Two companies, one a Kansas-based airplane manufacturer and the other its Brazilian competitor, are competing for an Air Force contract to build a new aircraft to perform light air support (LAS) and light attack and armed reconnaissance (LAAR) roles. I’ve covered the competition between America’s Hawker Beechcraft and Brazil’s Embraer before.
There are several reasons why the Obama administration ought to reward the contract to Hawker Beechcraft, in my view. As former-Rep. Todd Tiahrt has pointed out, awarding the contract to Hawker Beechcraft would create and sustain over 1,400 jobs here at home, while Embraer would build virtually its entire plane in Brazil and then import pieces to the U.S. for final assembly, creating only about 50 jobs here. Elsewhere, I have also pointed out the potential pitfalls of awarding a U.S. defense contract to Brazil, a country with a “golden share” rule that essentially grants the government full authority over the means of production with regard to military programs.
Now we must consider a new wrinkle in the contest over the contract. It appears as though the Obama administration is targeting the U.S. airplane manufacturing industry with a highly negative rhetorical assault at around the same time the Federative Republic of Brazil is providing deep tax cuts for its defense-related industries. In fact, Brazil’s President Dilma Rouseff just signed a bill exempting Brazilian defense contracts from paying taxes for five years. “We don’t want to produce only for Brazil. We know our competitiveness resides in our ability to export,” Rousseff said.
I’m a free trader. And tax cuts are good. But how is an American company supposed to compete for an American defense contact while at the same time the Obama administration is floating tax increases on the exact same industry here at home? “Corporate jet owners” have become synonymous with “millionaires and billionaires” and “fat cats” in the president’s speeches in recent months. “You’ll still be able to ride on your corporate jet. You’re just going to have to pay a little more,” Obama mocked U.S. businessmen and women last June.
Hawker Beechcraft doesn’t just manufacture warplanes. A substantial portion of its business is in manufacturing those same corporate jets President Obama wants to hike taxes on. So the Obama administration is asking a U.S. company to compete with a foreign company for a U.S. defense contract while he is raising prices through tax increases on the U.S. company’s products and the foreign country is exempting their companies from paying any taxes at all.
We are becoming less competitive in large part because our tax, regulatory and procurement policies stack the decks against American companies and American workers.
It is no wonder every one of Obama’s economic advisers is scratching his head trying to figure out how to get the economy moving again and create jobs.