Kansas Senator Sam Brownback on the illegal subsidies Airbus is receiving to lowball military tanker bids
HH: At this hour, President Sarkozy of France is at the White House, no doubt lobbying President Obama for Airbus to get the tanker contract, as the Times of London is reporting at this hour. Joining me to talk about the Airbus contract dispute, and whether or not Airbus ought to even be allowed to bid is United States Senator Sam Brownback. He’s also going to be the new governor of Kansas come November. His website for the Kansas governor’s race is linked at Hughhewitt.com, as is a study from the Lexington Institute on the Airbus subsidy. Senator Brownback, welcome, good to talk to you.
SB: Hey, it’s good to be back with you, Hugh. Hope you’re doing well.
HH: I am, and how goes the campaign in Kansas?
SB: It goes well. I mean, these are key times right now, and people are fired up about this health care bill. They don’t like it. I voted against it, have been pushing against it, but more than anything, people are concerned about the economy. So something like this Airbus bid really fires people up. They don’t think that the U.S. Department of Defense ought to make this contract wait so that Airbus can come up with another bid.
HH: Let’s set this up, Senator Brownback, for people who are late to the show. This controversy has been going on for years. I’ve never understood it. I’ve never understood why we just do not give it to Boeing, and get the tankers built. But give the folks some background of what the story is here.
SB: Well, you’ve got Eisenhower era tankers, these are tankers literally built during the Eisenhower years, that have gone past their useful life expectancy. They’re refueling planes. They’re gas stations in the sky. They keep us on a global projection base that allows us to do that. Ten years ago, the Air Force said this was their top military contract to fulfill. They then started negotiating, and we’ve been through three different iterations of this contract with Airbus in, Airbus out, a leasing arrangement at one point in time was proposed with Boeing. And at the core of it, you’ve got one of the largest military contract bids in history, $35 billion dollars, and now Airbus wants to subsidize their way into it, and a number of us are crying foul at the Airbus subsidy to build the base airplane to bid on it, and then also crying, saying you know, look, why should we give $35 billion dollars worth of business to Europe, when we can build them in America?
HH: Now we have often challenged France for the subsidy they give Airbus, because it allows Airbus to compete unfairly against Boeing and other manufacturers of aircraft around the world. The WTO issued an interim report that I think was favorable to our arguments, wasn’t it, Senator Brownback?
SB: Absolutely. And I just got briefed on this last week by the U.S. Trade Representative’s office. And the World Trade Organization found that Airbus illegally subsidized five different planes that they have. One of them was the base plane that the Airbus consortium was using to bid for our military contractor. Now they found, Hugh, that they were subsidizing their civilian aircraft market. What I find so galling on this now is that now, they’re going to use this plane that was illegally subsidized in the civilian market, and now use it to bid into the defense contract. That’s a total U.S. Government purchase. I just find that galling on the Europeans’ part.
HH: Now there’s a background paper, I’ve linked it at Hughhewitt.com, from the Lexington Institute by Loren Thompson, a very, very well known, very widely-respected defense institute. And your office has put out some information on why these subsidies are so damaging. They lessen the risk the company had to begin with, they lower the cost of capital for Airbus. It allows them to move products faster through the development, and it gives them an enormous price advantage. So Senator Brownback, ought we to allow them to bid at all?
SB: I don’t think we should in this situation, and we have tried repeatedly to get the Department of Defense to say look, if you illegally subsidize your aircraft, we are going to add the price of that subsidy onto the price of your aircraft, because this is illegal to do. And if you don’t do that, what will keep other countries from simply illegally subsidizing the development of another piece of hardware in our military system, but then they take away that business from the United States on an illegal basis, and hurting our job creation, and hurting our defense military establishment. I think this overall weakens the United States economically and militarily, and I really don’t understand why there’s even a consideration now that we would extend the bid time period so Airbus could bid themselves, or find another partner.
HH: I also want to bring up what your office put out, which is a pretty stunning statistic. In the years 1999-2004, the number of Americans producing Boeing jets fell from 116,000 in 1999, to less than 55,000 in 2004. That’s, you know, tens of thousands of jobs that are gone, Senator Brownback.
SB: Tens of thousands of jobs that are gone, many of them to Airbus from an illegal subsidization. You should recall, and your viewers should know, Airbus was started by a group of European governments, subsidized in the development of this aircraft. And they said you know, look, we don’t like to have these major aircraft made in the United States – Boeing, Lockheed, we don’t like to purchase them all there. We want to build them ourselves. And with that subsidy, they have grown to over 50% of the market share at one point in time. Now it’s been crowded back a little bit now, but I don’t see why on Earth we would give up a military contract to this illegally subsidized European consortium, and why we’re even considering this with Sarkozy or others is beyond my belief and imagination.
HH: I’ve also asked, and perhaps you can shed some light on this, even though it’s a tanker, and that is a fairly routine bit of equipment, there still has to be some technology here about linking up to our high performance aircraft, their specifications, whether it’s the F-18, the F-22, or the next generation of fighter, the F-35, that we…I mean, is there any concern that, you know, France is an ally, but this is, they’re going to have equipment and technology which will be available for resale on the world market then?
SB: I think that’s a concern. I think that the bigger one that I have is what if the French get mad at us on some military engagement? Do they decide that they’re not going to sell us spare parts then? And we’re going to have to go somewhere else? You know, at times, they have, different European countries have denied us overflight rights, because they’re saying we don’t like this engagement, we don’t like what you’re doing in Iraq. Is that going to happen in some other theater, and weaken our defense possibilities, and our use of our own military?
HH: Now could the, is the opposition to Airbus being allowed to compete at this late date bipartisan, Senator Brownback?
SB: Absolutely. There are a number of us in both the House and the Senate that are opposed to this taking place. And I really think if you polled the American public, they would be appalled that we are even considering such a major contract being done by the Europeans.
HH: And a last question, it’s unrelated to the tanker, but the C-117, the workhorse of the American air fleet, is back on the table. And I see Secretary Gates doesn’t want any more. Will the Congress continue to exercise its oversight of Defense on this matter?
SB: It will. These things get into some back and forth between the Executive and the Legislative branch, and that’s a healthy tension. But I think you will continue to see Congress voice its concern on some of these major military programs, and the importance of them for the future military defense of the country.
HH: Senator Sam Brownback, always a pleasure to talk to you, and continued good luck in the race to become Kansas’ new governor. We’ll check in with you as the summer progresses, the campaign goes forward, and thanks for giving us the background on Airbus.
SB: Happy to do it. You guys take care.
HH: Will do. Sam Brownback of Kansas, great American.
End of interview.