“United States of Subsidies” just scratches the surface of corporate welfare

I’ve been asked by some readers for my thoughts on “United States of Subsidies,” the New York Times series that ran last weekend on the massive amounts of public money ($80 billion a year, by their reckoning) spent by local governments to get companies to relocate or remain in their cities.

I finally had a chance to read it last night, and briefly: I think it’s a decent primer on the problem of corporate welfare and the industry that has grown up to support it. (My favorite bit is probably the nugget buried way at the end of the second article, where a subsidy consultant actually sued computer chip manufacturer Advanced Micro Devices for not seeking a tax break the consultant had recommended. Though the bit about Michael Moore getting subsidies for his anti-corporate-welfare movie “Capitalism: A Love Story” is pretty good, too.) It’s way too focused, though, on companies that accept subsidies and then leave town, and not enough on whether those that stay put and don’t actually do anything for their communities — like the famed Minnesota Dairy Queen that listed on their subsidy form that they had used their $275,000 in public cash to create exactly one minimum-wage job. Likewise, the series gives a bit too much credence to the notion that mayors and other local officials are forced to play this game for fear of being left without any corporate presence, when studies have shown that companies make their location decisions more on the presence of infrastructure (good schools, roads, etc.) than on whether they’re being offered tax breaks — though obviously, they’re happy to take the tax breaks from a locale they want to move to anyway.

All of this has been covered at length before, largely by the pioneering subsidy watch group Good Jobs First, whose Subsidy Tracker provided the bulk of the data for the Times series, and whose director Greg LeRoy penned the original study of local-level corporate subsidies (“No More Candy Store,” available for free here) as well as an excellent book on the subject (“The Great American Jobs Scam,” available for money here). And as Good Jobs First’s Phil Mattera notes on their Clawback blog, the Times apparently screwed up its math in calculating its total subsidy figures:

After getting our raw data, the Times did not consult with us on exactly how it would be used. We thus had no opportunity to warn the paper against the perils of aggregation. Specifically, we were not aware of the paper’s plans to create what it calls its $100 Million Club. [This] ends up with numerous instances in which the totals understate the true amount the big subsidy grabbers have received.

For example, the Times lists a total of $338 million for Boeing, including $218 from South Carolina. Yet it has been estimated that the package Boeing got by locating a new Dreamliner assembly line in the Charleston area could be worth some $900 million.

Apple is said to have received a total of $119 million, yet the Times fails to include more than $60 million in subsidies the company got for a data center in North Carolina.

The Times $100 Million Club also misses some major recipients entirely, including Volkswagen, which got more than $500 million in connection with an assembly plant in Tennessee, and ThyssenKrupp, which got more than $1 billion in subsidies for a steel mill in Alabama.

I also wished the Times series had gone into more detail about proposals for reining in local-level corporate subsidies, instead of just hand-wringing about the problem. (I wrote about some of this myself for In These Times magazine, back around the dawn of time.)

So two cheers for the Times for tackling an important subject, but for anyone interested in the corporate subsidy game as it’s played and what to do about it, this should only be the start of your reading. And let’s hope that for the Times this is only the start of more vigorous coverage of this topic, and not just a one-time attempt at award bait.

4 comments on ““United States of Subsidies” just scratches the surface of corporate welfare

  1. For some reason–because it wasn’t in Good Jobs’ databases?–the Atlantic Yards project and Barclays Center arena completely evaded the Times’s list.

    More here:

  2. I noticed a lot of data for WA state seemed to cut off at 2009. Maybe they didn’t know what the real cost of the Barclays Center would be by then Norman?

  3. The Aaron Bruski column from a couple days ago, which has to come in at about 20,000 words, covers the Kings situation in depth. It also addresses the subsidy issue.

    Fairly good column, but frankly, I started to get sleepy at about the 70% point.

  4. Responding to Chef Joe… most arena/project subsidies were approved/allocated before 2009… in fact, as of early 2007, the sum, as *acknowledged* by the developer, was $305M in direct subsidies. (NYC has since dialed back and said only $71M+ of the stated $105M chunk was for the project.)