I'll Bet that George Washington Flew Commercially

by Don Boudreaux on January 29, 2009

in Politics

Citibank will now reject delivery of a corporate jet.  As reported in yesterday’s Washington Times, “Pressure to cancel the deal came from the Obama administration and amid a chorus of concerns from politicians who are worried about how banks that have received federal funds are spending the money.”

Overlook the sad fact that bailout money is being used to exponentially expand the scope of market activities over which government exercises direct control, and instead ask: Does no one see the sick hypocrisy here?  A man who flies in a private jet paid for exclusively with taxpayer funds (Air Force One) scolds other persons for flying in private jets paid for only in part with taxpayer funds.

(HT to my old friend Kerry Dugas for the title of this post.)

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{ 37 comments }

Ironman January 29, 2009 at 5:19 pm

Worse, the jet that isn't being bought is now a whitetail (an aircraft without a buyer.) That creates problems for the manufacturer, who will likely take a loss on the aircraft (inventory holding costs, lower sale price, etc.) and will also reduce aircraft production by at least 1 unit until the plane is sold.

Michael January 29, 2009 at 5:24 pm

Help me out here because I want to move your way, Don. But it seems to me that once we nationalize our corporations, then of course our politicians will tell the company how to run its business (just as the largest stockholders did). It's a horrible idea, but that's where we are. You might as well complain about the hypocrisy between the Dept. of Agricultural and the FDA.

I have no idea if Citibank should have a new jet or not. Before we nationalized the company it was no concern of mine. Now the administration will tell it what to do whenever it's politically convenient. How anyone decided this is what's best for business I have no idea. But Citibank has no basis to say diddly now.

ben January 29, 2009 at 5:27 pm

Good point about hypocrisy.

I am more concerned about underlying thinking behind the government's demands. Presumably, their view is that a market for corporate jets exist only because managers are so completely out of the control of their company's owners that there is room for the federal government to step in and make things better.

If that is the thinking then the present government probably sees itself having a very deep role in running many businesses.

RickC January 29, 2009 at 5:36 pm

And what about those union aircraft manufactoring workers who will be out of a job if this continues?

It just gets more and more complicated doesn't it?

muirgeo January 29, 2009 at 5:38 pm

Yes president Obama is an aweful, elitist, oppurtunist with a personal agenda. What a disgraceful man no doubt the situtation we find ourselves in is ALL his doing. Lets keep piling on because…because..because… we want a better president??? Like the last one??? Who apparently didn't use a private jet… well or at least he wasn't a hypocrite by restricting jet purchases of those he gave pulic money to.

OK that was just sarcasm. Indeed I'm miffed at the hatred for this man who appears to be trying to carry out the will of the people in as fair an election and as decisive one as we've had in quite some time.

MnM January 29, 2009 at 5:39 pm

I'd agree with Michael, if it weren't for the fact that many banks were forced to accept the bailout money.

Scratch, I agree with him if Citibank lobbied for the money. If they had the money forced on them, they have every right to cry foul.

Martin Brock January 29, 2009 at 5:53 pm

Unlike bank CEO's, the POTUS's jet is a flying command center enabling him to annihilate millions of people anywhere in the world at a moment's notice with the touch of a button. Clearly, he needs his jet.

Adam January 29, 2009 at 5:57 pm

"Yes president Obama is an aweful, elitist, oppurtunist with a personal agenda. What a disgraceful man no doubt the situtation we find ourselves in is ALL his doing. Lets keep piling on because…because..because… we want a better president??? Like the last one??? Who apparently didn't use a private jet… well or at least he wasn't a hypocrite by restricting jet purchases of those he gave pulic money to. "

Even by the undemanding standards of precedent, this is an incredible non-sequitur. Although, that is a good point about the last president. I've been reading this blog for a long time and I know for a fact that there was never a single post critical of the president until Obama took office.

Sam Grove January 29, 2009 at 6:08 pm

Who here HATES president Obama?

I feel absolutely no animosity toward him.

Other than his party affiliation, I'm still looking for anything significant to distinguish him from GB.

Let's see, they both support bailouts, they both support military action in the mid east.
The last one grew the government a lot. The new one expects to do the same.

Please tell me what the big policy difference is.

I was hoping for some military draw down from the middle east.

Not looking very hopeful.

Adam January 29, 2009 at 6:38 pm

Sam Grove:

Obama closed Guantanamo and has appointed people who were vocal opponents of torture to high-ranking legal positions in the White House.

I know it's just one difference as opposed to many similarities, but it's a hell of a difference.

EconGrad January 29, 2009 at 6:45 pm

I actually saw a factoid today that George Washington took a salary of $25,000. That equals about $1M now. The scary part of that factoid I heard is that 7% of his income went to alcohol. However, I suppose that the current president makes more than that when you count all of his benefits (including AF1).

Marcus January 29, 2009 at 6:56 pm

My question about the jet is this: if we're all Keynesians now, what's the problem? The recent report from Obama's economists says government spending has a 1.57 multiplier. It's all good!

MWG January 29, 2009 at 7:11 pm

"Obama closed Guantanamo…"

Actually, Obama announced he WILL close Gitmo… hopefully in a year. The last year of his admin. Bush was discussing ways to close is, but as we see today, it remains to be seen what the alternative is…

Adam January 29, 2009 at 7:18 pm

"Actually, Obama announced he WILL close Gitmo… hopefully in a year. The last year of his admin. Bush was discussing ways to close is, but as we see today, it remains to be seen what the alternative is… "

Good point, but it's hard to believe this could be bad news.

Matt January 29, 2009 at 7:25 pm

It sickens me to see government and its biggest fans scapegoat corporations and CEOs for the mess we're in and I don't know or even work for one. The government are clearly bailing out these companies in order to control and profit from them, as if they weren't doing it before. But a dead hooker isn't worth much, right? But now they have the populist support behind them, so it's open season. I'd rather be a disgraced politician than a CEO right now.

Think about this: How much *more* has Citibank been able to pay in taxes *because* of their private jets? I would tend to think more business is done on a private jet than on a crowded plane or being delayed in a terminal. How many more jobs have they created as a result of that business and just operating those jets? Jets don't build/fly themselves, do they? (disclaimer, my uncle used to fly CEOs)

We might as well put a luxury tax on everything besides food and shelter so no stimulus money can be spent "unwisely". That will be great for jobs, right?

muirgeo January 29, 2009 at 10:46 pm

It sickens me to see government and its biggest fans scapegoat corporations and CEOs for the mess we're in and I don't know or even work for one.

Posted by: Matt

Wow! You must be a groupie for corporate CEO's. They just destroyed the economy then gave themselves $18 billion dollars worth of bonuses. And you're worried we are scapegoating them?

These are the kind of people you would leave our economic fate to? You may deserve such a fate but I sure as heck don't. What in God's name are people like you thinking??

"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

John Maynard Keynes

muirgeo January 29, 2009 at 10:48 pm

"Actually, Obama announced he WILL close Gitmo… "

Posted by: Adam

I don't want him to close Gitmo. He should just let those Middle Easterners go home and then fill Gitmo back up with the Financial Terrorist from Wall Street. Talk about dangerous people…

Oil Shock January 30, 2009 at 12:14 am

Financial Terrorist from Wall Street. Talk about dangerous people…

Good idea. Let's start with Geithner and Dodd.

Oil Shock January 30, 2009 at 12:22 am

"Socialism is the astounding belief that the most wickedest of men will do the most generous of things for the greatest good of everyone." -Oil Shock

brotio January 30, 2009 at 2:17 am

"Socialism is the astounding belief that the most wickedest of men will do the most generous of things for the greatest good of everyone." -Oil Shock

Great line, Oil. May I quote you?

Randy January 30, 2009 at 2:27 am

The problem isn't so much that the government is putting pressure on a bank to not buy a corporate jet, but that this is what the government thinks it means to run a bank.

Sam Grove January 30, 2009 at 2:32 am

What do you call it when someone comes to Cafe Hayek and quotes Keynes?

Matt January 30, 2009 at 2:46 am

Muirgeo thinks CEOs destroyed the economy as if they put guns to everyone's heads and told them to go out and buy a house or use one as a cash register. You know who put guns to peoples' heads? The federal government through incentives and regulations. They are the ones with guns. They tax people to the hilt and give them a huge incentive to buy a house, and even subsidize their interest rates.

Muirgeo also thinks that he can decide who deserves a bonus and who doesn't, even though he has no financial stake in the matter? I wonder what he made last year. Maybe he'll share with us so we can determine if he deserved it or not.

It boggles my mind that people believe the demagogues who chalk the crisis all up to greed on wall street, when those same people were looking for ways to game the system and pay as little in taxes, and as low of an interest rate as possible, while getting as much house as they could afford. Greed is everywhere and constant.

Dale Caruso January 30, 2009 at 8:47 am

Beyond the president flying the TAXPAYER'S Aircraft – Air Force One …. and having to listen to members of congress chastise corporate execs for flying in private jets, while they are forced to fly commercial, we NEED remember that when the poor babies are flying commercial it is WE who are paying for it. They fly at taxpayer expense.

dave smith January 30, 2009 at 9:26 am

Obama is moving toward closing Gitmo, but he is also pushing the buy American stuff that will starve millions.

So let's not get too excited.

RickC January 30, 2009 at 9:57 am

A telling feature to the "duck" is that he fails to comment on posts that even his twisted views on government can't put a gloss on no matter how much buffing he does. Take for example the post above on emergent disorder.

And Oil Shock – you beat me to the punch on your "Socialism . ." quote.

Mathieu Bédard January 30, 2009 at 10:51 am

Another way to look at this is to ask what's best for American taxpayers; Citigroup getting 50M worth of jetplane for 50M dollars, or paying a multi-million breach of contract penalties to a French company for nothing?

Worse, having a president who appears to want to manage large companies WILL create uncertainty, which will definitely hamper the recovery of the economy. Regime uncertainty is not what we need now.

jb January 30, 2009 at 12:11 pm

I generally agree with you about most things, Dr. Boudreaux. But, at some level, I think you're being unfair.

Obama flies at taxpayer expense because it's a big part of his job to be highly mobile and well-protected. If we assume that the government has a role to play at all, surely one of its roles is to allow the President to move around the country, to meet the people and to meet foreign leaders, etc. There's no reasonable way to do that with a commercial plane. We are all, in effect, shareholders in the US, and it doesn't seem to me to be unreasonable for the chief executive of the US to be highly mobile. Thus, a jet.

And, if the bank was to buy this plane with their own money, similarly, the argument could be made that it was in the interests of Citigroup's shareholders that their high-level execs be mobile.

But we're in the strange position that taxpayers, with no shareholder benefits in Citigroup, are asked to pay for the mobility of Citigroup's execs. That is the difference, and that is why I think your charge of hypocrisy fails, except in a far-too-simplistic view that will resonate with absolutely no-one who isn't already on your side.

Steve January 30, 2009 at 12:55 pm

"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

John Maynard Keynes

I'd add, "When it's in their interest to do so," and then agree with the statement. The idea of Corporatism/Socialism/Whateverism we have now is that if you take those same wicked people who are inclined to do wicked things and remove the incentive to act in for the greater good, you'll get better results.

Randy January 30, 2009 at 1:23 pm

Steve,

Actually, we just bring them all together and call it government.

jl January 30, 2009 at 4:18 pm

So the government is going to spend about $1 trillion to spur aggregate demand, but they want to punish Citibank for buying a jet? What's the mutiplier on that jet, I wonder? Do they print it in the owner's manual?

And by the way, Obama didn't close Gitmo, it's not clear that he will, it is even less clear that he won't just replace it with the exact equivalent at some other location, and he didn't say that he would under no circumstances use 'enhanced interrogation techniques' (known as 'torture' when done by Republicans) should the need arise.

The more things change…

vidyohs January 30, 2009 at 6:16 pm

Econograd,

Speak English please. WTF is a "factoid"?

How trendy! Do you still gag with a spoon?

vidyohs January 30, 2009 at 6:26 pm

Don,

Are you shocked that the "bailout money" is going to be squandered? Now com'on, you and I both know that bucket doesn't carry water.

Any, and I repeat, any, person who thought for even a fleeting instant that the money being conjured up by congress to "fix" the economy was going to actually be spent in such a way and on meaningful things that would actually help people and cure America's problems has the brains of a box of rocks, and Don I know that isn't you.

Tonight, the state eof Texas is actually going to spend some money in a wise manner. They will execute a convicted cold blood killer. It is an act that should have taken place long ago and it is an act that will benefit society.

The only feaking problem is that they can't do it cheaply; no, they have to spend ungodly sums of money to be nice about it. They can't just cart the bastard down to the back 40 and put a 22 between his eyes, all for a buck 60 in gas and a few pennies for the 22 bullet, then roll his butt into a slit trench and shovel dirt in. Deed done, and in a deserving manner.

If you give it to them they are going to squander it, Etch that in stone peoples.

Your only choice is, "Don't give it to them and let them know why." Or else live more (all) of your life on your knees as you do now.

vidyohs January 30, 2009 at 8:26 pm

My wife commandeered the computer and I went to eat my supper, did something unusual and turned on the TV.

Wound up watching Bill Clinton speaking to a man named Schwab and Billy was spouting the begging bullshit of a con man for the Obama and democrat world view.

Did you know that according to Bill Clinton, Central Banks came into existence because of market failure?

How about them apples, kiddies?

Here I thought central banks came into existence because of Baron Rothschilds dictum of, "I care not who writes a nation's laws, if I can control its currency."

Our nation was saddled by a corrupt congress with the Federal Reserve, and the market failure was…….?

Furthermore, the fool is still touting globabl warming as the greatest threat to mankind, and here I am just silly enough to believe that it is Obama in the Whitehouse and Hillary enscounced at the State Dept.

ARRRRRRGH!

brotio January 31, 2009 at 12:13 am

WTF is a "factoid"?

Leftards use Preparation-H when they're afflicted with factoids.

quack, quack, quack…

vidyohs January 31, 2009 at 10:34 am

Bro,

Not sure Econgrad is a leftard, he is just afflicted with speaking TVese, in which intelligent English is savaged ruthlessly and concepts have to be vague because anything requiring thought drives viewers away.

Perhaps I am harsh on Econograd but he triggered my already huge disgust with America. The creation of "factoid" to describe a fact, minor or inconseqential, has always driven me crazy. How does a fact become anything but a fact, it is a fact that a fact is a fact and nothing changes that fact.

The problem with "factoid" to describe a fact is that it gives the impression that facts can be graded in some way on a scale known only to who…..?

Trendy, TVese, immature maybe, but not exclusive to leftards.

brotio February 1, 2009 at 1:13 am

Vidyohs,

Since it sounded to you like I was picking on Econograd, it probably sounds that way to others, so I'll set things straight.

I was poking fun at Mierduck and the other avowed Leftards whose thoughts tend to come out of their asses. "Factoid" gave me an opportunity to pun because it rhymes with "hemorrhoid", which itself is synonymous with our socialist Pile by the Bay.

In fact, the more I think about it, the more I'm becoming convinced that we should strive to make this the definition of "factoid":

Factoid (n): Opinion that is presented as fact by Leftists. The word combines the words fact, and hemorrhoid, as a simple way to describe where Leftist thought originates.

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