EVERETT — A Republican-controlled Congress doesn’t promise much upside for Washington’s aerospace industry, but lawmakers and industry insiders say they aren’t too worried.
Republicans take control of the U.S. Senate in January, and Washington’s two Democratic senators, Patty Murray and Maria Cantwell, won’t have as much influence.
Murray and Cantwell will lose their Senate committee chairs, including the Budget Committee for Murray and the Aviation Operations, Safety and Security Subcommittee, which oversees the Federal Aviation Administration, for Cantwell.
But they have established themselves as aerospace experts, and expertise can exert influence across party lines.
“You can work in either environment,” be it a Republican or Democratic majority, Cantwell said in an interview.
More important, clout in Congress doesn’t transcend the greatest influence on Washington’s aerospace industry — the commercial aviation market. Demand is booming and is expected to stay strong for 20 years.
“The commercial marketplace is the commercial marketplace,” said Richard Aboulafia, an aerospace analyst with the Teal Group in Fairfax, Virginia. “There’s only so much politicians can do.”
“There’s a myth that if we get the right incentives” for companies, it will drive economic activity, he said.
Such measures can influence the market, but Congress or a legislature can’t mandate worldwide demand for airplanes, Aboulafia said.
The company with the most at stake, Boeing, has little to say about the new Congress.
“Boeing remains focused on forging positive, constructive and informative relationships with members on both sides of the aisle,” the company said in a written statement, when asked.
One significant issue that will be in play with Republicans in charge of both chambers is federal financing for U.S. exports.
Renewing the U.S. Export-Import Bank is a top priority for the Chicago-based company. Boeing executives have testified in Congress that letting the bank’s authority expire would give foreign competitors a distinct advantage in selling airplanes.
The Ex-Im Bank provides financing for sales of U.S. goods overseas. Congress has to periodically reauthorize it. Those votes typically happen with little fanfare, but the bank has become a target of tea party Republicans, who say the agency is essentially a corporate subsidy with too little oversight.
Boeing is the biggest beneficiary, but bank officials are quick to point out that a large number of loans are for sales by small U.S. firms.
A compromise this fall between opponents and supporters in the House extended the bank’s authority to June.
U.S. Rep. Cathy McMorris Rodgers, of Spokane, is chairwoman of the House Republican Conference and is fourth in the House majority leadership. She’s also the only member of the Washington delegation to not commit to a long-term Ex-Im reauthorization.
She did, however, back the September extension.
“Going forward, I believe critical reforms will establish safeguards that will lead to better accountability and will enable increased transparency, benefitting both the recipients and the taxpayers,” McMorris Rodgers said in an email to The Daily Herald.
Coming out in favor of the Ex-Im Bank could cost her credibility with Tea Party Republicans in Congress, making her leadership job more difficult.
“I hope Cathy uses her voice” to support the bank, said U.S. Rep. Rick Larsen, D-Everett. “It’s been lacking on the Ex-Im debate.”
Larsen said he isn’t too concerned about Democrats losing the Senate, in terms of Washington’s aerospace industry.
Even in the minority, Washington Democrats can get things done for that sector, such as getting federal money for workforce training, he said.
Washington’s aerospace industry is focused mostly on the commercial market. However, Boeing has two big defense projects — the KC-46 aerial-refueling tanker and the P-8 maritime patrol aircraft — both based in metro Puget Sound.
The tanker has faced multiple schedule delays in development, and Boeing has paid a $425 million pre-tax charge — $272 million after taxes — for budget overruns. But Boeing says the program is on track to deliver the first 18 tankers to the U.S. Air Force in August 2017, as required by the contract.
While some Republicans in Congress want to increase the Pentagon’s budget, individual programs, including the KC-46 tanker, could still be cut.
Last May, the House Armed Services Committee chairman, Rep. Buck McKeon, R-Calif., proposed trimming the number of tankers to be built next year from seven to six. His proposal wouldn’t have reduced the number to be delivered. Rather, it would have spread the deliveries over more years. Stretching out the production schedule could mean fewer jobs.
Big defense projects are always targets when drafting budgets, Cantwell said.
“We have to be on our toes” for cuts to the KC-46 and P-8 programs, she said.
Boeing, though, has carefully spread its influence around the country. It has significant operations or suppliers in nearly every state.
“Boeing is not stupid,” said Scott Hamilton, an aerospace analyst and owner of Issaquah-based Leeham Co. “They have a very good congressional lobbying team.”
Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.
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