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Money makes the world go round
Money makes the world go 'round but it may not keep companies in town.
It was the story of the weekend. A searing three-part investigative report by Louise Story at The New York Times describing in detail the gigantic rip-off that corporations across America extract from state, county and municipal governments when they start shopping for a place to land, expand or just stick around. "Rip-off," is not a word that Story or her editors chose, but that's the reality behind her exposé of all those tax breaks, land deals, infrastructure upgrades and assorted other arrangements desperate governments offer to lure companies to their turf or keep them in town. The first two parts are here and here. Part 3 comes Tuesday.

The explicit or implicit pledge on the part of the companies that get these incentives is to create more local jobs and higher tax revenue for the local economy. Everybody benefits, see? That may indeed happen. But it's not unusual for a company to hang around for a while and then just leave. And when the company does leave, on the hook are the citizens who assessed themselves higher sales, property and special district taxes to cover bond payments used to cover these incentives. Those levies can last for decades.

As Story tells it, with an emphasis on General Motors in Part 1, over the years, companies have dragged states and localities into a "high-stakes bazaar" in which they compete with each other to offer the biggest corporate bonanza. Just one more example of how private enterprises enhance their profits by socializing their expenses and, all too frequently, leaving those desperate communities deeply indebted for years. The pressure amounts to blackmail.

How much are the incentives worth? The Times found $80 billion and evaluated some 150,000 awards to create a searchable database. However:

The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.
That's right. Taxpayers are buying themselves a pig in a poke. And even when an incentivized company does stick around, few governments bother to gauge the economic and job benefits of the money they're spending, say, on sewer and road extensions nor on the revenue they're foregoing via tax breaks. So, when the next company comes sniffing around for incentives, nobody is in a position to determine from experience where it's a sound deal or not.
“How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?” said Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.
Although all sorts and sizes of businesses seek incentives, and get them, as usual the big guys get the big bucks. Oftentimes, as the Times notes, municipalities find themselves sitting across the table from conglomerates like Shell or Caterpillar, outgunned by the corporate lawyers of these giants:
“They dictate their terms, and we’re not really in a position to question their deal terms,” Sarah Eckhardt, a commissioner in Travis County, Tex., said of companies she has dealt with recently, including Apple and Hewlett-Packard. “We don’t have the sophistication or the resources to negotiate with a company that has the wherewithal the size of a country. We are just no match in negotiating with that.”
This isn't a new phenomenon, states and cities as far back as the 1930s sought to lure industry to their locale in those financially straitened times. But incentives didn't really take off until the 1980s. Now they aren't something most places can avoid offering. Sometimes, they're given to businesses where they make no difference at all where a company locates, as with hotels that can hardly "go somewhere else." But they ask for the cash anyway, and the government often coughs it up.

The cities and states have to sign on the bottom line for those bond issues and other measures that pay for the incentives. But the companies? They just make vague promises. As Eckhardt told the Times, “These economic development deals with a company just serve to guarantee that the nation’s largest companies can receive tax breaks wherever they go.”

Originally posted to Meteor Blades on Mon Dec 03, 2012 at 12:39 AM PST.

Also republished by Daily Kos.

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Comment Preferences

  •  Tip Jar (133+ / 0-)
    Recommended by:
    Simplify, markthshark, ericlewis0, SoCaliana, cany, peachcreek, Pam from Calif, Marcus Tullius, hannah, owlbear1, Youffraita, ChicDemago, Democrats Ramshield, Agathena, sceptical observer, OLinda, GenXangster, Permanent Republican Minority, irate, tardis10, Clues, kaliope, thenekkidtruth, Pluto, Egalitare, banjolele, Jim R, A FIB in Cheddarland, uciguy30, Creosote, DRo, Blue Bell Bookworm, Miss Jones, carpunder, YaNevaNo, jadt65, CA wildwoman, AnnieJo, Lovo, jimstaro, Tinfoil Hat, dkmich, frankzappatista, Oliver Tiger, concernedamerican, Geenius at Wrok, WI Deadhead, farmerchuck, TomP, defluxion10, SME in Seattle, litoralis, Ophelia, RJDixon74135, Aquarius40, Dr Erich Bloodaxe RN, Just Bob, Kristina40, cordgrass, GwenM, One Pissed Off Liberal, arizonablue, Quilldriver, Illinois IRV, marleycat, jamess, rustypatina, Azazello, MartyM, Gooserock, celdd, dotsright, jnhobbs, blue aardvark, ExStr8, gloriana, ms badger, lineatus, nolagrl, PedalingPete, Fishgrease, belle1, Pandoras Box, UnionMade, US Blues, DisNoir36, OjaiValleyCali, maryabein, wader, zerelda, P Carey, CwV, MKinTN, emmasnacker, annieli, pelagicray, Marjmar, stlsophos, skyounkin, GeorgeXVIII, Notreadytobenice, avsp, no way lack of brain, ratcityreprobate, jennifer poole, Naniboujou, Brecht, DeminNewJ, TarheelDem, BlueMississippi, enhydra lutris, Helpless, navajo, RebeccaG, stormicats, llywrch, StrayCat, Johnny Nucleo, redlum jak, Cassandra Waites, maracucho, armadillo, Mr MadAsHell, citizen dan, TexDem, filkertom, tripodisblack, LinSea, condorcet, War on Error, Loonesta, tofumagoo, kurt

    Don't tell me what you believe, show me what you do and I will tell you what you believe.

    by Meteor Blades on Mon Dec 03, 2012 at 12:39:27 AM PST

  •  I wish localities would not make exceptions (48+ / 0-)

    for any particular company. Otherwise it's just a race to the bottom. What's the point of standards, if they aren't standard?

    Government and laws are the agreement we all make to secure everyone's freedom.

    by Simplify on Mon Dec 03, 2012 at 12:46:45 AM PST

    •  To MB thanks for diary! (9+ / 0-)

      sig...You just ran into a hardcore progressive who's just another working stiff with an MBA degree & therefore a vociferous labor union supporter [smile]

      by Democrats Ramshield on Mon Dec 03, 2012 at 01:47:58 AM PST

      [ Parent ]

    •  There outta be a law (3+ / 0-)
      Recommended by:
      Robobagpiper, dylanfan, filkertom

      Why not have a law which prevents specific people or corporations from getting tax breaks from the government?

      Just say that unless a tax break aids at least X number of people or Y number of businesses, it's illegal.

      If passed on a federal level, it would put an end to all this crap.

      •  Why do they need a tax break at all? (14+ / 0-)

        Who pays you to live where you live?   Freaking corporate welfare anyway you slice it.   The money MI Governor Granholm gave away to bring jobs to MI during the great recession belongs in the banksters' column.  So does the loan given to GM.    GM along with millions of others were coping with their debt until the bankster created Great Recession came along and sunk everyone.  

        We truly need an FDR to take these corporations on.  Want to leave?  Go, and take the fiscal cliff route while you are at it.    Simple global rule:  make it where you sell it or pay to bring it in.    I've had quite enough of the assholes and crooks that are leading this country.

        If money is speech, then speech must be money.

        by dkmich on Mon Dec 03, 2012 at 04:15:11 AM PST

        [ Parent ]

        •  If Costco, Walmart, Home Depot and Lowes (4+ / 0-)

          have such wonderful business models, why do they need  extorsion money wherever they build?  Why should they get  advantages over local businesses they displace?

          Sure they make jobs, but they suck jobs out of local stores too.  What's the net?  How many local hardware stores have Home Depot and Lowes closed?  

          It just doesn't make sense.

          There otta be a law preventing anyone (from cities & local districts to the federal level) giving financial preferences to anyone.

          Even Democrats can be asses. Look at Rahm Emanuel.

          by Helpless on Mon Dec 03, 2012 at 09:03:28 AM PST

          [ Parent ]

        •  Or, if you give them any kind of tax break (0+ / 0-)

          It's contingent on the locality having higher tax revenue.

          Give them a year to get started, and after that if there's no increase in tax revenue, they no longer get a tax break.

          No company is going to move somewhere, spend all that money, for a year. Unless they were going to do it anyway.

          And no incentives. I understand improving infrastructure, but that often improves things for everybody. EXCEPT where the infrastructure is specific for that industry, I don't mind those types of upgrades.

          But no incentive for a sports stadium, or anything that's specifically for THAT industry. If it's something that improves infrastructure for everybody (electrical grid upgrades, water/sewer upgrades, better roads, etc.) that's OK. But not things that are only useful if that particular company stays around.

      •  Oughta, indeed (0+ / 0-)
        “I just shake my head every time it happens, it just gives me a sick feeling in the pit of my stomach,” said Sean O’Byrne, the vice president of the Downtown Council of Kansas City. “It sounds like I’m talking myself out of a job, but there ought to be a law against what I’m doing."

        Government and laws are the agreement we all make to secure everyone's freedom.

        by Simplify on Mon Dec 03, 2012 at 08:19:33 AM PST

        [ Parent ]

      •  upfront cash (4+ / 0-)

        If I ask a person to do a job, and give them the cash upfront, or guarantee the cash upfront, then I have little incentive to make fulfill their end of the deal.  This is what is happening here.  We are essentially giving away money so the local and state authorities can say they are doing some to attract jobs, while purposefully not holding on to any leverage so that when the promises of job do not come true there is nothing but blame on the firms, no way to monetize that blame.  This is what is often done with executives and football coaches.  Guaranteed cash, no real consequences.

        What I have seen done is the benefits are given in terms of long term tax breaks based on productivity.  Your store would generates sales tax, we will rebate those to help you recover some of your initial expenses to move here.  You employ people, we will pay your payroll taxes to cover some of your expenses of hiring and training.  These are rational incentives.  if the firm does not generate sales, does not hire people, then they get nothing, the state is out nothing.  

        If the incentives are tied to jobs and promoting the local economy, then make the rewards tied to jobs.  Giving away tax payers cash in exchange for vaque promises is just that, a give away.

  •  In other words, extortion... (37+ / 0-)

    After all this conniving, they bitch about paying taxes?

    Time to end corporate rule in America.

    "That men do not learn very much from the lessons of history is the most important of all the lessons of history." ~ Aldous Huxley

    by markthshark on Mon Dec 03, 2012 at 12:49:27 AM PST

  •  No one really thinks much about how we fund (30+ / 0-)

    land developers, but we do. We underwrite the cost of roads, parklands, schools and water and energy resources associated with them. The developers pick up just SOME of those costs. And in return, we get more air pollution, decreased natural resources, more traffic, more light, etc.

    We've been doing it for so long that it has become acceptable.

    202-224-3121 to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them. "We're not perfect, but they're nuts."--Barney Frank 01/02/2012

    by cany on Mon Dec 03, 2012 at 01:01:39 AM PST

    •  It doesn't help that developers and realtors are (11+ / 0-)

      often major campaign contributors - precisely because they're the original corporate welfare babies.

      In one locality where I lived I noticed that the little "I voted" stickers you get at the polls were funded by a local real estate company.

      •  "I voted" and "I work. . . for minimum" (0+ / 0-)

        Pay a pittance to win a bond issue -

        Then, the few jobs they do create are for terribly low pay, often - as is the case with Walmart - such that a person with 2 kids is eligible for food stamps.

        Food stams b/c of low wages - yet another subsidy for the big companies.

        Its infuriating.

        Blessed are the peacemakers, the poor, the meek and the sick. Message to Repug Fundies: "DO you really wonder "what would Jesus do?" I didn't think so.

        by 4CasandChlo on Mon Dec 03, 2012 at 06:41:21 AM PST

        [ Parent ]

    •  In local government this is huge all the way down (13+ / 0-)

      from larger cities to the smaller towns.  They always bite on the bait that the new development will produce sales tax revenue and real estate tax revenue that will be a return on the investment made on behalf of the developers.

      The sad truth is that the government that pics up the developers tab for infrastructure improvement is being taken for a ride.  The new subdivisions or commercial developments will require all that new tax revenue to maintain services to that new area.  In the meantime, that new area will be hollowing out the existing residential and commercial neighborhoods creating areas that will now demand more government services to fight blight while tax revenues from the area fall.

      •  New Orleans is the poster child (2+ / 0-)
        Recommended by:
        BlueMississippi, maracucho

        for contractor rapine.
        We had privatized all our critical services - transit, trash removal, planning, etc. So when disaster struck, they extorted the highest price they could, and gave as little as possible.

        Nagin blew millions on useless tourist attraction and decorative (not) sculptures bought from his friends.  

        This was after decades of the City funding every snake oil 'revenue generator' at the expense of education, infrastructure, citizen services, transit, and worker pensions.

        This boy is Ignorance and this girl is Want. Beware them both, but most of all beware this boy for on his brow I see that written which is Doom.” ― Charles Dickens, A Christmas Carol

        by nolagrl on Mon Dec 03, 2012 at 06:47:36 AM PST

        [ Parent ]

      •  Exactly edr. Dev. pays for itself for a short (0+ / 0-)

        time period, then it's turtles.

        202-224-3121 to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them. "We're not perfect, but they're nuts."--Barney Frank 01/02/2012

        by cany on Mon Dec 03, 2012 at 07:52:52 AM PST

        [ Parent ]

      •  This is called the "growth machine" (0+ / 0-)

        in the political science literature. As you say, it's a fertile source of local subsidies, and behind state laws that enable local subsidies, like tax increment financing.

    •  but, but, but - they built it! n.t (5+ / 0-)

      If money is speech, then speech must be money.

      by dkmich on Mon Dec 03, 2012 at 04:15:37 AM PST

      [ Parent ]

    •  Good points! Some great comments here (1+ / 0-)
      Recommended by:

      and downthread. Reminds me of content from the great scholarly "Who Rules America" site:

      A local power structure is at its core an aggregate of land-based interests that profit from increasingly intensive use of land. It is a set of property owners who see their futures as linked together because of a common desire to increase the value of their individual parcels. Wishing to avoid any land uses on adjacent parcels that might decrease the value of their properties, they come to believe that working together is to the benefit of each and everyone of them. Starting from the level of individual ownership of pieces of land, a "growth coalition" arises that develops a "we" feeling among its members even if they differ on other kinds of political and social issues.

      This "we" feeling is reinforced by the fact that the pro-growth landed interests soon attract a set of staunch opponents--if not immediately, then soon after they are successful. These opponents are most often neighborhoods and environmentalists, which are sometimes aided by university students and left activists. The inevitable tensions between the growth coalition and its opponents led to increased suburbanization, urban renewal, ghettoization, and many of the other problems that plague American cities of the 21st century.

      In economic terms, the "place entrepreneurs" at the center of the growth coalitions are trying to maximize "rents" from land and buildings, which is a little different than the goal of the corporate community -- maximizing profits from the sale of goods and services.

      "..The political class cannot solve the problems it created. " - Jay Rosen

      by New Rule on Mon Dec 03, 2012 at 10:35:31 AM PST

      [ Parent ]

      •  BTW THAT is a fabulous piece. I just finished (0+ / 0-)

        reading the entire thing and as someone that has worked on land use for most of my adult life, in one way or another, I can really see a lot of parallels, though my area isn't mentioned and is rather unique in that it is largely owned by two individuals/families (well stolen in the case of one, then stolen in a different sense, again, decades later).

        The power structure here has ALWAYS been based on land.

        202-224-3121 to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them. "We're not perfect, but they're nuts."--Barney Frank 01/02/2012

        by cany on Mon Dec 03, 2012 at 01:07:03 PM PST

        [ Parent ]

        •  You're welcome. Lots of good stuff (1+ / 0-)
          Recommended by:

          hidden away in academic sites.

          "..The political class cannot solve the problems it created. " - Jay Rosen

          by New Rule on Mon Dec 03, 2012 at 03:06:00 PM PST

          [ Parent ]

          •  I'm actually looking for something specific (0+ / 0-)

            at the moment... maybe you would have an idea where to find it.

            I am looking for studies that show that open space v. development around existing communities keeps the property values higher than that area being developed. The Irvine Company did such a study years ago for a development they never proceeded with in Anaheim Hills, but I can't dig it up anywhere.

            Any ideas?

            What I am trying to show is that the conventional wisdom of new tract mansions in an otherwise wild/historical area actually lowers the value of the existing small cabins/homes. These homes currently exist w/i the Congressional boundary of a forest.

            I've seen studies before that reinforce this view, but I cannot, for the life of me, find them.

            202-224-3121 to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them. "We're not perfect, but they're nuts."--Barney Frank 01/02/2012

            by cany on Mon Dec 03, 2012 at 03:24:19 PM PST

            [ Parent ]

  •  That front-page, above-the-fold story (19+ / 0-)

    is part of the reason I shelled out six bucks for the DC edition of the Times today.

    The pathetic part?  I've known this to be a fact for decades, just by following non-NYT news sources.

    But when the national Paper of Record puts all the power of their best reporters on the case...well, ya gotta read it.

    Who else is going to report the obvious, and back it up with lots of fact-checking and boots on the ground?

    Certainly not my local paper.  They cover some important local stories, I guess, if "important local story" means who got shot and who killed his wife.  And who embezzled from their employer.

    But for stories of national importance?  You pay for the Times.  Even when you already know how the story is gonna turn pay for the reportage, for the sourcing.

    Judith Miller be damned: it's still the best paper out there.

    To make the argument that the media has a left- or right-wing, or a liberal or a conservative bias, is like asking if the problem with Al-Qaeda is do they use too much oil in their hummus. Al Franken

    by Youffraita on Mon Dec 03, 2012 at 01:33:49 AM PST

    •  They ain't what they used to be (1+ / 0-)
      Recommended by:

      There still is some quality there, but it is going away.
      If you want to read news about something that isn't America you have to read BBC or al-Jazeera.
         Sometimes, even foreign news sources are better at reporting American news than American news sources.

      ¡Cállate o despertarás la izquierda! - protest sign in Spain

      by gjohnsit on Mon Dec 03, 2012 at 05:32:46 AM PST

      [ Parent ]

    •  my local paper - Indpls Star - has actually (2+ / 0-)
      Recommended by:
      gosoxataboy, Loonesta

      reported how many of these promises have been broken in Indiana.  I cannot recall the specifics but it at least has been reported.  
      We need to follow up these tax breaks to see if the promised jobs appear or not.

    •  local news is a tough business (0+ / 0-)

      you cannot expect too much from there anymore given the decline in classified advertising.

    •  The answer to your question is Good Jobs First (1+ / 0-)
      Recommended by:

      Good Jobs First provided most of the material for her database. Their database covers 247,000 deals versus the Times' 150,000. It has been reporting on this since 1998 and its founder, Greg LeRoy, has been doing it even longer.

      Good Jobs First also grades all the states on what they require of subsidy recipients, and on how well they enforce those performance requirements.

      Every page of the Times' database links to the Good Jobs First database.

      Being in the Times elevates the visibility of the issue, which is tremendously important. I hope Story wins a Pulitzer for this. That would make the issue even more visible.

      But for the theory, you should consult Tim Bartik's Who Benefits from State and Local Economic Development Policies, Alan Peters and Peter Fisher's Industrial Incentives, and my book Competing for Capital: Europe and North America in a Global Era.

  •  I've seen this in a number of places. (13+ / 0-)

    Around malls and business everything's modern while just blocks away local streets have potholes and patches.

    But they don't call it welfare when it's corporate, it's an investment.

    "The human eye is a wonderful device. With a little effort, it can fail to see even the most glaring injustice." Richard K. Morgan

    by sceptical observer on Mon Dec 03, 2012 at 01:51:28 AM PST

  •  Didn't Reagan utter something (21+ / 0-)

    about welfare queens driving caddys from state to state to collect govt. checks? Sounds familiar here.

    A company in Cleveland has a sister company in Fort Wayne, Indiana that shut down recently to concentrate all it's production in Cleveland to increase profits. My downstairs neighbor is from Indiana and came all the way here to work for Lincoln Electric for some reason.

    Red state Indiana is losing people to Cleveland and we don't have enough jobs for ourselves here. That's why you can win a trillion electoral votes with a few blue states even though bigger territories are colored red. Nobody fucking lives there because Republicans don't give a shit about people working. Where are they gonna work? They migrate to places where they can survive if they can manage, otherwise, they're on welfare and unemployment.

    That's what galls me about the company picking up and moving after they've drained a city's coffers. They've left people on the hook with no job and with nothing but the govt. to turn to for unemployment benefits while they painfully search for a new job. That's a double blow to the economy.

    "It's not enough to acknowledge privilege. You have to resist." -soothsayer

    by GenXangster on Mon Dec 03, 2012 at 02:22:31 AM PST

  •  This ranks right up there (13+ / 0-)

    with throwing money willy-nilly at rich people and hoping they create some jobs.

    This must be an indication of corruption, right?  We all couldn't possibly be so stupid to give such enormous amounts of money and then just hope something good comes out of it.  It's the equivalent of sending a check to the corporate offices of Publix or Wegmans every week and then hoping someone brings groceries to your house.  Who would do this?

    This has been going on for a very long time.  I've posted links to a lot of articles about shenanigans like this happening in the IT industry.  The funny thing is that these municipalities often congratulate themselves for luring a business away from another city or state, and fail to realize that the same thing will happen to them the minute some other place makes a better offer, or when the incentives expire.

  •  The series is a real eye opener. (6+ / 0-)

    I expected to read about corporate welfare on steroids but the out in plain view corruption (especially as practiced in Texas) was a surprise.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Mon Dec 03, 2012 at 02:41:15 AM PST

  •  Welfare for me but none for thee (17+ / 0-)

    And this at a time when we're being lectured to by our corporate overlords and Wall Street plutocrats that our totally inadequate social safety net must be slashed even further in the name of economic sustainability.

    It has long been the case that what is "legal" in the tax code for the wealthy is the greatest rip off in America, not single moms struggling to survive.


    "extravagant advantage for the few, ultimately depresses the many." FDR

    by Jim R on Mon Dec 03, 2012 at 02:54:53 AM PST

    •  The only government spending they oppose (4+ / 0-)

      is the money they don't get.    They've privatized the military.   Where's the savings?   :-}

      If money is speech, then speech must be money.

      by dkmich on Mon Dec 03, 2012 at 04:17:25 AM PST

      [ Parent ]

      •  Barlett & Steele (3+ / 0-)
        Recommended by:
        belle1, gosoxataboy, nolagrl

        put out a trio of books beginning with, "America: What Went Wrong?"in the mid to late nineties detailing in shocking fashion how governments at all levels had become mere appendages of and in thrall to corporate America.

        Reason number gazillion why the disastrous 1976 Buckley V Valeo "push back on Watergate reforms by conservatives act" and the more recent sellout to the 1% Citizens decision, money and politics are repeatedly proven incompatible by producing blatant graft and corruption, let alone a sorry ROI to taxpayers.


        "extravagant advantage for the few, ultimately depresses the many." FDR

        by Jim R on Mon Dec 03, 2012 at 05:14:57 AM PST

        [ Parent ]

  •  Counting jobs created (16+ / 0-)

    These incentives are pushed as creating jobs. But you have to look at both sides of the equation.

    Virtually every state has a balanced budget amendment. So when you give Corporation X $10 million dollars, there's only two places it can come from: raising taxes on everyone else, or cutting spending somewhere else in the budget. Raising taxes is off the table in Wisconsin as it is in a lot of other states with Republican governors and legislatures. Which means that paying for corporate welfare comes at the expense of other parts of the budget.

    The kicker is that the $10 million you gave to Corporation X also supported jobs when the state was previously spending it on hiring teachers or firemen or buying pallets of office supplies from local vendors. So any accounting of the net jobs created has to include not only the jobs that Corporation X says it will create (ignoring for the moment whether or not Corporation X is really creating jobs or not), but it also has to include the jobs destroyed when state and local governments have to lay off teachers or firemen because there's not as much money as there used to be.

    Let's take back Wisconsin!!!

    by A FIB in Cheddarland on Mon Dec 03, 2012 at 03:14:46 AM PST

    •  Exactly! Public sector jobs are still jobs. That (5+ / 0-)

      the corporate-dominated discussion of "job creation" has been permitted to frame discourse around corporate welfare in such a way that they, the corporations, come across as the "job creators" riding in to save the day and "create jobs" where there previously were none, is one of the greatest and most galling absurdities of this whole matter.  Of course there were jobs there--- but they are public-sector jobs, jobs providing essential services that the citizens rely on from their government, and those are jobs that corporations want to get rid of so as to free up money that might then be funneled toward their private agenda.

      That's one more thing to add to my long list of small problems. --my son, age 10

      by concernedamerican on Mon Dec 03, 2012 at 04:34:40 AM PST

      [ Parent ]

      •  I've long believed that the way to solve a problem (6+ / 0-)

        is to take it head on, and that indirection only adds costs and makes things less efficient.  Need to efficiently insure every American?  Just DO it.  Don't drag in inefficient middlemen who add no value, and only cost.  Need to create jobs?  Just do it, in a framework in which you know exactly what jobs were created and what the associated costs are.

        The horror of the right at the existence of public sector jobs is merely the horror in knowing that they're not getting to skim public cash off into their own pockets when governments hire directly, rather than farm out the hiring to private companies.

  •  This is the crap side of Local Government (4+ / 0-)

    that the GOP hopes nobody knows about.

    My local area politicians are suckers for these deals, esp. as the 'community' on one side of a river has a blood feud with the 'community' on the other side from 150 years ago.

    I had to quit going to local political meetings because the stupidity & short-sighted revenge seeking was making me sick.

    And they were OK with looking stupid & making bad decisions in public, on TV, all the time.

    Something that doesn't make good sense, makes bad sense. That means someone is being deliberately hurtful & selfish. Look for motives behind actions & words.

    by CA wildwoman on Mon Dec 03, 2012 at 03:36:09 AM PST

  •  Well nice of them to notice and write up the big (8+ / 0-)

    article, but this isn't a brand new discovery.  It has been at least discussed for over the last 20 years or more.

    Right there with this particular gifting to the corporate class is the giving of public funds and other benefits to professional sports teams to lure them to a city and/or keep them in place.

    As George W. Bush might ask:  "Is our local politicians stupid?"  Well sadly yes, yes they are.

    •  but it isn't just the politicans fault (0+ / 0-)

      do you want to stand for re-election as the official that allowed all the jobs to leave or that didn't get the new plant that instead moved to the adjoining municipality - the easiest thing to do is give in.
      What we need are laws that prevent any sort of preferred treatment - but they need to be national.

    •  Not new, but getting in the Times matters (0+ / 0-)

      I've been researching this issue since 1993, and some people even longer, but being on the front page of the Sunday Times makes the issue tremendously visible.

      The story has been 10 months in the making (I talked to the reporter 9 months ago). It really is a big deal.

      See also my comment upthread on Good Jobs First.

  •  A contract, maybe? Saying that if the company (3+ / 0-)
    Recommended by:
    defluxion10, Utahrd, Cassandra Waites

    doesn't create x amount of jobs or leaves before a certain number of years pass then the company pays the city/state for the lost revenue?

    "Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity." --M. L. King "You can't fix stupid" --Ron White -6.00, -5.18

    by zenbassoon on Mon Dec 03, 2012 at 04:02:58 AM PST

    •  That's what happens here (in theory) (0+ / 0-)
      an Ogden-based manufacturer of carbon fiber composite products, will get a $1.3 million post-performance tax break if it creates 342 jobs over seven years that pay at least 125 percent of the Weber County average wage.
      Here's how our Corporate Welfare works.

      And these bike parts are going to slightly increase global warming.  No one makes complete bicycles in the US any more.  Many of these parts will be sold as aftermarket parts in the US.

      But some of them will be sent to the other side of the world and added to bikes whose production was outsourced from the US to Asia.

  •  This has been WalMarts (6+ / 0-)

    business model forever, nice someone finally noticed it is all bullshit, though.

    ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

    by Kristina40 on Mon Dec 03, 2012 at 05:25:15 AM PST

  •  great diary! (1+ / 0-)
    Recommended by:
    Meteor Blades

    It's something you heard about every once in a while, but no one has ever put the entire story together (that I am aware of).

    ¡Cállate o despertarás la izquierda! - protest sign in Spain

    by gjohnsit on Mon Dec 03, 2012 at 05:26:03 AM PST

  •  Did they include cash given to local (3+ / 0-)
    Recommended by:
    nolagrl, LinSea, Loonesta

    chamber of commerce -- to promote such moves by wining & dining execs from potential move ins?   Living high on your tax paid hog.  

    Have you checked how much of that fungible money goes back into your local officials' reelection coffers?    Has anyone run for your local office on the promise of NOT wasting your taxes in this way.

    If not, why not?  Does the question get asked of candidates in pre-election forums?  Why not?  

    There certainly IS plenty of "free lunch."   We the People just aren't getting it.    

    When you get right down to it, how patriotic or ethical is it to want to bribe any company to steal jobs from our fellow US citizens in order to bring them to our town --- if & when they actually do?   Would you steal work from your neighbor?

    A good corporate citizen would want their employees to live where there are good schools, hospitals, roads, libraries, police, and fire departments.   How much would you pay to have a crook move into your neighborhood?  

    Sorry Mittsters --- your corporate "people" are bad neighbors.

    De fund + de bunk = de EXIT--->>>>>

    by Neon Mama on Mon Dec 03, 2012 at 05:35:27 AM PST

  •  How does that work? (0+ / 0-)

    It's OK to hand out Corporate Welfare to GM but it's not OK to hand out Corporate Welfare to a bike part maker?

  •  Yep an Old Story in Ohio nt (1+ / 0-)
    Recommended by:

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Dec 03, 2012 at 06:10:17 AM PST

  •  Why is it (0+ / 0-)

    that when it comes to education republican/limited government/low taxes & regulation types are constantly advocating for measurable standards and a mechanism that can assess whether those standards are achieved.... but when it comes to business deals it's a free-for-all?  Anything business wants is automatically considered good (hell, even fracking is considered good by many businesses-are-people types).

    Deye mon, gen mon (Beyond mountains there are mountains - Haitian proverb)

    by ekeithj on Mon Dec 03, 2012 at 06:19:29 AM PST

  •  Proposed solution (1+ / 0-)
    Recommended by:

    National sales tax, collected by the Federal government. Big corporations have to break down their sales by city and county, and the Feds send the money collected to those cities and counties according to the sales therein.

    Economics is a social *science*. Can we base future economic decisions on math?

    by blue aardvark on Mon Dec 03, 2012 at 06:25:58 AM PST

    •  Sorry, bad idea. (0+ / 0-)

      Sales taxes are regressive to the max.
      Why punish the consumers while giving the corporations tax breaks? That's exactly backwards.

      If I ran this circus, things would be DIFFERENT!

      by CwV on Mon Dec 03, 2012 at 07:07:44 AM PST

      [ Parent ]

      •  Because it ensures that a Wal Mart store (0+ / 0-)

        that sells to a multi-city area pays taxes to all of them.

        Economics is a social *science*. Can we base future economic decisions on math?

        by blue aardvark on Mon Dec 03, 2012 at 07:17:47 AM PST

        [ Parent ]

        •  No, it ensures that Wal-Mart's customers (1+ / 0-)
          Recommended by:

          are effectively double-billed for this sort of "corporate incentive" welfare/fraud: on the leading edge by sacrifice of tax revenues or other fees and the trailing by having to make up the difference.

          Neither Wal-Mart nor any other corporation pays the sales taxes that accrue from the result of their sales. The purchaser pays it, and the corporation is merely an Agent of the State to collect them.

    •  I know it isn't popular on this site (2+ / 0-)
      Recommended by:
      Utahrd, condorcet

      but this kind of thing is one of the reasons I am open minded about reducing business tax in favor of having taxes paid by individuals.

      Paying taxes provides businesses with power and leverage. I would like to see how we shift this power back to individuals. This article in the Atlantic discussed this to a degree.

  •  My mom sued GM over property tax issues for a (2+ / 0-)
    Recommended by:
    Kenneth Thomas, LinSea

    school district she represented - and won.  They've been doing this crap for decades, trying every possible way to get out of paying their fair share, and impoverishing the communities they occupy.


  •  this isn't news to anyone (2+ / 0-)
    Recommended by:
    belle1, Cassandra Waites

    and it isn't just individual tax payers that suffer, it is also other businesses that have to make up the difference.

    Look at any large business investment in a new plant in this country, it is likely they received some sort of tax incentive and possibly infrastructure improvement in order to create jobs in that location. And companies blackmailing by threatening to pick up and take their jobs to a different city and state if they don't get what they want is a daily occurrence - see any local newspaper.

    •  The problem is that most local newspapers... (3+ / 0-)

      ...don't point out the problems when the companies are asking for and municipalities are granting these deals. The local newspapers rarely check out the bigger companies' record for keeping their promises to other communities. They don't report until the companies pull out.

      Don't tell me what you believe, show me what you do and I will tell you what you believe.

      by Meteor Blades on Mon Dec 03, 2012 at 07:37:54 AM PST

      [ Parent ]

      •  sure, the details may not be there (0+ / 0-)

        my point is simply that these are not infrequent events.

        However, whether 'promises' are kept is not the issue and I believe that is a narrow appreciation of this problem. There is a clear unfairness to select companies getting special treatment - with everyone else having to make up the difference while some other municipality may also lose out in the process - regardless of whether 'promises' are kept. The only winners in this are the businesses that exert leverage to get what they want. Collectively, the rest of us lose.

        •  I agree that broken promises aren't the only... (2+ / 0-)
          Recommended by:
          LinSea, Loonesta

          ...problem, which I think I made clear in my diary. This is a matter essentially of communities signing over a chunk of their revenue (obtained from existing taxpayers, both individual and business) to an outside company (or to one that says it may have to leave if it doesn't get some relief).

          I also agree that these aren't infrequent events, which is one of the Times's main points in this series. But I will wager that not more than 5% of Americans know this goes on and, except in the smaller communities, have little to no idea which companies have received incentives.

          I covered two big issues of this sort for alternative publications in the '80s (other traditional local papers didn't cover them until a long time later).

          In Boulder, Colorado, the computer company DEC got the city council to approve industrial development bonds and supply infrastructure upgrades, and got the school board to approve the construction of a new elementary school. All for a new branch facility DEC would bring to the city. The company promised a few hundred jobs and, of course, made the usual noise about improving the tax base. A few years later, DEC was bought by Compaq and the Boulder facility was closed entirely, leaving the local taxpayers on the hook.

          Exxon wrote in a notorious "White Paper" in 1980 that stated, by 2010, there would be 1.5 million in western Colorado pumping out 8 million barrels of oil shale a day. Cities like Parachute and Rifle (and counties) prepared by passing bonds to extend their sewer and water, build new schools, approved housing developments, etc. In 1982, Exxon pulled out of its oil shale operation. Eventually, the state bailed the local governments out to avoid their bankruptcy.

          Don't tell me what you believe, show me what you do and I will tell you what you believe.

          by Meteor Blades on Mon Dec 03, 2012 at 11:13:19 AM PST

          [ Parent ]

      •  Good Jobs First (0+ / 0-)

        You need to cite them. They have been doing great work since 1998, and Story's database cites their much bigger one on every page.

        And I've written two books on this issue.

  •  It's good for business (0+ / 0-)

    "This will create jobs."
    "It's a boost to the local economy."

    These are but a few of the trance inducing statements that are made in favor of corporate welfare. The simple rejoinder "where's your data?" is often left unasked.

    "Political ends as sad remains will die." - YES 'And You and I' ; -8.88, -9.54

    by US Blues on Mon Dec 03, 2012 at 06:42:21 AM PST

  •  Corporate welfare, part 3,573. (0+ / 0-)

    It's really no different in principle from 'takings' or eminent domain siezures of private property. See, your legislators are putting you and your children (and grandchildren and...) on the hook for billions in giveaways to giant corporations. And you aren't a party to the negotiation.

    You don't even get a lousy T-shirt.

  •  "Follow the Sun" (0+ / 0-)

    Corporate Execs are just doing their job . . . finding the cheapest labor and tax rates.

    Instead of reducing Executive compensation or maintaining a flat earnings-per-share for their stock.

    So wonderfully business-like in the USA, where the notion of a "home team" has almost no meaning in business or culture when big money is involved.

    "So, please stay where you are. Don't move and don't panic. Don't take off your shoes! Jobs is on the way."

    by wader on Mon Dec 03, 2012 at 06:46:27 AM PST

  •  What is their end of the bargain? (0+ / 0-)

    What you describe here are local governments that set themselves up as suckers, and companies shopping around for the lowest rent.

  •  same old story (5+ / 0-)

    Back in the 70's, local counties attracted textile and furniture plants by offering them free utilities, no taxes, land at bargain basement prices (through imminent domain for stubborn owners) and loans at almost no interest along with other incentives for 10 years or so.  The plan was that after 10 years, the plant would be a cash cow for the county.
    Instead, year 10, companies negotiated sweetheart deals with neighboring counties and moved.  So the county negotiated a deal with another company.  End of 10 years, they moved and so on.

    Finally, about 20 years ago, a plant moved into the vacated facilities and dumped all their waste (they were a t shirt factory) and chemicals into open rainwater drains in the factory.  When carcinogens showed up in the local water table, the company relocated to its parent country, leaving the county with multiple unpaid loans and paying for the cleanup.

    Moral of the story? Must not be one.  County was out begging companies to please come and abuse us again the last I heard of the county development committee

  •  UBS in Stamford CT (3+ / 0-)
    Recommended by:
    annieli, gosoxataboy, LinSea

    If you want to be disgusted by large corporations extracting/extorting local and state governments, then UBS in Stamford CT should be one of the top on the list.  

    Prior to moving to the city they extracted huge tax breaks from the city and state.  Neophyte politician and incoming mayor Dan Malloy helped to get them to move to the city.  UBS moved in, Stamford prospered and Malloy took the credit for helping to create one of the worlds hedge fund capitals.

    15 years later, stories like this  start popping up and rumor start spreading that UBS was planning on moving back to NYC.  

    Newly elected governor Dan Malloy steps in to help UBS stay in Stamford.  In exchange for them staying and retaining jobs UBS would get HUGE tax breaks.

    Well surprise surprise but UBS had already moved many of their workers to NYC and they have no plan to honor the agreement.  Employees withing UBS and others outside scream at the top of their lungs to no avail that the state and city are getting fleeced despite them being relocated to Manhattan.   Now there's a huge eyesore of a building in the heart of Stamford which is currently at half capacity and right next door is the newly erected RBS bank headquarters no doubt wondering how they too can extort some more money from Malloy.  

    This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

    by DisNoir36 on Mon Dec 03, 2012 at 06:58:04 AM PST

  •  Its happened here with several companies that (2+ / 0-)
    Recommended by:
    gosoxataboy, LinSea

    later folded up tents and went elsewhere. Taxpayers didn't get a dime for the services they provided and the workers got jobs for less then 2 years. As for the corporations that leave environmental messes for the locals to live with... that is not even mentioned. Bohemia mines sucked the mine dry and left us with mercury, arsenic and other hazards leaching into the groundwater ever since depressing the  value of that land and harming people who paid for them to do business.

    This is the reall entiltlement program not small potatos like the common person gets in aid.

    Fear is the Mind Killer...

    by boophus on Mon Dec 03, 2012 at 07:03:50 AM PST

  •  I wonder if contacted the mayors of the various (4+ / 0-)

    suburban communities around Des Moines and offered to move into their community and purchase goods and pay property taxes if I could get Urbandale and Clive and West Des Moines and Johnston bidding against one another and offering me incentives to come and live in their cities.

    Corporations are people, after all.  I'm a people.

    "Let's see what fresh fuckwittery these dolts can contrive to torment themselves with this time." -- Iain Banks, The Hydrogen Sonata

    by Rikon Snow on Mon Dec 03, 2012 at 07:05:03 AM PST

  •  Harvard, IL in the early 2000's (4+ / 0-)

    wrung all kinds of concessions out of the small farming town - infrastructure buildouts to support google satellite of  behemoth (really - load the URL to get an idea of just how huge this thing is) - road expansions, utilities, tax-exemptions etc. etc..

    After all, who wouldn't giveaway like this? Motorola was going to "create several hundred jobs and bring money to Harvard".

    One small problem - Harvard didn't have the people-power/skill profile to fill all the jobs. Oh - the other problem was Motorola didn't hire from Harvard. A whole bunch of employees took the Metra commuter line from the dense suburbs in the morning, apart from tiny McDonalds and Subway there was no food to buy and even that required a 15 minute drive through small roads.

    After less than 3 years Motorola folded the thing up and walked. The massive facility sold eventually to some clown-fund  around 2006 who thought they'd flip it. They then sold to another clown-fund and there it sits.... empty.

    The little-town wannabe piranhas play with the sharks and get their breakfast lunch and dinner eaten and the shirt stolen off their backs.

    These don't happen as one-sided deals - the locals always have some people who take money or favors under the table for personal gain, and the community as a whole ends up short-changed. How 'bout a federal law that prohibits tax-giveaways without first an 80% yea-vote referendum?

  •  " each according to their need" (0+ / 0-)
    Many on the political left also seem to have adopted the view that global changes have left local states with little or no real alternative to neoliberalism.  This has led to predictions about the emergence of an enduring neoliberal local state form (Patterson and Pinch 1995; Esser and Hirsch 1989). The idea that local states and communities are firmly locked into a neoliberal policy framework as a result of globalisation is superficially plausible. However, it is based upon questionable assumptions which warrant critical examination, because there are far-reaching implications for political practice. Acceptance of this discourse of inevitability is politically de-powering and detrimental to the generation of any form of progressive alternative policy.
    Stalin focused particular hostility on the wealthier peasants, or kulaks. About one million kulak households (some five million people) were deported and never heard from again. Forced collectivization of the remaining peasants, which was often fiercely resisted, resulted in a disastrous disruption of agricultural productivity and a catastrophic famine in 1932-33. Although the First Five-Year Plan called for the collectivization of only twenty percent of peasant households, by 1940 approximately ninety-seven percent of all peasant households had been collectivized and private ownership of property almost entirely eliminated. Forced collectivization helped achieve Stalin's goal of rapid industrialization, but the human costs were incalculable

    yksitoista ulotteinen presidentin shakki. / tappaa kaikki natsit "Nous sommes un groupuscule" (-9.50; -7.03) 政治委员, 政委‽ Warning - some snark above ‽

    by annieli on Mon Dec 03, 2012 at 07:10:27 AM PST

  •  This very subject is... (1+ / 0-)
    Recommended by:
    Meteor Blades

    ...what dragged me, kicking and screaming, into the local political arena.  This very subject.

    It's about g'damn time [we] began taking a much harder look at this corporate welfare/blackmail bullshit.

    "The most potent weapon in the hands of the oppressor is the mind of the oppressed." ~ Steven Biko

    by Marjmar on Mon Dec 03, 2012 at 07:13:09 AM PST

  •  My guess is this is the new reality of politics (0+ / 0-)

    in this country:

    “They dictate their terms, and we’re not really in a position to question their deal terms,”

    And I bet it happens all the way up to the federal level.

    There are some things that are unforgivable. Your willingness to play political games while people suffer and die is one of them--Onomastic

    by SouthernLiberalinMD on Mon Dec 03, 2012 at 07:17:53 AM PST

  •  If "There's a sucker born every minute" applies (0+ / 0-)

    to much of the public it is epidemic among local boosters and politicians playing this game.

    The practice is of long standing and deeply entrenched among the politically active in local and state governments. The circus with sports in which huge amounts are devoted to keep a team is particularly galling. For example, the Washington Nationals got a stadium and then demanded more. Then, when in playoffs they again stiffed the city and region:

    After weeks of back-and-forth discussions between the District of Columbia government and the Nats over who will cover the cost of keeping the rail system open to accomodate potential late weeknight games, the team ownership is insisting that they won't pay.

    The only foes that threaten America are the enemies at home, and those are ignorance, superstition, and incompetence. [Elbert Hubbard]

    by pelagicray on Mon Dec 03, 2012 at 07:22:01 AM PST

  •  Our town is getting a new 'upscale mall' after (2+ / 0-)

    the developers played chicken with city hall to get tax breaks. Now that it has been announced that the existing  Best Buy, Barnes and Noble, and an AT&T Store will relocate to the new mall the developers claim that they only said it would be  an 'upscale looking mall'.

    •  That's what happens with malls (1+ / 0-)
      Recommended by:
      Kenneth Thomas

      Build a new one, and the other stores move. They move from the old mall, they move from other locations. The new mall likely gave them a good deal to get them to move.

      You'll get some new stores, of course. But not as many as you'd think. And those jobs don't pay much either.

      They're the same jobs, just in a different location. And now you have the OLD mall, which will be an empty shell in a few years, to deal with as well.

      We had that happen. The old mall finally became corporate offices for some large companies, which have since moved. I suspect because whatever incentives they got to move to the old mall ran out...

      They keep talking about building a civic center. I'm not sure where they want to build it, but I can sure think of a really good spot. It's zoned correctly, has plenty of parking already, and it's right on the highway.

      •  Retail subsidies are awful (0+ / 0-)

        They create no new economic activity. The definitive study on this was done in the St. Louis metro area by the East-West Gateway Council of Governments, the regional planning body. From 1990 to 2007, they found, local governments gave at least $2 billion in retail subsidies. Total retail job growth? 5400, probably all due to the area's increase in income. Apparent net cost per job: $380,380. True cost per job: infinite.

        And these are retail jobs, low pay and low benefit.

  •  Coffeyville, Kansas (0+ / 0-)

    and Amazon. Wow it is bad.

    For today August 9 I found a signature. I am a badger in heart today. Fight on Wisconsin.

    by the mom in the middle on Mon Dec 03, 2012 at 07:29:22 AM PST

    •  Springfield, Oregon (0+ / 0-)

      and Sony.  Cost the city millions.  Cost the citizenry of the area far more in the form of divorces, breakdowns, and at least one suicide.  I worked there from the beginning to the end and met some wonderful people, made some great friends but it was the worst workplace experience of my life after which I wouldn't buy a Sony product if you put a gun to my head.

      Live so that when your children think of fairness, caring and integrity, they think of you. H. Jackson Brown, Jr.

      by Ellen Columbo on Mon Dec 03, 2012 at 05:20:58 PM PST

      [ Parent ]

  •  Ala wanted to let companies steal worker taxes (0+ / 0-)

    We actually had a legislative proposal to allow companies to KEEP the taxes withheld from workers' paychecks! It wasn't even a disguised subsidy, it was a straight-up tax giveaway. So these companies would be able to take money from their employees, put it toward corporate profits, and a state whose taxes are already much too low would get even less money.

    Of course, we are always more than willing to let those companies give "grants" to nonprofits, or buy advertising space on public property, but it never equals the tax revenue they should be paying. Our physical and civic infrastructure continues to deteriorate.

    "Maybe life's meaning is not so much found, as it is made." Opus, by Berke Breathed

    by Lisa in Bama on Mon Dec 03, 2012 at 07:32:04 AM PST

  •  Dell stiffed NC after getting loads of incentives (1+ / 0-)
    Recommended by:

    to build in Winston Salem area, then left town after only a few years operation.  

    After that fiasco, some here are wising up and attaching some strings to the grand bargaining, such as a guarantee of a number of years of operation, and the number of jobs.

  •  Ever hear of Kelo Vs New London? (6+ / 0-)

    pFizer decided that it wanted to expand it's SouthEastern Connecticut presence, to build a new campus for it's regulatory compliance department. They crossed the river from Groton and, with the help of a thoroughly corrupt Republican Governor and his gang, lined up and took out an old neighborhood, right on the river. Fort Trumbull neighborhood was not particularly upscale but it was far from blighted. Many of the people that lived there were third and forth generation in those homes. pFizer and their "consultants" (NLDC) laid out a development plan for the area that included a hotel, restaurants, shops, a marina and housing as well as their massive campus. They claimed that they would be employing thousands of people and that the overall development would create thousands more jobs.
    The City gave them an eight year tax window. No taxes for 8 years! It also condemned and took all the houses in the neighborhood under Eminent Domain.
    There are 2 kinds of ED, one is for expanding the commons, like a reservoir or a highway. The other is for "economic development" that is: take land from some people to give to other people to make money on.
    This was the basis of the Supreme Court case.
    Kelo lost.
    The entire neighborhood was bulldozed.
    pFizer built it's shiny new buildings and huge parking lots, none of the rest of the development happened so they were surrounded by vacant land, turned to lawn. Quite beautiful. The City improved the roads and maintained the new pseudo parks.
    The people that worked for pFizer didn't live in New London, they drove a speculation boom in the surrounding rural towns (driving up land prices and property taxes) and commuted through downtown New London, which was already a traffic nightmare. Very few jobs were created for people in New London.
    Then, eight years later, just as the tax window was about to close, they left.
    Found some other suckers to bilk somewhere else.
    The housing bubble burst, unfinished developments all around the area sit there to this day, having destroyed the woods and farms but never to be finished.
    The campus sat empty for a while, then General Dynamics, Electric Boat (the people who make the submarines in Groton) got a tax break to bring their engineering department across the river. Still no taxes collected, still no development of the area, still few local jobs.

    If I ran this circus, things would be DIFFERENT!

    by CwV on Mon Dec 03, 2012 at 07:39:37 AM PST

  •  not in a position to question the deal terms ? (1+ / 0-)
    Recommended by:

    this is exactyl the kind of stuff that gives government a bad name.

    if you can't negotiate properly, with the appropriate expertise then say "NO" !


    as usual if we don't hang together we will surely hang separately.  the problem is not negotiating, that can be solved with "no".  The problem is that these companies jump to the next state over where the idiots have given them more in tax breaks than they will get from having the company there.

    oh and also too, sports stadiums.

    big badda boom : GRB 090423

    by squarewheel on Mon Dec 03, 2012 at 07:42:22 AM PST

  •  Pigs and pokes (0+ / 0-)

    Overall, I agree with MB. The question that remains, however, is why we eternally imagine that these kinds of subsidies/ incentives/ tax breaks/ etc. can be managed over 'here', just not over 'there.' In short, why believe that tax breaks to Solyndra are OK, but not for GE (which, I believe, is one of the primary benificiaries today of green energy tax credits)? MB himself just last week essentially proposed a massive regime of just such subsidies and such in order to turn W. Virginia from coal production to wind turbine manufacture. IMO, he ought, then, to expect much the same results as those he criticizes in today's diary. In general, governments don't do a terrific job of betting on these industries and virtually always promise vast benefits that rarely materialize.

  •  thanks for posting. (3+ / 0-)
    Recommended by:
    maracucho, LinSea, Meteor Blades

    and thanks to the New York Times, too.

    It's ironic to see so many posting about how this is "old news" as if what the Times did isn't worth anything. People here at Daily Kos complain about "the media" (although most of the time I think they're actually referring to the idiot bobbleheads on TV and/or the White House press corps), and yet when a real example of investigative journalism is done, they shrug it off.

    Yes, it's great that Meteor Blades wrote these stories up for us, I would've probably missed them otherwise, so far I haven't noticed them on Google News, but let's be real: bloggers, no matter how much they have added to political discourse and fact-checking and shaping the narrative over the years, can not (or at least have not so far) do what the Times did:

    The Times analyzed more than 150,000 awards and created a searchable database of incentive spending. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants.
    This is a big story, and I thank the New York Times for putting money into it, just like they put money into Nate Silver's work.  thanks again to MB, too.
    •  Good Jobs First has 247,000 awards (2+ / 0-)
      Recommended by:
      Meteor Blades, jennifer poole

      and the Times database cites the Good Jobs First database on every page.

      Still, being in the Times gets the issue more of the attention it needs, and I hope Ms. Story wins a Pulitzer.

    •  Yep. An awful lot of bloggers I know would... (1+ / 0-)
      Recommended by:
      jennifer poole bereft of things to write were it not for traditional media. Which is not, definitely not, to say these media are unflawed. Having worked for tradmed for 14 of my 30+ years in journalism, I know a lot of those flaws firsthand. But investigative journalism is expensive, and except for the rare and stubborn free-lancer who digs into a subject despite the fact s/he can barely cover the phone charges, it takes the financial resources of big newspapers to generate this kind of story. Crowdsourcing and citizen journalism and specialists in law and foreign policy, etc. all have their place—they are terrific tools for citizens and professional journalists alike—but, so far at least, they are in no way replacements for the old ways, just supplements.

      Anyone who doesn't believe me should count the number of links to and excerpts from tradmed sources in a week's worth of DailyKos diaries.

      Don't tell me what you believe, show me what you do and I will tell you what you believe.

      by Meteor Blades on Mon Dec 03, 2012 at 05:00:10 PM PST

      [ Parent ]

      •  you betcha. Sort of off topic, but related? (1+ / 0-)
        Recommended by:
        Meteor Blades

        L.A. Times did a big story last week on a subject I've been covering for the local paper (our local school board got into these expensive "capital appreciation bonds" without having a clue about what they were doing):

        Risky bonds tie schools to huge debt
        About 200 districts in California may have to pay as much as 10 to 20 times the amount borrowed.

        check it out. These stories (incentives and school bond rip offs) are related in 1. local jurisdictions just don't have the expertise to negotiate wisely or to prevent themselves from getting flimflammed, and 2. the exploitation of the commons, as noted by commenter New Rule above.

  •  just like college coaches (0+ / 0-)

    have to pay a penalty for leaving before their contract is up why not have businesses play by similar rules, big businesses are takers not givers and its time everyone knows that and holds them accountable for their raping of the american economic system.

  •  Where's Atlantic Yards or Forest City Ratner in NY (2+ / 0-)
    Recommended by:
    stormicats, LinSea

    The Atlantic Yards Report has a blogpost today, which has the long  title:

    In Times series on "United States of Subsidies," a glaring gap: no mention of Atlantic Yards or Forest City Ratner, which should lead the pack in New York State.

    Surprising, though Brooklyn-based developer Forest City Ratner has collected hundreds of millions of dollars in subsidies and other support for the Atlantic Yards project, neither the firm nor its parent, Forest City Enterprises, appears among those company that have received more than $100 million.

    In fact, as I explain below, Forest City Ratner, rather than being absent from the list of firms taking advantage of subsidies in New York State, should be at the top of the list, as it gains far more than the $157 million attributed to JP Morgan Chase.

    Ever since Forest City Ratner built the NY Times' new headquarters, they tend not to embarrass FCR within their pages.

    For those interested in this particular boondoggle and the stench that comes with it, you can see the documentary Battle For Brooklyn.

  •  Private-Public Partnerships (0+ / 0-)

    Private-public partnerships are just plain out corruption with a little lipstick.  Show me one local, state or federal private-public partnership than in the end did not wind up either as corruption or a platform on which a "private entrepreneur" ran as a pro-business Republican (just another form of corruption).

    50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts

    by TarheelDem on Mon Dec 03, 2012 at 08:28:20 AM PST

  •  Thank you for focusing on this critical issue (1+ / 0-)
    Recommended by:

    Local governments give away the store to businesses waiting for tax breaks before they move in, in every coun ty of our country. The worst sector is that of professional sports. There is an unholy troika of chambers of commerce, large unions and media commentators cheering on all sorts of concessions to pro sports teams and stadiums, predicting great economic benefits that never materialize. The Dallas Cowboys for example pay no property tax on their megastadium. They are one of the wealthiest sports franchises in the world (Manchester United is #1).

    Just to give one example, the city of Cincinnati recently sold a public hospital to raise money to help pay off public stadium subsidies. The NFL kills. First they produce chronic traumatic encephalopathy in many players (you can get it from boxing, very rarely from soccer or just HS + college football, the NFL has no monopoly). Second they rip off cities and reduce tax money available for schools, libraries, hospitals, etc. If you look at the breakdown of what happens when new stadiums are built, poor neighborhoods who are often enrolled to 'demand our own team' get screwed- consider for example, Collins & Grineski, Unequal Impacts of Downtown Redevelopment: The Case of Stadium Building in Phoenix, Arizona, J Poverty 11:23-54, 2007.

    Public schools and public sector medicine are important for the lesser 90% of the population who can't afford concierge medicine and concierge schools, but many cities eagerly vote for subsidies to professional sports, leaving public schools, libraries and hospitals strapped onto the wheel of escalating budget cuts. The media bear considerable blame for this dumbing down of American voters.

    •  West Ham United is moving to the Olympic Stadium? (1+ / 0-)
      Recommended by:

      I think.  I could be wrong.  Tottenham?

      Anyway, Manchester United; like pretty much every other western European pro soccer team; paid for its own stadium.  Or "ground", if you prefer.

      Pro teams in socialist Europe pay for their own facilities but here in the capitalist US; taxpayers have to pay or the team will move.  Weird.

  •  it is not just at government level (1+ / 0-)
    Recommended by:

    But also at condominium complex levels...

    for our condo, comcast said they wanted to put one of their boxes (that feed hundreds of thousand of homes) onto our building.  they offered  couple hundred dollars and were tempted to take it to cover some operating budgets costs.  the management property said we should take the deal but they didnt do any analyses  worth a damn.  then one of our board members with a finance background did some quick math (projecting cash flows for comcast based on the box and how many customers it feeds, and asked them for a bigger piece of the pie).  They refused.  We rejected when we realized that what they offered wouldnt be enough to even remove the box if they ever walked away (they didnt add cleanup/removal to the price).
    sometime better to walk away from a deal.  they probably found anohter apt hard up for cash but who cares.

  •  Sports stadiums (1+ / 0-)
    Recommended by:

    are another offender that I loathe.  I love sports, I am a huge fan a few NFL teams, but fuck this bullshit about taxpayer money paying for a private enterprise.  I thought the magical invisible hand of the market was supposed to provide for these businesses, not government?

    Some people have some gall.  Let's complain that downtrodden members of society suckle at the government teat so as to make more room for professional sports or big pharma or WalMart or whatever other corporate interest lobbied.

    •  Where's the lowest unemployment? (0+ / 0-)

      Places like North Dakota, South Dakota, Iowa and Nebraska that have very few if any Corporate Welfare Sports Stadiums.

      I was going to put a joke here about how the Nebraska Cornhuskers football team is over the salary cap.  But it didn't do them a lot of good last weekend.

  •  L.A. Raiders (2+ / 0-)
    Recommended by:
    Utahrd, maracucho

    No story about the corporate fleecing of municipalities would be completed without mentioning the Los Angeles Raiders. In 1987, Al Davis convinced the city of Irwindale CA to put of $10 million as a down payment on the Raiders moving to that city. Turned out that Davis had no intention of moving his team to Irwindale, so he pocketed that $10M and moved the team back to Oakland. Since it was a non-refundable deposit, the City of Irwindale had no recourse and gave away $10M in return for absolutely nothing, except the ridicule and scorn it so rightfully deserved for being such chumps.

  •  Thanks, MB. Corporate domination / exploitation (1+ / 0-)
    Recommended by:
    jennifer poole

    of the commons in general is one of the major the issue of our time.

    "..The political class cannot solve the problems it created. " - Jay Rosen

    by New Rule on Mon Dec 03, 2012 at 10:17:03 AM PST

  •  Simple solution? (0+ / 0-)

    Make it against the law to give tax breaks or any monetary or non-monetary aid to corporations from city or state governments. Then all these games would end.

    Impossible is nothing

    by DrSpike on Mon Dec 03, 2012 at 10:18:16 AM PST

  •  I think... (1+ / 0-)
    Recommended by:
    Kenneth Thomas

    A good idea for a bill that should be something that both parties can get behind would be for the companies that request these incentives to put in writing and keep track of whatever jobs/tax dollars they will bring to the state/municipality that they say is reason for them to get these awards. That way they can be held accountable. Republicans can't be against it because they're the ones always complaining about fraud and abuse but it's always been an abstract term for them. At least now, we can narrow it down to specifically the tax giveaways that they promise companies to steal them away from donor states that make up their share of missing tax revenues. Being against a bill like that would prove they're nakedly stealing jobs away from other states and complicit in the loss of tax revenue. It'll also rob them of their argument for smaller taxes when they can't prove that less taxes mean a broader tax base.

  •  TIFs are a major source of that abuse (1+ / 0-)
    Recommended by:
    Kenneth Thomas

    TIFS have a good use, but more often than not, they are abused by large corporations to develop land that is not blighted.

    For instance, here in the Illinois suburbs of St Louis, we are a prime example of TIF abuse.

    On the eastern edge of one town, there was an undeveloped, unincorporated area near a major state highway. The large tract was all farm field, surrounded by farm fields to the north, south and east with a developed area a short drive to the east.

    The first step by the town was to annex this unincorporated area, even though it was about 2 miles from the edge of the town boarder. They did this by also annexing a thin sliver of land connecting the area they wanted to the town along a major road.

    The next step was to create the TIF. TIFs are supposed to be used to develop blighted areas. This TIF was created on undeveloped farm land.

    TIFs freeze the property taxes at the level of the property when the TIF was created. If the property is improved, the increase in property taxes due to the increase in property value is kicked back to the developers for 20 YEARS! This means that the schools and other taxing districts do not see any additional money from this development, but have to deal with the increased costs to support it.

    This TIF farm land now contains a strip mall with Lowes and one and Walmart at the other. There are dozens of TIFs in the STL area with a fairly new Lowes and Walmart in them.

    To add insult to injury, they also created a Business Enterprise Zone for this farm land or whatever it is called. It adds an additional 1% sales tax to all businesses in the zone. This additional sales tax money is then kicked back to the developers for another 20 years. Lowes and Walmart seem to love these business sales tax districts as most of the new Lowes and Walmarts around here are in them.

    So not only do the taxpayers subsidize the development with the TIF, the shoppers also subsidize the development with an additional 1% sales tax. I guess charging 1% more in a sales tax lets Lowes and Walmart advertise low, low, prices.

    Since the plot of land was a distance away from the rest of the town, the town then had a fire and police response time issue for calls to that development. The other property taxpayers of the town had build a new fire station to move an existing station closer to the new Lowes/Walmart (and 500 home subdivision that was part of the same development). They also have to pay for an additional police officer since they police were spread too thin over a much larger area.

    On top of all that, Walmart left a much smaller building about 3 miles down the road in the town to move to the new development. That building has sat empty since the new Walmart opened about 5 years ago, creating more blight.

    A resident of the town thought he was getting shafted, so he sued. His suit claimed that the TIF was illegal because active farm land cannot be blighted.

    The developer argued that since the land was undermined, it qualified for the TIF because the developer had to fill in the abandoned coal mine.

    The problem with that argument is that it is hard to find a square inch of land in this part of Illinois that is NOT undermined. That's why the state runs a mine subsidence insurance program. It's optional and is added as a rider to your property insurnace policy.

    There is a major shopping mall within 5 miles of the new development that was built in the early 70s. It is undermined and is not and never was in a TIF. There are thousands of other developments that were built over abandoned coal mines that are not part of any TIF.

  •  We had that problem here in Lane county (1+ / 0-)
    Recommended by:

    It was Huandai.  They got millions in tax breaks.  Millions in infrastructure investment for them to destroy wetlands to build. The local electric company charged them about half what they charge residential customers for the entire time they were operating and they left town as soon as it was okay to start producing their chips in Korea or where ever.

    That passed by; this can, too. - Deor

    by stevie avebury on Mon Dec 03, 2012 at 12:12:14 PM PST

  •  Huandai (0+ / 0-)

    was one of the worst examples.  They also brought in Korean workers and didn't hire locally.

    FedEx in Portland got millions in tax breaks to move from Swan Island to Gresham, got a cut-rate deal on Port of Portland lands, and didn't add a single job.

    Boise and Willamette Industries got big tax breaks (enterprise zones) for promising to lay off less workers than otherwise. Last week the Boise St Helens mill closed, extinguishing hundreds of jobs.

  •  These cities need a union. (1+ / 0-)
    Recommended by:
    Kenneth Thomas

    Really, they're in exactly the same situation that individual workers are when faced with a company.  The company has the jobs, which the cities desperately want.  If the cities face the companies individually, they may have a local pool of skills, they may have contacts, resources to bring to the table, but in the end the company has the jobs and an individual city has to compete with all the others in who can sell their people's skills cheapest.

    No small city would unilaterally disarm by refusing to play the game.  California is big enough that it has a chance to say no, because companies have to play in Cali.  But most cities would be too afraid to lose out to a dealmaker across a state line.  The only way the negative-sum game gets broken is if the cities make an enforceable deal not to compete on who can offer the biggest bribe for a company's jobs.  They can call it something else if they hate the idea of unionizing, but in principle, they have to form a bargaining unit.

    In the long run, it would be better for everyone.  Cities could spend less of their tax dollars on something with no productive value, meaning they could tax their citizens less or spend it on something that it more useful; and companies could quit spending time on the nonsense and simply decide to locate where they can do the best business, whether that's a prime location or being near to the talent pool.

  •  Utah (1+ / 0-)
    Recommended by:

    According to the NYTimes Report, Utah's aid to corporations costs approximately $74 per capita.

    Interestingly, Salt Lake County where most of the population resides, The mayor’s 2013 budget would have increased taxes on that home by $64.  

    Well, gee Mr. Mayor, why don't you askGoldman Sachs to chip in.

    Utah spends at least $207 million per year on incentive

    programs, according to the most recent data available. That is roughly:

    $75 per capita
    4¢ per dollar of state budget

    Instead of this

    Utah Lawmakers Proposing Higher Food Tax

    End Corporate Welfare

    It makes my head explode.

    Thanks for the report, Meteor Blades

    It's difficult to be happy knowing so many suffer. We must unite.

    by War on Error on Mon Dec 03, 2012 at 03:26:35 PM PST

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