Corporate welfare

Friday, May 18, 2012

Friday, May 18, 2012 - 13:05:09

Curt Schilling, GOP small govt. man, seeks taxpayer welfare

Rich. Curt Schilling, well-paid major league pitcher and long-time advocate of small government and personal responsibility as a campaign shill for Republican presidential candidates, has his hand out for Rhode Island corporate welfare to prop up his ailing video game company, in apparent default on state loans.

Hypocrite of the day, if not the month.

From the story:

“We got hoodwinked; we got played,” Republican state Representative Robert Watson told the Globe. “How many millions of dollars does Curt Schilling have? He can’t write a check? It’s Rhode Island that is supposed to provide the money? I think not.”

They aren't the first government to get played. Happens in Arkansas all the time, including by a current wannabe Republican politician who stung our government development agency. He, too, warbles a hypocritical tune about the glories of free enterprise. I guess it's free when you don't pay back your loans.

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Thursday, April 19, 2012

Thursday, April 19, 2012 - 06:19:29

Another corporation ends support of ALEC

The Color of Change, a political group activated by legislation to suppress minority votes through ID laws, says another corporate sponsor has forsaken the American Legislative Exchange Council, supplier of corporate and other rightwing legislation to state stooges. Yum! Brands, operator of KFC, Pizza Hut and Taco Bell, joins McDonald's, Wendy's, Mars Inc., Coca-Cola, PepsiCo, Kraft Foods, Intuit, Blue Cross Blue Shield Association, Reed Elsevier (owner of LexisNexis and publisher of science and health information), American Traffic Solutions and Arizona Public Service.

There's also this: One Republican legislator, formerly a leading stooge for ALEC in Louisiana, has quit the organization. He wasn't happy to find ALEC had been meeting secretly with legislators about cutting state employee pensions. This is a key push for ALEC, which generally detests public employees. Arkansas ALEC backers — primarily the Republican caucus — are still on board this bus.

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Tuesday, April 17, 2012

Tuesday, April 17, 2012 - 06:27:27

Arkansas ranks high on corporate welfare

A new study ranks Arkansas high — among the top 13 states — on how well it establishes criteria and evaluates those criteria for economic development incentives, AKA corporate welfare payments to attract business.

This is somewhat reminiscent of the studies that rank Arkansas high, 5th, on education procedures.

If our education procedures are so good why aren't our children learning more? If our incentive policy is so well drawn, why are we so poor?

Here's the full Pew study. It seems to cite Arkansas's measure of the impact of incentives as the strongest element of its high rating of the state, along with regular review of the incentives. State officials are proud of the rating, naturally.

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Thursday, April 5, 2012

Thursday, April 5, 2012 - 07:19:13

Chris Christie's corporate welfare wagon

Arkansas business leaders would L-O-V-E love New Jersey Gov. Chris Christie. He's lavished hundreds of millions of dollars in corporate welfare — handouts of tax money and tax breaks — to private companies for putative economic development, often merely moves from one location in New Jersey to another.

The generous distribution of subsidies in New Jersey has come under fire from government-reform groups, Mayor Michael R. Bloomberg of New York City and some New Jersey landlords, who contend that the programs are an expensive and ineffective form of assistance to wealthy corporations.

The critics pointed out that even when the promised jobs have not materialized, the Christie administration has merely reduced, not withdrawn, the subsidies. And they say that the administration is mortgaging the state’s future by forgiving so much tax revenue for the next 10 to 15 years.

“Christie has taken this to a whole different level; it’s become a feeding trough,” said Deborah Howlett, executive director of New Jersey Policy Perspectives, a liberal policy organization. “It seems ridiculous to steal jobs from one city in the state and move them to another city a couple miles away. There just doesn’t seem to be any benefit to taxpayers.”

I can't help but think of a corporate welfare handout in Arkansas to a member of the Arkansas Economic Development Commission, Mike Akin, to take over a furniture plant in an Arkansas city in which he was already operating (and promptly cut workers' pay). Akin went on to preside as a UA trustee over a UA-Monticello business deal with one of his concerns. He's a Republican, running for Senate on the standard platform of running government like a business. Which is exactly what taxpayers should be afraid of.

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Thursday, February 9, 2012

Thursday, February 9, 2012 - 10:56:47

Chamber of Commerce handout on agenda

The Central Arkansas Water Commission is scheduled to consider today upping its contribution of ratepayer money to the unaccountable Little Rock Regional Chamber of Commerce from $25,000 to $50,000.

I think this payment — and others by local governments from taxes and utility rates — is an unconstitutional appropriation to a private corporation. Legalities aside, the chamber should raise its own money privately to support its political agenda. It should not be allowed to tap the water bills of people whose best interests are frequently contrary to those of the chamber.

I wrote about this recently.

UPDATE: The item was removed from the agenda at the last minute because the commission had asked for some additional information about the request and CEO Graham Rich had no additional report ready.

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Tuesday, January 24, 2012

Tuesday, January 24, 2012 - 10:37:32

The chamber tax grab goes statewide

Unless Gov. Mike Beebe stands in the way, the scam by which chambers of commerce are increasingly getting taxpayers to pay for their operationsmay be about to go statewide.

Says here that a legislative committee signed off on sending $250,000 in surplus money to regional economic development efforts. Tax money to people like the Little Rock Regional Chamber of Commerce and related parties, in other words. Lack of public accountability on state money, in other words. Corporate welfare, in other words. Taxpayer support for paychecks of people who lobby against working people's interests, in other words.

The $250,000 tap of the state till is the first step on a slippery slope. The next logical step is a congressional appropriation to the U.S. Chamber of Commerce. Makes just as much sense.

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Sunday, January 8, 2012

Sunday, January 8, 2012 - 07:03:43

Why subsidize wealthy corporations?

The New York Times takes another run today at examining the handouts state give to lure manufacturers. The familiar points are touched, particularly the core question of why taxpayers should bribe profit-rich corporations and whether the return is worth the investment. This particular article looks further at a handout for job training, a routine benefit offered in Arkansas, including to Caterpillar, the featured recipient in the Times' article.

These handouts are such an article of faith among Arkansas politicians — check their campaign reports for the money that elects them — that it's almost a waste of time to discuss (up there with the ever-increasing devotion of newsprint acreage in the Democrat-Gazette to the still-dead David O. Dodd.) The near-universal support is also reflected in the Times article, though it notes:

Various studies have long questioned whether states get their money’s worth from incentives for companies that build facilities or expand existing ones. In a report last month, Good Jobs First, a nonprofit research organization that tracks such spending, found that states often attract companies that create few jobs, pay low wages or scrimp on health insurance.

But customized job training for a specific employer still holds favor with public officials, who often argue it may be an effective use of taxpayer dollars, especially when so many workers have been displaced. Targeted programs can be preferable to the more general training paid for by the federal government, programs that have been used by hundreds of thousands of Americans yet have left many participants still out of work.

Thursday, June 9, 2011

Thursday, June 9, 2011 - 16:57:44

NLR moving on State Fair tax

Fox 16's David Goins reports polling is underway by the North Little Rock Chamber of Commerce on voter feelings about a temporary sales tax to raise $70 million to lure the Arkansas State Fair to move its grounds from Little Rock to a spot in or near North Little Rock.

This compares with the $3 million proposed in the recent Little Rock sales tax priority list for fairground improvements at the current site on Roosevelt Road.

This is a pretty good example of the mutually destructive nature of the corporate welfare game. One city is going to outbid another city to steal one of it businesses. Taxpayers will pay the freight. And for what? There might be some greater activity at the State Fair from a newer and bigger site, but you can look at fairs all over the country and not find much in the way of year-round net growth potential.

The current location leaves a lot to be desired in size, freeway access and neighborhood. But in a new site, the fair will still be primarily a carny midway and farm animals, same as before. New exhibit and performance halls might be useful for entertainment rental at other times, but see Verizon Arena, another break-even proposition. Inevitably, a new venue will drain some business from other existing sites. The best estimate from a consultant hired by the fair, which badly wants to move, was pretty modest income potential. That gives you some idea. But when North Little Rock wants something, the mayor is willing to move mountains to get it and taxpayers have tended to go along, even as they pay a huge hidden tax through electric rates, no longer the bargain they once were.

Forgot to mention: the NLR Chamber enjoys a constitutionally dubious and large subsidy courtesy of city taxpayers, about $250,000 a year last time I checked.

It's the old public-private partnership. Public pays the freight. Private interests get the profits.

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Friday, May 27, 2011

Friday, May 27, 2011 - 06:54:57

Tim Griffin jumps off corporate welfare bill

Funny story in Politico. U.S. Rep. Tim Griffin — friend of millionaires, enemy of Medicare and Medicaid — has decided it is just a bit TOO unseemly to be sponsoring billions of dollars in tax incentives to promote natural gas-fueled vehicles.

Politico said Griffin had "quietly" removed himself as a co-sponsor.

Griffin said in a statement to POLITICO that “H.R. 1380 is well intentioned in that it seeks to promote natural gas as a clean burning, abundant and American energy source.

“However, I am concerned that H.R. 1380 might be inconsistent with my goal of simplifying the tax code by lowering the overall tax rate and simultaneously ending industry specific incentives,” he added.

So why did he sign on as sponsor? Did he really think his rank hypocrisy would go unnoticed?

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Sunday, May 22, 2011

Sunday, May 22, 2011 - 06:56:55

Lignite: Fool's gold

IN ARKANSASS FUTURE?: Lignite mining in East Texas.
  • IN ARKANSAS'S FUTURE?: Lignite mining in East Texas.

SOCIALIZED MINER: Rep. Kim Hammer (R-Benton)
  • SOCIALIZED MINER: Rep. Kim Hammer (R-Benton)
Periodically, an Arkansas politician gets worked up about the state's lignite deposits. But for four decades or more, the bottom line always turned out the same — it's not commercially viable to mine, burn, liquify or whatever.

The drumbeat has begun again. The Democrat-Gazette's Sarah Wire mined every aspect of the latest lignite push this morning. (Pay wall.)

It's still the same fool's gold, but that doesn't mean there aren't foolish legislators willing to spend taxpayer money in pursuit of it. It is rich irony indeed to see one of the vanguard of small-government Republicans, Rep. Kim Hammer of Benton, pushing for taxpayer funding of a study on the viability of this deposit.

Isn't this what free enterprise and capitalism are supposed to do? Identify profit-making ideas, research and develop them? This passage, smacking of socialized mining, particularly struck me:


Hammer said the state needs to fund the new study to show it is interested in creating a lignite industry.

He said a mining company will have to spend money on a lignite mine and wouldn’t want to have to search for it too.

“If I was a private investor I wouldn’t spend $2.5 million on hope,” Hammer said.

A few things:

1) How many times this year have you heard a Republican say — in response to stimulus spending on real jobs for demonstrable public benefit — "government never created a job."

2) Private investors don't spend money on hope, but the state's taxpayers should? How about we run government like a business — on reality, not pipe dreams?

Thanks to Gov. Mike Beebe for noting that taxpayers weren't asked to pay to discover the gas deposits now being exploited in Arkansas or study ways to commercially tap it.

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Monday, February 14, 2011

Monday, February 14, 2011 - 08:21:54

Tax breaks don't build economy

Timing is good for receipt of this link to a study in Iowa that demonstrates the fallacy of the belief that corporate tax breaks and similar corporate welfare encourage economic development.

It is an article of faith among many legislators and this report will be dismissed out of hand. They don't want to be confused with facts. Still, concludes the Iowa Fiscal Partnership:


Proponents of business tax breaks claim that taxes are a significant factor in the location choices of businesses, and that a state can tax-cut its way to economic growth and generate tax revenue in the process. As we will see, there are good reasons to be skeptical of such a claim, and several decades of research on the relation between state taxes and growth confirm that such claims are vastly overblown and sometimes completely misleading. Business tax breaks turn out to be an expensive and inefficient way to attempt to stimulate a state economy.

Among the points:

* Corporate tax rates are a very small part of the cost of doing business, so have marginal impact.

* When all factors are equal, tax rates have a small impact on corporate locations, judging low-tax states against others.

* Public services matter. When you cut taxes, costs (services) must be cut.

* Tax breaks are costly and inefficient because they have little impact on decisions corporations already planned to make. New jobs don't offset the tax costs because they often bring in-migrating workers who create new costs (more schools, for example.)

* Local giveaways might affect a location within a metro area — a decision in choosing Conway over Little Rock, for example. This may be a big win for Conway, but it's a net nothing for the state as a whole.

But tax or incentive-induced shifts within a labor market produce no benefits for the state as a whole or for the local labor market. The same number of jobs exist and are likely filled by pretty much the same people; some will have longer commutes, some shorter. The incentives merely shift activity around, with no net gain for the region or the state, but with a loss of local tax revenue. State governments should not facilitate such beggar-thy-neighbor competition among their own local government.

This is a particularly apt observation, given that some legislators are spoiling to allow kickback of sales taxes to build retail stores and other commerce with little demonstrated value-added impact.

Even where a business is induced to locate within a state when it otherwise would not have, there may be no net gain in economic activity or jobs or income. A Walmart store, for example, may take advantage of a tax break to open a new store, but in doing so will diminish the sales and viability of existing Main Street businesses. Walmart is not creating new economic activity, but shifting where that economic activity is focused. In fact, there is no case for subsidizing local market activities such as retail; if the market can support the additional activity, we can be sure that private enterprise will take advantage of that market without any subsidy needed.

The putative free marketers don't believe it. They believe that government subsidy is necessary for a successful business climate. The Iowa study also debunks the counter-arguments — everybody does it, we know it works because we say it works, etc.

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Wednesday, February 9, 2011

Wednesday, February 9, 2011 - 11:43:23

Jefferson County approves tax for development

The final tally indicates Jefferson County has approved a 3-8th-of-a-cent sales tax to create a fund to hand out tax money to lure private business to the depressed county.

You know my song and dance: These kind of corporate welfare schemes — giving tax money to prop up private business — isn't free enterprise and it's invariably decisive mostly in landing marginal enterprises. Public money is better invested in local people — education, civic amenities, quality of life. But "economic development" remain magic words in Arkansas. Too bad they don't demand the accountability expected of, say, public schools.

Speaking of accountability, the Arkansas Community Organization called for it in commenting on the outcome of the election:

Continue reading »

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