DAILY WISCONSIN

Crony Capitalism

Bad Ideas, Corrections, Crony Capitalism, Cronyism, Foxconn, Gov. Walker, Government Spending, Mendacity, Trump, WEDC

Predictably, Trump Comes Up Empty on Foxconn

From The White House’s official transcript:

This is just the beginning.  This is one of the largest plants in the world.  And when you think in terms of 20 million feet — if you build in Manhattan a million-foot building, that’s a very big building.  They don’t get much bigger.  And here you’re talking about more.  Think of it: more than 20 million feet.  And that’s probably going to be a minimal number.

So I’m thrilled to be here in the Badger State with the hardworking men and women of Foxconn working with you.  Moments ago, we broke ground on a plant that will provide jobs for much more than 13,000 Wisconsin workers.  (Applause.)  Really something.  Really something.  Thank you, fellas.

Corporate Welfare, Crony Capitalism, Cronyism, Foxconn, Government Spending, State Capitalism, State Government, WEDC

‘Every paragraph revealed another strange twist or failure’

As it turns out, history had already determined that state handouts to attract and keep businesses was a horrible idea, so bad in fact many states amended their Constitutions to prevent those mistakes from ever happening again in the future.

After reading the Cap Times article “Where to now with Foxconn? It won’t leave Wisconsin, but it won’t build what it promised,” where every paragraph revealed another strange twist or failure, I had to look up why Scott Walker and his band of plundering Republicans pirates liked the idea of state corporate handouts so much. Not surprisingly, their actions weren’t based on anything I found in the real world, it was simply pure ideological theory. Look at how much money we’re losing, and how few jobs they’re creating…

Via DemoCurmudgeon: History, Corporate Tax Incentives, and the State Constitutional Gift Clause collide with Scott Walker’s economic theories.

Corporate Welfare, Crony Capitalism, Foxconn, Government Spending, State Capitalism, State Government, WEDC

Walker Foxconn Folly

They say there’s no such thing as bad publicity.

Here’s the counter-argument today, first in a long, must-read piece carried by the Madison Capital Times which, among other things, looks at the risks facing Racine County and the Village of Mount Pleasant where Foxconn bulldozing and local borrowing are well underway:

Based on an examination of Foxconn’s corporate history, Asian business practices and the stark realities of the LCD panel production industry, the likelihood of a flat panel factory in Mount Pleasant seems unlikely any time soon — if ever.

Neither does the prospect of anything close to 13,000 “family supporting” jobs…

For Racine County, the situation is more pressing… The total county cost was recently projected at $911 million, a liability of more than $10,000 per county household…

Via The Political Environment: Grim new reviews for Walker Foxconn folly billed to taxpayers

Corporate Welfare, Crony Capitalism, Government Spending

When the middle-of-the-road approach is business welfare 

It’s the default position of a declining class of entitled men in places like Whitewater that public money should be used to fund their pet business projects despite ample evidence that economic and social conditions have grown worse over time.  Their control and manipulation of ‘community development’ hasn’t developed individual or household incomes.  See A Candid Admission from the Whitewater CDA, Reported Family Poverty in Whitewater Increased Over the Last Decade, and Private Businesses Craving Public Money.

Via The Middle Lane is a Dirt Road to Decay, Pt. 2 @ FREE WHITEWATER.

Corporate Welfare, Crony Capitalism, Foxconn, Government Spending, State Capitalism, WEDC

Shrinking in reality

Just to remind you on how much of a COMPLETE SUCKER you have to,be to think that Foxconn will ever create anything close to 13,000 jobs, let me show you yesterday’s John Oliver segment on the automation of jobs. Something Foxconn proudly proclaims to be a “world leader” on.

As Oliver’s piece notes, historically jobs that have been automated out of existence get replaced by new technologies, generally in more knowledge-based industries. Except that Foxconn’s big pre-election promises on new “innovation centers” outside of Racine County don’t seem to be working out either.

Via Jake’s Wisconsin Funhouse: Foxconn keeps talking big, but keeps shrinking in reality

Corporate Welfare, Crony Capitalism, Foxconn, Government Spending

Really Bad Scam

Jon Peacock of the Wisconsin Budget Project on what we need to look at with the Foxconn contract,

Defenders of the Foxconn deal often claim that the contract protects state taxpayers because Foxconn won’t receive any credits if it doesn’t meet job thresholds. Although that claim is true in part, it’s also very misleading. More than a third of the planned subsidies — $1.6 billion — including the state and local infrastructure spending for the project, has little or no tie to job creation.

3. The state and local subsidies per job are much higher if Foxconn falls well short of the job creation targets.
Under the contract, Foxconn can get the maximum capital investment credits even if it falls well short of each year’s job target. For example, Foxconn can receive the maximum annual cash subsidy (“tax credit”) of nearly $193 million per year even if it employs only 520 people at the end of this year (25 percent of the target level) and 1,820 at the end of 2020 (which is just 35 percent of that year’s target of 5,200 jobs). Under that lower employment scenario, the job creation payments to Foxconn would be lower, but the investment subsidies are much less tied to the job levels.

In light of that factor, plus all the upfront subsidies that are independent of job creation, the total cost of state and local subsides will be much higher per job if Foxconn builds a smaller plant with fewer employees than initially promised. The huge subsidies for each job created are a concern for many reasons, including the fact that the revisions to Foxconn’s plans make it far less likely that project will have the purported employment benefits for blue collar workers and communities of color in southeast Wisconsin.

Via Foxconn – the only thing we know is that it’s a really bad scam @ Jake’s Economic TA Funhouse.

Business, Crony Capitalism, Cronyism, Government Spending, Newspapers

Business Leeches Dislike Private Initiative 

You see, in Janesville, extremely wealthy individuals and politically connected pals including large corporations with hundreds of millions in cash on hand focus more on getting substantial capital hand-outs and other free stuff, usually by way of lucrative TIF deals, from local taxpayers before they commit to Janesville. It’s the first commandment from their economic development bible here. Thou shalt not invest in Janesville or create jobs before capturing some free TIF surplus capital, free land or other free stuff. Their second commandment is a warning for local taxpayers: Thou shalt not believe in false hope that growth will come without providing “incentives.” You get the idea.

Via Rock Netroots: In Janesville, Potential From Developer Attracts The Moocher Club.

Business, Crony Capitalism, Cronyism, WEDC

Nebraska Sacks Former WEDC Official

Unwanted anywhere –

A woman who played a key role in Wisconsin’s economic development agency, including overseeing a $500,000 taxpayer loan to a failing construction company, has lost her job as the top economic leader in Nebraska.

Nebraska Gov. Pete Ricketts’ office announced Thursday that Brenda Hicks-Sorensen is no longer that state’s economic development director. She had been on the job a little more than eight months.

She was previously the vice president for economic and community development for the Wisconsin Economic Development Corp.

Via Former WEDC official fired as Nebraska’s top economic development official @ State Journal.

Crony Capitalism, Cronyism, Government Spending, WEDC

WEDC Spends More, Produces Less

The state’s flagship job-creation agency handed out nearly $90 million more in economic development awards last year than the previous year, yet those awards are expected to create or retain almost 6,000 fewer jobs and result in $400 million less in capital investment.

Most of the additional award funding resulted from a historic rehabilitation tax credit that Gov. Scott Walker and the Legislature expanded in 2013. The agency gave out $2.9 million in 2013-14, but that jumped to $78.1 million last year.

Even without the historic credits, total economic development awards increased $13.5 million, while promised job creation and capital investment dropped….

Via AGENCY HANDED OUT $90 MILLION MORE LAST YEAR: WEDC awards increase as job creation numbers fall @ State Journal.

Business, Crony Capitalism, Cronyism, Government Spending, WEDC

WEDC grants Kohls up to $62.5 million in state taxpayer subsidies, but multi-billion-dollar company falls far short of stipulated goals

But there’s another Kohl’s story Walker doesn’t tell.

It’s about the $62.5 million package of tax credits given to Menomonee Falls-based Kohl’s Corp. — the biggest state subsidy for creating jobs under the Walker administration — that three years later isn’t generating the promised jobs or capital spending.

The deal allows Kohl’s to collect tax credits annually for each created job that meets certain criteria — even if that position vanishes after a year.

Via Scott Walker’s untold story: Jobs lacking after big state subsidy of Kohl’s stores @ WisconsinWatch.

Business, Crony Capitalism, Cronyism, Government Spending, WEDC

No Change in WEDC Cronyism

“Are you going to follow the recommendations in the audit?” I asked the Board Chair of the Wisconsin Economic Development Corporation (WEDC). He crossed his arms, sat back and smiled at me.

A smile that, to me, said I was annoying him.

The clearest path to better outcomes at Governor Walker’s flagship jobs creation agency is to follow the recommendations of the nonpartisan Legislative Audit Bureau (LAB).

However, during a recent and very long public hearing investigating the troubled agency, I repeatedly heard obfuscation, deception and disdain for the law.

Via Sen. Kathleen Vinehout: WEDC Leaders Missed Opportunity to Apologize and Reform By @ Uppity Wisconsin.  

Business, Crony Capitalism, Cronyism, Government Spending, WEDC

The Dollar General Deal Will Hit Taxpayers for Millions More Than Proponents Admit 

You see, not only will the city be giving land valued at $4.25M to Dollar General for free, but the property taxes on the new incremental value DG is supposed to pay “to repay the municipality’s costs” WILL BE REFUNDED to them for the first ten years. That also means DG’s TIF district will not produce a $1.5M surplus near the end of the 10 year term. The deal essentially terminates the stakeholders responsibility for funding TIF District infrastructure and relegates the TIF application to a simple legal platform for local tools of the oligarchy to exempt Dollar General from its property tax obligations.

Via Local Tools Rework TIF Districts Into Tax Exempt Districts For the Oligarchs @ Rock Netroots.

Business, Crony Capitalism, Cronyism, Government Spending, WEDC

Vaporware Deals 

Let’s see if these projects ever get off the ground. I’ll remind you that Eaton Corp announced plans for a sizable expansion with WEDC tax credits in Spring 2014 (just as Scott Walker’s re-election campaign was ramping up) only to outsource large amounts of Wisconsin jobs twice in the last 18 months. Funny how these things never seem to work itself out the way the initial headlines claim, isn’t it?

Via This week in WEDC giveaways and corruption @ Jake’s Economic TA Funhouse.

Business, Crony Capitalism, Cronyism, Government Spending, WEDC

Another WEDC Distraction 

WEDC was part of another “future jobs announcement” this week regarding a new warehouse for Dollar General in Janesville, which features another $5.5 million in potential WEDC write-offs, along with local tax breaks and land gifts from the Janesville area. And the timing of these announcements are very interesting, because last Wednesday, WEDC was the subject of a legislative hearing related to another blistering audit by the Legislative Audit Bureau. And take a look at what came out in that hearing, where both Republicans and (especially) Democrats were angered by WEDC’s continued inability to follow state laws on tracking loans, grants and job-making progress, combined with the loss of taxpayer dollars from previously failed projects and questionable loans.

Via This week in WEDC giveaways and corruption @ Jake’s Economic TA Funhouse.

Business, Crony Capitalism, Cronyism, Government Spending, WEDC

About the WEDC Quad Graphics Announcemnet 

So Quad Graphics already had a contract in place that would have required an expansion anyway, before they received one tax break. And if you do the math, the WEDC package translates to tax credits of $31,400 a job- well past whatever profit would be gained from hiring another employee. In addition, WEDC allows Quad Graphics 5 years to add the jobs, and I don’t see any wage requirements listed in the jobs that need to be added in order to grab these tax credits.

Via This week in WEDC giveaways and corruption @ Jake’s Economic TA Funhouse.

Business, Crony Capitalism, Cronyism, Government Spending, WEDC

Multi-billion-dollar corporation demands millions to move to Janesville 

But it was negotiations with all levels of government bureaucrats from state to county to city employees providing capital value redistributive incentive packages that ultimately drew Dollar General to Janesville. 

A condition imperative to all of these corporate welfare deals: The development would not be occurring without government providing those “incentives.” Collectivism has now become self-fulfilling.

Via Collectivism Scores Again! Janesville Could Pick Up Warehouse and 550 Jobs @ Rock Netroots.

Business, Crony Capitalism, Cronyism, Government Spending, Politics, WEDC

The New Crony Capitalist

Gov. Scott Walker on Thursday appointed banking executive and frequent GOP donor Mark Hogan to lead the state’s troubled job-creation agency…..

M&I Bank faced its own problems several years ago with bad loans and a crashing stock price and ended up being absorbed by BMO Harris of Canada in 2011.

M&I loan losses during the real estate bust — concentrated heavily in Arizona and Florida — totaled $4.8 billion across its portfolio from Dec. 31, 2007, through December 2010, according to a Milwaukee Journal Sentinel review.

Hogan has given $24,125 to Walker’s campaigns for governor since 2009, state records show.

He gave another $10,000 this year to the super PAC backing Walker’s presidential run. His son, Patrick, has worked for Walker’s office and campaign.

Walker spokeswoman Laurel Patrick said the contributions and Hogan’s son’s work for the campaign played no role in Hogan’s appointment.

Scott Walker appoints banking executive to lead state jobs agency @ JSOnline.  

Business, Crony Capitalism, Cronyism, GOP, Gov. Walker, Government Spending, Presidential race 2016, WEDC

WEDC Taints Walker

Walker’s jobs agency is better understood as a model of what not to do. The persistent struggles of his perpetually mismanaged, publicly funded business development facilitator highlight just how inept government-designed agencies can be at spending taxpayer money to create jobs, and the perils of a politically driven, get-something-done approach to economic growth. And, in combination with his flawed arguments for the stadium deal, they offer a stark reminder of the sort of dismal results that can occur when politically connected corporate interests team up with politicians under the banner of happy economic boosterism: Businesses benefit, and so do politicians—but only at taxpayers’ expense. Despite Walker’s campaign-trail claims to be a champion for the little guy, what he’s inadvertently shown in Wisconsin is how the special interests win.

Via Scott Walker, Crony Capitalist @ Politico.