Scott Walker’s $3 Billion Fraud

Judd Legum

Judd Legum Editor-in-Chief, ThinkProgress

When Scott Walker announced his candidacy for the President of the United States on July 13, 2015, he sent an email to supporters explaining why he was running for the Republican nomination.

“I’m a conservative because I believe in a smaller government, lower taxes and a free market,” Walker wrote.

744 days later, sharing a stage with Donald Trump, the man who defeated him, Walker announced he was giving $3 billion in taxpayer money to a Taiwanese electronics manufacturer, Foxconn. The company is best known for making component parts for the iPhone and other Apple products. The stunning deal is 50 times larger than any previous public incentive package.

The Foxconn factory will likely be located in the Congressional district of House Speaker Paul Ryan, an Ayn Rand acolyte and avowed champion of free enterprise. Ryan, who joined Trump and Walker for the announcement, lashed out Obama for supporting “big business” with “crony capitalism” in a 2012 column entitled “Republicans Must Return To Free Market Principles.”

The protection of big business remains a common thread in Mr Obama’s policies, which have come at the expense of the consumer, the taxpayer and the entrepreneur. A growing coalition of reformers — rooted in citizen movements across the political spectrum — reject this pernicious crony capitalism. Our solutions promote an opportunity society, one that is rooted in the US commitment to free enterprise

As it turns out, this professed commitment to “free enterprise” was a fraud.

In announcing the deal, Walker took no questions from the press. Asked later about critics who say the massive taxpayer subsidy to a profitable foreign manufacturer is unjustified, had a tart response: “Go suck lemons.”

A workforce paid for by Wisconsin taxpayers for the benefit for Taiwanese shareholders

Walker claimed a new Foxconn manufacturing plant in Wisconsin will create 13,000 new jobs.

But the Memorandum of Understanding between FoxConn and Walker only states that Foxconn will create “up to 13,000 jobs.” Meanwhile, the company says it “would be hiring 3,000 workers over four years.”

If 3,000 jobs are created, that means Wisconsin taxpayers will be paying Foxconn $1 million per new job. Walked has touted that the average pay for newly created jobs will by about $53,000 annually. At that salary, the subsidies paid out by taxpayers over 15 years will exceed that total amount paid to workers by more $200,000 per worker.

Foxconn will essentially be run by a workforce paid by Wisconsin taxpayers, while the profits go to Taiwanese taxpayers at the behest of politicians who cast themselves as champions of the free market.

A $200 million check

Normally, state incentives are dolled out in tax credits. This makes them a little easier to swallow. Effectively, the companies are being paid through relief from a tax bill that might not otherwise exist.

Wisconsin, however, already has eliminated taxes for state manufactures.

That means the incentives to Foxconn will have to be paid to the company in cash. Wisconsin taxpayers would send a $200 million check to the company every year for 15 years.

Beyond $3 billion: “Huge undisclosed subsidies”

The $3 billion subsidy is stunning, but it’s also just the beginning. It does not account for local governments which “will almost certainly have to put up huge undisclosed subsidies.”

Local governments will have to shell out for “the sewer lines, streets and other infrastructure to be built in what are now undeveloped fields.” In order for the deal to go through, state law would have to be amended to allow for local governments to borrow more money to finance the products. No one knows exactly how much.

Ideally, the loans are paid back through local tax revenue from Foxconn and others. But the deal could place local communities are serious financial risk.

The state would also need to borrow another $250 million to complete a highway.

The silence of the Kochs

Ryan and Walker have been supported vigorously by a constellation of groups controlled by the the Koch brothers, the billionaires and self-proclaimed champions of the free market.

Charles Koch, in a 2015 speech, made an impassioned case against “corporate welfare.”

Conservative billionaire Charles Koch told his ultra-rich friends that they face a “life and death” decision whether to keep lobbying for tax breaks and government subsidies.
“Business leaders (must) recognize that their behavior is suicide, that it is suicide long term. To survive, long-term, they have to start opposing, rather than promoting, corporate welfare,” Koch told about 450 allies at an Orange County, Calif., summit that began Saturday.

But the Wisconsin branch of Americans for Prosperity, the political group created by the Kochs, has remained conspicuously quiet about Walker’s deal with Foxconn.

The group itself has not officially commented although its executive director, Eric Bott, retweeted another organization praising the deal.

 

The MacIver Institute is another “free market” group in Wisconsin that works closely with Americans For Prosperity. It has unabashedly promoted Foxconn’s $3 billion subsidy.

Big promises, modest delivery

Foxconn has a reputation for making big, flashy announcements and failing to follow through. The company announced plans to build a $30 million plant in Pennsylvania and then dropped it. It also announced a $1 billion investment in India that never happened.

The company has promised capital investment in Wisconsin, “up to $10 billion,” which exceeds the total capital investment the company has made over the last five years. Around the world, it has committed to $27.5 billion in capital investments, more than the company has made in the last 23 years.

Not a done deal

Although Walker invited Trump to celebrate, the Foxconn deal is not done. Walker needs approval from the legislature to actually provide Foxconn what he has promised. He just called a special legislative session for that purpose.

The legislature would need to sign off on the state subsidies and the local government subsidies. Walker is also asking the legislature to waive the environmental impact report and a slew of environmental regulations.

The bill would “allow Foxconn, without permits, to discharge dredged materials, fill wetlands, change the course of streams, build artificial bodies of water that connect with natural waterways and build on a riverbed or lakebed.”

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Reposted from ThinkProgress

Posted In: Allied Approaches

Union Matters

Failing Bridges Hold Public Hostage

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities.

The Seattle Department of Transportation (SDOT) gave the public just a few hours’ notice before closing a major bridge in March, citing significant safety concerns.

The West Seattle Bridge functioned as an essential component of  the city’s local and regional transportation network, carrying 125,000 travelers a day while serving Seattle’s critical maritime and freight industries. Closing it was a huge blow to the city and its citizens. 

Yet neither Seattle’s struggle with bridge maintenance nor the inconvenience now facing the city’s motorists is unusual. Decades of neglect left bridges across the country crumbling or near collapse, requiring a massive investment to keep traffic flowing safely.

When they opened it in 1984, officials predicted the West Seattle Bridge would last 75 years.

But in 2013, cracks started appearing in the center span’s box girders, the main horizontal support beams below the roadway. These cracks spread 2 feet in a little more than two weeks, prompting the bridge’s closure.

And it’s still at risk of falling.  

The city set up an emergency alert system so those in the “fall zone” could be quickly evacuated if the bridge deteriorates to the point of collapse.

More than one-third of U.S. bridges similarly need repair work or replacement, a reminder of America’s urgent need to invest in long-ignored infrastructure.

Fixing or replacing America’s bridges wouldn’t just keep Americans moving. It would also provide millions of family-supporting jobs for steel and cement workers, while also boosting the building trades and other industries.

With bridges across the country close to failure and millions unemployed, America needs a major infrastructure campaign now more than ever.

 

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There is Dignity in All Work

There is Dignity in All Work