Saturday, November 30, 2019

New Foxconn study demands Walker get in-depth scrutiny by 12/3 media panel

Given a stunning, independently-compiled expose about his crashing Foxconn  debacle - - 
- - 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.”
I have been following this story for 30 months and maintain a running archive about it all, here.
A Foxconn Fever primer
The 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:" 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 19Similarly, 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. 


Anonymous said...

Say what you want about Walker and Foxconn, but Gov. Evers is doing nothing to fix this problem either. I doubt there will be any meaningful probing or scrutiny on 12/3 and, even if there was, what Wisconsin media is going to carry this story to a wide audience?

Meanwhile, largely flying under the radar beyond a local web publication, is this story which appears to be yet another way to launder money to Walker:

Anonymous said...

So what brave stand did Gov. Evers take on Foxconn?

I can accept (though disagreed) that Evers refused to make it a campaign issue in 2018. Today it is now fair to ask why he is enabling this.

No one is asking why he refuses to take advantage of this report to finally put the kibosh on Foxconn scam entirely or at least hold Foxconn to the letter and intent of the agreement.

Unfortunately, there has been no real leadership from anyone on Foxconn. It matters, because the hemorrhaging public money for Foxconn will be used to impose austerity on the rest of us.

joerossm said...

Link broken in first line

James Rowen said...

Thanks. Fixed.:

Anonymous said...

I have always believed that Foxconn never intended to grow their company in Wisconsin. Why, because about year ago Mr Trump had tried to locate a site in Wisconsin for the incarceration of undocumented people crossing the border. That fell through and he took a helicopter ride around the State looking around for "something" and found the current Foxconn site in Kenosha which he then invited Foxconn to develop promising thousands of jobs. Then a series of events started. Foxconn claiming that weather was an issue which took the project into Spring. Numerous people displaced from their homes, some refusing to so. Then construction started, then stopped. Foxconn saying that wages and material costs were too high. Something they should have discovered in the beginning. Last July they opened a plant in India where the living wage is about a $1.00 a week, yes a dollar. We already have evidence of ICE raids in Wisconsin the help of our local police which I heard was their right to do. If Mr. Trump wins the 2020 election, I expect to hear him say "Wisconsin, don't worry about Foxconn we will make use of that land and the Government will pay for all that debt". This is not about the current Governor who struggles to do his job against the Republican majority. It is about our former Governor and the current President who had their way in Wisconsin and now we are paying the price.

Anonymous said...

Will anybody in government ever admit that the Emperor has no clothes? I doubt it. Despite report after report year after year showing that TIF districts are a boondoggle we continue to see them applied as though they are the magic salve that will turn everything to gold. All while crooked consultants stand ready to help municipalities create "ghost properties/values" in order to make the numbers all qualify into the legally prescribed formula. Pockets are lined and photo-ops taken. While SEWRPC stands ready to give phony justifications knowing that their activities butter the slices of bread of everybody except the average Wisconsinite.

James Rowen said...

As to Foxconn in India, I did report that low-wage expansion in April. No arguments about your points.