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GE’s Big Brother

Posted By Billy Hallowell On April 15, 2010 @ 12:15 am In FrontPage | 34 Comments

The Obama administration has come under scrutiny for its ties to several large corporations, including the auto industry giants General Motors and Chrysler, whose bailout it engineered last spring. But one corporate connection has not received similar scrutiny. Since 2008, General Electric has been cozying up to the Obama administration. The relationship is sure to result in financial gain for GE, while likely granting the company greater access and influence. The arrangements set forth are legal, but the potential impact the interconnections may have – and the blatant kickbacks that have been offered – should alarm Americans.

In a Washington Examiner op-ed, journalist Timothy Carney points out the eyebrow-raising ties between President Barack Obama’s team and GE’s leadership. According to Carney, “GE CEO Jeff Immelt sits on Obama’s Economic Recovery Advisory Board, and GE owns MSNBC, the network famously friendly to Obama.”

Immelts’s place on the board is concerning for a number of reasons. First and foremost, GE has been the recipient of bailout funds and stands to benefit from current and future contracts with the U.S. government. This may partly explain MSNBC’s highly favorable treatment of the Obama administration. With GE’s CEO sitting on Obama’s economic panel, it is no surprise that MSNBC rarely provides critical coverage of the administration. Furthermore, GE’s environmental business interests may explain why NBC recently joined Hollywood in inserting environmentally-friendly messaging into network programming. Furthermore, NBC promotes two annual campaigns — “Green Week” and “Earth Week” — that focus on environmentalism.

Media connections are just the tip of the iceberg. GE’s increased permeation into other sectors will have a more profound impact on policy and, in turn, Americans’ lives. A December 2009 Vanity Fair article points to what it calls suspicious “GE-friendly developments” that were spearheaded by the Obama administration. Following Immelt’s placement on Obama’s board, GE found a loophole and became the biggest benefactor of the Temporary Liquidity Guarantee Program, a federal bailout initiative. According to Jeff Gerth and Brady Dennis of ProPublica, GE appealed behind the scenes to secure the company’s ability to participate. Coincidently, Immelt was quoted in a November 2009 Wall Street Journal article boasting about $192 million that GE plans to secure in government-sponsored projects – an interesting development considering his close relationship with President Obama and the work being conducted through the Economic Recovery Advisory Board.

Additionally, Vanity Fair reports that after months of the Obama administration claiming that the government would not allocate $1 billion for the Joint Strike Fighters program (a fighter engine in which GE is one of two main benefactors), Obama included the plan in the 2010 Defense Authorization Bill. One wonders what caused Obama to change course, considering his previous opposition to GE’s engine. In fact, Defense Secretary Robert Gates threatened to recommend a veto should funding for the engine be included in the bill. Somehow, perceptions changed quite fluidly.

As reported by Reuters, back in September 2009, President Obama decided to cancel plans to install “inceptor missiles” in Poland and a “radar complex” in the Czech Republic. Both of these security elements were intended to ward off missiles coming from rogue states. Perhaps most concerning was Russia’s response that immediately followed Obama’s announcement: “Shortly after the pullback on the shield program was announced, Russia’s government said Prime Minister Vladimir Putin would meet several U.S. executives…from firms including General Electric, Morgan Stanley…”

As Megan Stack of the L.A. Times has noted, the U.S. needs Russian support to ensure that more viable action be taken against Iran. As a result, U.S. leaders have been pushing Moscow to take a tougher stance. On a recent trip to Russia, Secretary of State Hillary Clinton made clear U.S. opposition to a nuclear power plant that Russia is building and fueling in Iran – a plant that Clinton says the rogue nation is not entitled to until it can prove peaceful intent. Obama’s decision to change course on the missile program appeases Russia, while opening the door for GE and other U.S. businesses to more readily operate there.

While this may have some strategic benefits, the cost of abandoning security goals also poses its dangers. Obama’s decision to appease Russia may only embolden its government; this would be potentially dangerous to harmony and security in the region. Furthermore, given GE’s history of dealings with Iran, one has to wonder about GE’s willingness to work intensely with a nation that has such integral financial and energy sector connections with the Islamic Republic. Ultimately, the push to secure business for GE and other U.S.-based companies could imperil important security measures against rogue states like Iran.

If compromising media coverage, national security and economic interests were not enough, the energy sector is also at play. GE is looking to partner with the U.S. government in an effort to manage greenhouse gas credits. Tim Carney points out that GE has created a new “joint venture” called Greenhouse Gas Services (GGS).  GGS invests in and seeks to manage greenhouse gas credits, and without the government stepping in to restrict greenhouse gases, GGS cannot turn a profit.  Obama has answered this call by promising to create a greenhouse gas industry by 2012, providing yet another potentially lucrative opportunity for GE.

With new business on the horizon, Carney points out the potential ramifications of GE’s quest for greenhouse dominance. These potential downsides include: increased electricity and heating costs, increased manufactured and shipping goods costs and environmental costs as a result of Ethanol usage. Carney concludes: “When the lobbying fingerprints of GE and other well-connected firms are considered, it’s not hard to conclude that the policy that will finally emerge won’t be the one that is best for the planet and least bad for the economy, but the one that is best for General Electric.”

The buck does not stop there. Health care, an industry Obama has spent a substantial portion of the past 15 months pledging to reform, is also an area of interest for GE.  According to BNET’s Ken Terry, as the federal government began pushing for health care reform back in 2009, GE announced its own intent to invest $6 billion in a new “Healthymagination Initiative.” The overall goal, as Terry notes, is to increase GE’s standing in the health care industry. Perhaps most intriguing was Immelt’s pledge to influence consumers in their health behaviors as well as NBC and MSNBC’s commitment to begin airing more health-related stories and programming. It will become increasingly necessary to monitor and understand the role that GE will play once health care reform is more solidified. If recent history is any indication, GE will also have a major stake in the nation’s health care sector.

The U.S. government has always been, as Carney notes, a viable GE partner, but the changing political landscape is paving the way for the company to receive transformational benefits and control. Immelt realizes this, which is likely one reason that Obama was the top recipient of GE contributions during the 2008 presidential campaign (after all, Immelt is a Republican and a former McCain supporter who has no other reason apart from profits to partner with Obama). With such extensive reach into sectors that impact the daily lives of Americans and with international policy at stake, it is in the public’s best interest that close attention be paid to the alliance between GE and the Obama administration.


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