For richer, for poorer: the revolving door between Boeing and Washington State

All smiles in Washington State after handing $8.7 billion to Boeing, the largest state tax subsidy in US history

The State of Washington made headlines earlier this week for pledging the largest state tax subsidy in US history–$8.7 billion through 2040–to Boeing.  Boeing is the country’s 30th largest company, with revenue of $81.7 billion and profit of $3.9 billion last year.  CEO Jim McNerney made $27.5 million in 2012, a 20% raise from his previous salary.

Despite this apparent success, Boeing has been asking more from Washington state officials while offering less in return over the last few decades.  In 2001 Boeing moved its headquarters from Seattle, where the company was founded in 1910, to Chicago.  Two years later Washington taxpayers gave Boeing $3.2 billion, the third largest state tax subsidy in US history, so they would build the 787 Dreamliner there.  Yet in 2009, Boeing decided to set-up a second assembly line for 787 in South Carolina.  Just this past May, Boeing announced it would be cutting 1,500 IT jobs in Washington.

The latest deal was passed by legislators in a special session last week and signed by Governor Jay Inslee on Monday. Boeing will get billions to manufacture the new 777X in Washington. State Rep. Reuven Carlyle called the latest deal an “authentic marriage” between Boeing and Washington.  Maybe he’s trying to set another record–for the largest dowry paid in US history–but it sounds like a pretty one-sided relationship to me.  So how does Boeing continue to earn the rapture of Washington State officials?

One of Inslee’s first hires when he took office in January was David Schumacher, a former Boeing lobbyist, to direct the Office of Financial Management.  Inslee and Schumacher likely worked together to craft the budget for this deal. Before taking this position, Schumacher directed the State Senate’s Ways & Means Committee after leaving Boeing.

When Schumacher left Boeing to return to government, Bill McSherry was hired to replace him straight from the office of Inslee’s predecessor Chris Gregoire. McSherry was the governor’s advisor on aerospace before becoming a Boeing lobbyist. In that role he helped to negotiate the state’s 2009 subsidy deal with Boeing that ultimately flopped because no agreement was reached with the machinists.  He also chairs the Aerospace Futures Alliance of Washington, an industry association that lobbies heavily on behalf of Boeing.

Dale Peinecke was CEO of Boeing supplier Giddens Industries before being appointed commissioner of the Employment Security Department by Inslee in January.  Incidentally, Peinecke was previously COO of Alcoa, which held the record for receiving the largest state tax subsidy before it was trumped by Boeing on Tuesday. Former Boeing executive Shaunta Hyde was also reappointed to the Washington State Board for Community and Technical Colleges by Inslee in April.

Boeing seems more interested in gold digging than in an “authentic marriage.”  For the sake of its citizens let’s hope Washington State signed a pre-nup.