Saturday, February 23, 2019

The Foxconn contract is bad for Foxconn. That's also bad for the rest of us.

The non-profit Wisconsin Budget Project has produced a devastating analysis of the Foxconn deal, especially the contract which promises record-breaking subsidies from Wisconsin taxpayers to the company for jobs and production which look increasingly iffy.

(A full archive of posts about the Foxconn project since June, 2017 is here).

What's freshly worrisome in the analysis is that Foxconn has more to gain from a renegotiation of the deal than the state which is on the hook for billions of dollars - - which means the geniuses in the Republican-run Legislature who first embraced the project without any real vetting, and then inserted their controlling, lame-duck hand over the WEDC, Foxconn's paymaster, now own even more responsibility for 'managing' the fiasco, too.

The bill would give the state legislature control of the board of the Wisconsin Economic Development Corp. – an agency created by Walker in 2011 to replace the Wisconsin Department of Commerce – through September. Under the proposed law, the board will be able to choose its CEO, a power held by the governor under current law. 

Fool us it's not good the same fools are in a position to  'negotiate' with Foxconn again.

As the Wisconsin Budget Project writes:

First, it now appears very unlikely that Foxconn can hit the minimum job targets that it needs to reach to be eligible for the payroll tax credits. Second, the changes in the type of LCD factory seem to make Foxconn ineligible for most of the investment tax credits it was expecting over the next several years. If anyone is initiating an effort to strike a new deal, it should be Foxconn.
If Foxconn truly intends to go ahead with revised plans for the Mt. Pleasant facility, it will probably seek a new contract that helps it qualify for a larger portion of the nearly $3 billion of cash payments authorized by Governor Scott Walker and the legislature. Whether the state should agree to any changes of that nature is an open question because a better option might be to cut the state’s losses. On the other hand, renegotiating the contract could be an opportunity to close loopholes and change other contract terms to make it a less costly and less risky deal for state taxpayers.
But before we can have those deliberations, state policymakers need to acknowledge that some of the presumed economic benefits of the Foxconn project are now in doubt and that the current contract poses potential problems for both Foxconn and the state.

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