On Friday, President Obama signed an executive order to establish the “Council on Jobs and Competitiveness” led by General Electric’s (GE) CEO Jeffrey Immelt. President Obama and Immelt released statements claiming that the new council would “put our economy into overdrive.” To those paying attention to their relationship, it should come as no surprise that Immelt was selected as chairman. The Obama administration and GE have had a disturbingly close relationship for the past two years.
First, it’s important to distinguish the difference between free enterprise and crony capitalism. Free enterprise means that businesses must provide a product or service that consumers want in order to thrive. With no special government protections, every business must compete with each other through innovation and entrepreneurship. GE, however, has epitomized crony capitalism. Instead of earning an honest dollar in the marketplace, GE has used government largesse to advance their interests. GE has become the definition of a rent-seeking company. This economic term refers to a company that seeks to obtain benefits through the political arena.
General Electric’s lobbying efforts have paid off for them. In the 2008 elections, GE’s political action committee shelled out $1.55 million to mainly Democratic candidates. By far, then-presidential candidate Barack Obama was the largest recipient of GE’s money. How has Congress paid off General Electric for their past political contributions? During the Bush administration, GE persuaded the government to expand the Temporary Liquidity Guarantee Program so it would qualify as a recipient. As the Washington Post noted a year later, “General Electric, the world’s largest industrial company, has quietly become the biggest beneficiary of one of the government’s key rescue programs for banks.”
Furthermore, “Public records show that GE Capital, the company’s massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP. The government’s actions have been ‘powerful and helpful’ to the company, GE chief executive Jeffrey Immelt acknowledged in December.”
The rent seeking company has become a main spokesperson for self-serving legislation such as the costly cap and trade legislation. If passed, it would add to the company’s bottom line at the expense of taxpayers and the American economy. In a leaked email, GE Vice Chairman John G. Rice wrote,
On climate change. We were able to work closely with key authors of the Waxman-Markey climate and energy bill, recently passed by the House of Representatives. If this bill is enacted into law it would benefit many GE businesses.
Listed in President Obama’s budget is a line item titled “climate revenues” totaling $646 billion over eight years. This has inspired GE to start a joint venture called Greenhouse Gas Services in order to invest and manage in trading greenhouse gases. As Washington Examiner writer Tim Carney reports,
In short, GE plans to get rich by being one of the government’s closest partners — which it has always been, thanks to its unmatched lobbying efforts… While many companies hire lobbyists to win earmarks, General Electric’s unmatched lobbying force has secured a tax increase — or its equivalent — in President Barack Obama’s budget.
It’s clear that the new council’s mission is not to boost jobs or competition. In fact, the opposite is the case. As Tom Borelli of the Free Enterprise Project said, it’s “not about jobs creation but the 2012 election. Obama needs to rally big business donors from companies such as General Electric. Obama and Immelt are mutually dependent on each other.” Rent-seeking General Electric will likely use the council to further line their pockets with taxpayer dollars and restrict their competitors. Simply, this is a prime case of special interest politics.