When Corporate Welfare Recipients Like GM Pack Up And Go
Louise Story writes in the NYT of towns feeling ripped off in the wake of GM plant closings -- after forking over plenty in hopes of bribing GM into locating in or staying in their area:
In the end, the money that towns across America gave General Motors did not matter.When the automaker released a list of factories it was closing during bankruptcy three years ago, communities that had considered themselves G.M.'s business partners were among the targets.
For years, mayors and governors anxious about local jobs had agreed to G.M.'s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would "further G.M.'s strong relationship" with them and be a "win/win situation," according to town council notes from one Michigan community.
Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.
Some officials, desperate to keep G.M., offered more. Ohio was proposing a $56 million deal to save its Moraine plant, and Wisconsin, fighting for its Janesville factory, offered $153 million.
But their overtures were to no avail. G.M. walked away and, thanks to a federal bailout, is once again profitable. The towns have not been so fortunate, having spent scarce funds in exchange for thousands of jobs that no longer exist.
One township, Ypsilanti, Mich., is suing over the automaker's departure. "You can't just make these promises and throw them around like they're spare change in the drawer," said Doug Winters, the township's attorney.
Yet across the country, companies have been doing just that. And the giveaways are adding up to a gigantic bill for taxpayers.
I think this line from the movie "Animal House" says it all:
http://www.youtube.com/watch?v=zOXtWxhlsUg
David Crawford at December 2, 2012 12:28 AM
More like this.
Whenever there is a government involvement in private commercial operations the local population is generally going to be screwed.
Another example is Wilmington, OH. They finally finished the bypass to nowhere in 2011; three years after DHL was gone. The odds of another Airborne Express opening up is somewhere between zero and nil.
Jim P. at December 2, 2012 4:53 AM
If you violate the equal protection clause I have no sympathy. When I operated a SMALL business I got no breaks. In fact local govt went out of its way to track me down and squeeze every nickel they could.
Bill O Rights at December 2, 2012 6:11 AM
These bribes should be illegal. Maybe some day someone will notice they don't work. Like the City of Syracuse, which finds itself with 55% of the property in the city exempt from taxes. The list of companies that got breaks and left anyway is a veritable Who's Who of the corporate 500.
Corporate welfare should be illegal.
MarkD at December 2, 2012 7:01 AM
"Bill O Rights" -- obviously an intelligent Irishman (O'Rights) -- hit the nail on the head. This violates the equal protection clause and his horrible public policy. Not only is it illegal and unfair, but it never benefits the overall economy. All it does is force those who lack political connections to bear a disproportionate share of the tax burden. The City of L.A. has taken this practice to new lows, which is why unemployment here has hit new highs.
Walter Moore at December 2, 2012 7:22 AM
Typo: "his horrible" should have been "is horrible."
Still on first cup of coffee. Sorry.
Walter Moore at December 2, 2012 7:24 AM
G.M. walked away and, thanks to a federal bailout, is once again profitable.
I disagree with this statement. Until they've paid back every dime that Bush or Obama gave them, they're not really profitable. If the US Government sold the GM stock they hold, we'd take 25 or 30 billion dollar hit.
I R A Darth Aggie at December 2, 2012 8:29 AM
> Until they've paid back every dime that
> Bush or Obama gave them, they're not
> really profitable.
Exactly. Exactly. Exactly. Bush and Obama screwed their creditors, including the taxpayers. Thanks to Darth for being clear about this.
Yeah, if you discount all my indebtedness, I'm filthy rich!
Crid [CridComment at gmail] at December 2, 2012 11:01 AM
Shame on the politicians and the public for thinking that bailouts and generous tax breaks were/are a good thing.
Did the politicians sign a contract with these companies that would have forced them to stay for X number of years employing X number of people?
If not, then they are pretty stupid aren't they?
It would be nice if they wouldn't be stupid with MY money.
Charles at December 2, 2012 11:40 AM
San Francisco did the same thing, exempting the "cool" companies from its new payroll tax when they threatened to leave town because of it. The City kept the tax on all the "uncool" companies or the ones that didn't have any leverage. After all, someone's got to actually pay the tax.
The Obama administration is issuing exemptions for friendly companies and unions that claim the law would burden them unduly - but unfriendly companies that claim the same thing are screwed.
Doesn't the Constitution prohibit bills of attainder?
Conan the Grammarian at December 2, 2012 11:43 AM
Yep, Conan, "friendly" is defined by how much the company or union contributed to Obama's campaign or how they most likely voted.
Now, if only we had a real newsmedia that acted like a watch dog instead of Obama's lapdog . . .
Charles at December 2, 2012 8:57 PM
Government Motors is only profitable in that they do not pay taxes on their income, due to the NOLs carried forward from the pre-bailout years. It doesn't take a great businessman to profitably run a business when there are no taxes on income.
Bob at December 3, 2012 2:41 AM
"San Francisco did the same thing, exempting the "cool" companies from its new payroll tax when they threatened to leave town because of it. The City kept the tax on all the "uncool" companies or the ones that didn't have any leverage. After all, someone's got to actually pay the tax."
I still get a laugh out of this one... Several years ago, the state of Maryland decided that Wal-Mart wasn't cool enough to operate in their state, so they crafted a tax specifically to hit that company and discourage it from expanding in Maryland. Only it wound up hitting Lockheed Martin in suburban D.C. -- who promptly took all of their high-paying jobs and high-tax-paying employees around the Beltway to Virginia. Ah well, no skin off of the legislator's noses, and they gained brownie points with their entitlement-class voters by taking a Stand Against Evil Corporations.
Cousin Dave at December 3, 2012 9:24 AM
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