New Foxconn study demands Walker get in-depth scrutiny by 12/3 media panel
- - what great timing by Wis Politics and the Milwaukee Press Club:
Former Governor Scott Walker to Speak at Newsmaker Luncheon
Walker will take questions from a panel of journalists and from the audience at the luncheon, set for 11:45 a.m. to 1:30 p.m. at the Newsroom Pub, 137 E. Wells St.Questioners should pierce Walker's talking points and default to deflection and force him to explain why he put his re-election campaign above the public treasuries by routing unjustifiable and unsustainable subsidies and privileges to Foxconn, as a new, independent study lays out dispassionately:
The [George Mason University] Mercatus Center’s study, “The Economics of a Targeted Economic Development Subsidy,” looks at the economic case for and against economic development subsidies, focusing on Wisconsin’s pledge of $3.6 billion in incentives to Taiwan-based electronics manufacturer Foxconn Technology Group.
“The weight of economic theory suggests that these subsidies do not work and may even depress economic activity,” according to the study. “We show that under realistic scenarios the subsidy may depress state economic activity by tens of billions of dollars over the next 15 years.”
A Foxconn Fever primerThe new study is full of hared economic science and amazing/depressing tidbits which should be run past Walker.
He'll never read it because he's free of accountability and prefers now to fly around the country making speeches and sampling airport food, but I urge the public and the luncheon's media guests and panelists to read it in full before the question period begins:
Some memorable excerpts from the study:
A footnote in a chart shows the full cost of the $252.3 million in I-94 system highway expansion near Foxconn, and fast-tracked by Assembly Speaker Vos (my commentary on that, here) for the company's benefit actually exceeds $408 million, given interest added through years of borrowing:
*Page 9:"...to pay off $252.4 million in general obligation bonds for roadway construction. This committment will cost $408.3 million over 20 years; $306.225 million is 15 years’ worth of payments."
*Page 21:"...from 2018 to 2032, Wisconsin GDP will total $6.3 trillion. The higher taxes to fund a Generation 10.5 plant subsidy will be associated with economic losses in the range of $5.7 billion to $34.3 billion over that time period. Higher taxes to fund the subsidy for a Generation 6 plant will be associated with economic losses in the range of $1.8 billion to $10.6 billion."
*Page 27: In a discussion of "X-inefficiency," or 'slack.' "In the case of Foxconn, X-inefficiency sug-gests that Wisconsin’s subsidy will allow the com-pany to waste up to $231 million annually (on aver-age) in unnecessarily high production costs, as this is the size of the annual subsidy (see table 1)."
*Page 32: "Targeted economic development subsidies follow a pattern that is common to many government transfers: those who benefit from these subsidies are few in number, whereas those who pay for them are numerous. Foxconn is again illustrative: just one firm stands to receive a $3.6 billion subsidy while some 16,000 other Wisconsin businesses must pay a corporate income tax that could be reduced by 22 percent in the absence of that subsidy."
[From *Page 19] Similarly, the state's flat fuel tax of $0.309 per gallon could be lowered by 18.92 percent down to $0.25 per gallon. Or, more broadly, overall tax revenue could be reduced by 1.07 percent.And by the by - -
* Page 8:"...a recent state audit has found that, on average, firms receiving Wisconsin subsidies create only about 34 percent of promised jobs.