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The Times
  • Editorial: Critiquing corporate welfare

  • Slowly but surely, some taxpayers and government leaders in America - if not in central Illinois, not yet - are starting to question aloud whether they have been sold a bill of goods by those private businesses that demand public subsidies as the price of their presence in any given community.

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  • Slowly but surely, some taxpayers and government leaders in America - if not in central Illinois, not yet - are starting to question aloud whether they have been sold a bill of goods by those private businesses that demand public subsidies as the price of their presence in any given community.
    An investigation by the New York Times published this past weekend paints a very critical picture of the kinds of economic development incentives that communities from coast to coast have been passing out like so much candy, while posing the question of whether the subsequent return on taxpayer investment has been worth it. Essentially the stories conclude the answer is "no."
    The Times developed a database of more than 150,000 such examples of taxpayer largesse. In a story headlined "As companies seek tax deals, governments pay high price," the newspaper counted more than $80 billion in subsidies annually to companies from state, county and city governments, ultimately comparing that to the $156 billion in service cuts and tax increases imposed by state governments in 2011 alone. That may be lowball.
    "A full accounting ... is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of the awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. ...
    "A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.
    "Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors."
    No one is opposed to the pursuit of jobs. It's the mindless pursuit that's alarming, with more than a few economists arguing that these incentives are a zero-sum game, with one community's gain often just another's loss. At the very least, local governments owe a cost-benefit analysis to the taxpayers who make these subsidies possible. Alas, one suspects many elected officials don't want to know, because that would mean accepting accountability for their gambles with taxpayer money.
    Meanwhile, we live in a nation where many malign food stamp recipients but praise businesses getting assistance for their savvy. For the sake of argument, welfare is welfare.
    Journal Star of Peoria, Ill.

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