Corporate Welfare Frenzy Drops All Pretense of Fiscal Responsibility

What happens when the federal government sends tens of billions of dollars of (borrowed) money to states that really don't need it to fight an economic downturn that was already over?

Rather than, say, use that money to shore up their balance sheets, cover pension obligations or simply send the money back…they indulge in the mother of all bipartisan corporate welfare frenzies. In this case, for electric vehicle manufacturing sites. According to Bloomberg:

Michigan's largesse — and Tennessee's and Kentucky's — was made possible in part by hundreds of billions in federal aid pumped into US states as part of President Joe Biden's American Rescue Plan. The money was meant to soften the blow of a pandemic-induced fiscal apocalypse that never happened. Instead, it's left states flush with cash, supercharging competition to win the automotive jobs of the future and cushioning the bottom lines of companies like Ford, GM, and Panasonic Holdings Corp., a battery supplier to Tesla Inc. 

There's a risk that all the money sloshing around amid the EV development frenzy will fund boondoggles, like Foxconn Technology Group's heavily subsidized television factory in Wisconsin that never materialized.

To counter that risk, state and local officials helping to fund this EV boom say they built in protections to keep taxpayers from getting fleeced. But the stakes are getting bigger: The cost per permanent job for some projects is now eight times the average seen less than a decade ago.

What that means is states are paying companies hundreds of thousands of dollars for each job those companies promise to create:

Ford's Tennessee hub will cost about $414,000 for each direct job, Michigan is contributing $450,000 per GM job, while Georgia committed to forgo revenue that amounts to $212,000 per job to win megaprojects from Rivian Automotive Inc. and Hyundai Motor Co. in the past two years, according to data compiled by Bloomberg. The average per-job cost of economic incentives in the US was about $52,000 in 2015, measured in today's dollars…

Call it corporate welfare, or industrial policy or crony capitalism…whatever the label, the outcome is the same: government picks a winner and pays said winner handsomely out of government funds (or tax incentives…which means the losers subsidize the winner for years or decades to come).

Rinse, repeat. It doesn't matter which state, political party or ideological bent is in play. Once the political class smells an opportunity to look like it's bringing jobs and wealth to the area, they fall all over themselves to make it happen. Those self-congratulatory press releases aren't going to write themselves, after all.

And who gets the bill for all those incentives? Taxpayers like you.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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