet even after Boeing’s missteps on the Max,
the company still symbolizes American industrial
might as China and Russia sharpen their efforts
to take on the Boeing-Airbus duopoly. The man-
ufacturer is traditionally among the largest U.S.
exporters, the nation’s only company able to
build large jetliners, and a crucial Pentagon part-
ner as the No. 2 defense contractor. That’s why
Washington is likely to loosen the purse strings
while Boeing’s airline customers are unable to
keep shoveling money its way. “A private-sector
company is not going to spend its own money to
build jets when there’s no end market for them,”
says Richard Aboulafia, an analyst at Teal Group.
“Either they lay off everybody, and you have a
huge blow to the U.S. and the world economy
because Airbus will do the same, or they get sup-
port for building jets. Tough choice.”
Still, Calhoun acknowledged on CNBC that
it would be inappropriate to plow government
aid into buybacks. “I do think the environment
changes here going forward for the aviation indus-
try,” he said, while sidestepping a question about
whether the billions Boeing spent on its own
shares was a mistake. Given the risk of future
crises, “I think there will be a reassessment of
what balance sheets need to look like, not unlike
the banks post-’08, ’09.” —Justin Bachman and
Julie Johnsson, with Brendan Case In Tokyo○ Former U.S. Secretary of
Labor Reich is a professor
at the University of
California at Berkeley.
We’re trying to stimulate the
economy in the traditional
way, but this is not your typical
recession, not like after- This economic crisis is
entirely because we have an
unprecedented public-health
crisis. We need to shut the
economy down so people can
be home and safe, rather than
spreading the virus if they’re not.
The public needs to
understand that this is kind
of a giant extortion game:
Businesses saying if you don’t
pay me off, I’m going to fire
all my workers and shut the
economy down. But in this game
the real cards are being hidden.
In this game the economy has
to be shut down —that’s the
way to slow down the spread of
the coronavirus.
It’s important that members
of Congress and the
administration understand that
every dollar of taxpayer money
must be used in one of three
ways: helping provide income
support for people during this
emergency, providing health-
care support if people need
it, or getting critical supplies
such as ventilators and masks
to hospitals. There isn’t room
for bailouts.
There is no reason to bail
out big companies while this
is happening. That’s what
Chapter 11 of the bankruptcy
code is for. They work out
their debts that way. Giving
money to big corporations is
another form of trickle-down
economics that doesn’t work. It
will not get cash into the hands
of workers who desperately
need it and are being laid
off from their jobs in huge
numbers. So don’t bail out
corporations. Bail out workers.
But corporate lobbyists
have the loudest voices of all.
Every time Washington opens
its doors, whether a big tax
cut, regulatory reductions,
or a bailout, it’s the biggest
companies that have the
contacts and influence and get
into the front of the line. They
are the biggest influencers in
Washington. It’s not illegal—it’s
a matter of how the system
works. —As told to
James E. Ellis○ Robert Reich
on Bad Bailouts