RANCHO SANTA FE, Ca., August 24, 2011 – During his State of the Union Address this year, President Obama said, “We need to out-innovate, out-educate, and out-build the rest of the world … At stake is whether new jobs and industries take root in this country, or somewhere else.” No one can disagree with the President on this point.
Prior to the SOTU, President Obama reached out to “big business” to help him address this issue. Since his Party normally eschews anything to do with “big business” (other than when it comes to soliciting campaign donations), he must have swallowed deeply before asking General Electric’s Chairman and CEO, Jeffrey Immelt, to become the Chairperson of the President’s Council on Jobs and Competitiveness.
After all, GE is the epitome of “big business” in the annals of American history. It was a company that, at one point, had fallen upon hard times. Then, Neutron Jack Welsh came on board to craft the second phase of the company’s history; a phase during which GE regained its position of market dominance.
GE set the bar for corporate performance. The company’s Six Sigma programs, its internal dictate of being number one or two in every targeted market, and its other signature strategies became the standards to which other businesses aspired. Even its slogan, “GE … We bring good things to life,” was woven deeply into the fabric of America as if it were a thread in our flag.
Then, Mr. Immelt took the reins from the venerable Mr. Welch in 2001, and a third phase of the company’s history was born; a third Reich if you will.
Mr. Immelt quickly distinguished himself. By 2008, he enjoyed the unique status of having been honored as one of Time Magazine’s “100 Most Influential People in the World” while also being named one of the five worst “Non-Financial-Crisis-Related CEOs of 2008” by another organization.
For a period of time, he was also regularly pummeled by Fox News Commentator, Bill O’Reilly, for doing business with the Iranian regime. But who could blame Mr. Immelt? There were profits to be made, and that’s what “big business” does!
By 2009, either the President’s stated aversion to “big business” had subsided or, ever the consummate diplomat, he felt inclined to reach out to the dark side with an olive branch. Then again, perhaps it was just Mr. Immelt’s demonstrated willingness to work with factions in the Middle East.
Whatever the reason, Mr. Immelt bonded with President Obama and became a mentor of sorts. Given the dearth of business experience among the President’s staff, Mr. Immelt must have appeared to be a veritable sage. As a result, he was appointed to the President’s Economic Recovery Advisory Board.
As its name suggests, the Economic Recovery Advisory Board was tasked with providing the President with advice and counsel relative to our Nation’s economic recovery. There’s a Latin phrase that’s used in the law: res ipsa loquitor … which translates to “the thing speaks for itself.” That seems like an applicable theory to apply to the effectiveness of the Economic Recovery Advisory Board.
With the economic crisis apparently behind us, President Obama signed an Executive Order that created the Council on Jobs and Competitiveness. Who else could he appoint as its Chairperson other than Mr. Immelt?
To quote the President, “Our job is to do everything we can to ensure that businesses can take root and folks can find good jobs and America is leading the global competition that will determine our success in the 21st century.”
The White House website provides:
“The President’s Council on Jobs and Competitiveness (Jobs Council) was created to provide non-partisan advice to the President on continuing to strengthen the Nation’s economy and ensure the competitiveness of the United States and on ways to create jobs, opportunity, and prosperity for the American people.
“The Jobs Council is made up of members appointed by the President from among distinguished citizens outside the Federal Government, including citizens chosen to serve as representatives of the various sectors of the economy to offer the diverse perspectives of the private sector, employers, and workers on how the Federal Government can best foster growth, competitiveness, innovation, and job creation.”
That sounds good! Is Mr. Immelt up to the task? Of course, he is!
Last year, GE reported worldwide profits of $14.2 billion. Clearly, Mr. Immelt knows how to create jobs and compete!
But wait! Only $5.1 billion of the total came from GE’s U.S. operations. How can that be?
It’s because GE has been “exporting” jobs in recent years. It has reduced its U.S. base of business by approximately 21,000 employees and now employs about 53% of its workforce overseas.
Who cares … as long as it pays taxes? That is … if it did pay taxes. You see, under Mr. Immelt’s guidance, GE has become very proficient at exploiting the tax code. The company not only didn’t pay any taxes last year on its $14.2 billion profit, it actually claimed a tax benefit of $3.2 billion. Isn’t America great?
At least, we can hope that Mr. Immelt paid personal income taxes on the $14+ million he earned in his capacity as Chairman and CEO of GE while flying around in his corporate jet.
And speaking of jets, the Chairman of the President’s Council on Jobs and Competitiveness made another big announcement around the time the President appointed him. Mr. Immelt revealed that GE will be participating in the development of jet aircraft that will create jobs and improve competitiveness. The business opportunity is also projected to result in about $400 billion in additional revenue for the company over the next 20 years.
Just imagine the benefit that our Nation would derive from the deal if GE had to pay taxes on those revenues!
Just imagine the benefit that our Nation would derive from the deal if the jobs were actually in the United States!
Just imagine the benefit that our Nation would derive from the deal if the jobs were in China enriching that nation’s ability to compete with U.S. firms like Boeing!
You remember Boeing. It’s the company that is being sued by the National Labor Relations Board over its attempt to open a new manufacturing plant in South Carolina that would create 1,000+ new jobs. Luckily, the NLRB intervened; the same NLRB whose composition was greatly impacted by the President’s pro-labor appointments that were made while Congress was in recess.
The NLRB saw through Boeing’s heinous and lightly-veiled attempt to crush the union at its facility in the State of Washington. Lots of taxpayer dollars will be spent to ensure that Boeing doesn’t get away with it. As a result, over 1,000 people will be denied jobs in South Carolina because, otherwise, they would have the freedom to determine whether they wanted to be represented by a union … and if there’s one thing we can’t have in this country, it’s freedom of choice!
In the interim, production of Boeing’s state-of-the-art 787 Dreamliner is on hold. But don’t worry! GE will be sharing its most sophisticated electronic systems, many of which would otherwise have been included in the 787 Dreamliner, with its Chinese partner … creating jobs for the Chinese … and making them more competitive with Boeing, a U.S. company that employs American workers in the States when it’s permitted to do so.
Are you connecting the dots yet? We’re denying jobs in South Carolina while creating them in China. We’re generating revenue in China and for GE, but not taxing GE on those profits in the United States. We’re making China more competitive in the long term and exposing Boeing’s U.S.-based manufacturing to more competition in the future.
What government agency is going to protect the union jobs that are being lost by this fiasco? There isn’t a field office of the NLRB in China to the best of my knowledge.
And speaking of competition, let’s not stop with Boeing. How about the competition that exists between those non-private sector entities: the United States Air Force and the Chinese Air Force?
You see, the advanced technology that GE will be sharing with its partner in China could accelerate China’s ability to close the technological gap between its Air Force and ours. Did I mention that Avic, GE’s partner in this endeavor, also supplies China’s military aircraft and weapons systems?
Luckily, China’s never demonstrated the ability to copy our technology if you don’t count its recent demonstration of a Stealth fighter. Besides, if GE didn’t share our technology, Pakistan probably would.
To its credit, GE has briefed the Department of Defense, the State Department, and the Department of Commerce. Stringent rules have been put in place by bureaucrats to preclude any threat to our country (outside of the economic havoc the deal could wreak). Specifically, the joint venture will have to establish offices that are separate from Avic’s military development operations; the JV’s computer systems can’t pass data to Avic’s military development operations; and the JV’s employees must wait two years before they can transfer to the military side of Avic’s operations.
Here’s another suggested measure: let’s all keep our fingers crossed and pray.
Lest you think that I’m picking on GE, I’m not. Other American companies have also given in to the temptation of money … just not to the same degree as GE.
This isn’t to suggest that the President’s selection of Mr. Immelt as Chairman of the Council on Jobs and Competitiveness might indicate a lapse of judgment on the President’s part. It doesn’t.
Do you remember how the President saved the United States automobile industry and how he redirected its production to more energy-efficient cars like the $40,000 Volt with a range of 35 miles? Well, General Motors sold a whooping 125 Volts in July of this year … and that includes the taxpayer-financed $7,500 rebate.
However, fear not! For the mighty Mr. Immelt has stepped up to the plate to order about 12,000 Volts for GE. Ignoring the $90 million in rebates GE will receive, this is a generous act that will help our country create jobs and add to its competitiveness.
Mr. Immelt said, “Electric vehicle technology is real and ready for deployment and we are embracing the transformation with partners like GM and our fleet customers … By electrifying our own fleet, we will accelerate the adoption curve, drive scale, and move electric vehicles from anticipation to action.” Finally, the Chairman of the President’s Council is “giving back” to America.
Then again, it could be because GE builds charging stations and a wide variety of components that are tied to the infrastructure that will be required to support the electric vehicle market. It also owns one of the world’s largest fleets and runs a huge fleet management business. The investment is estimated to potentially be worth $500 million in revenue to GE over the next 3-5 years.
On the positive side, it could provide the President with the opportunity to take a few more victory laps for saving GM and creating the electric car that consumers were demanding; even if the only real consumer was his good, rich, big business friend, Mr. Immelt.
In the final analysis, I’m inspired by the old GE slogan: “GE … We bring good things to life.” Perhaps mine should be: “The Common Sense Czar … He brings us back to reality.” In the interim, may you find a job in the United States in an industry in which we are still competitive. Either that or may you become fluent in Chinese.
T.J. O’Hara is an internationally recognized author, speaker, and strategic consultant in the private and public sectors. In 2012, he emerged as the leading independent candidate for the Office of President of the United States and the first nominee of the Whig Party in over 150 years.
This article first appeared in T.J. O’Hara’s recurring column, The Common Sense Czar, in the Communities Section of The Washington Times.