We’ve all heard the sad refrain from many state legislators and members of Congress: “Economic incentives are a necessary evil. We don’t like having to pay hundreds of millions of dollars to get big companies to come to our state, but all the other states are doing it. It’s the harsh reality of business today. It’s distasteful to me, but we have to compete.”
Please, let’s be frank: That answer insults everyone’s intelligence, except maybe that of decision-makers who spin the deals.
Many politicians, in fact, absolutely adore so-called “economic incentives.” The payouts prove invaluable at election time when incumbents can boast of all the faux jobs they’ve landed for their states.
Certainly, if the honorables were serious about alleviating themselves of the onerous burden of doling out taxpayers’ money, they’d leap at a rare opportunity that’s before the U.S. Supreme Court. It’s an appeal of a U.S. Sixth Circuit Court of Appeals decision (Cuno vs. Daimler-Chrysler) that struck down certain economic development tax breaks offered by the State of Ohio. The Supreme Court, it is hoped by opponents of corporate welfare, will ban such payouts.
For their part, legislators should do nothing. Let the court make its decision and live with it. That would allow their constituents some respite from the rapidly escalating share of revenue they provide to the Treasury.
Recent events prove the extent to which lawmakers will go to protect corporate welfare. In Washington, D.C., some lawmakers are trying to head off what they consider a potentially adverse high-court ruling. U.S. Sen. George Voinovich, R-Ohio, introduced a bill (S. 1066) in Congress on May 18 that would nullify the court’s ruling, should it ban corporate payouts. North Carolina’s Sen. Richard Burr is a cosponsor of the bill.
Some state legislators, too, anticipating a ruling against incentives, tried to block the court’s way. The National Conference of State Legislators, meeting in Seattle in August, considered a resolution that would have empowered its congressional lobbyists to push Voinovich’s bill.
David Steil, R-Pa., introduced the resolution. But, thanks in part to North Carolina’s Rep. Jennifer Weiss, a Wake County Democrat who attended the conference, Steil’s resolution failed to muster a required supermajority of the committees. Weiss had introduced a resolution of her own that the conference take no official position on Cuno. “It could be a real favor to states if Cuno were upheld,” Weiss told the committee members.
N.C. Rep. Phillip Frye, R-Spruce Pine, a new member and a vice chairman of the NCSL’s economic development committee, did not attend the Seattle conference. In a telephone interview Oct. 19, he told CJ that he had supported economic incentives, although he found them distasteful. But he said that if the Supreme Court “levels the playing field” among the states, he, too, will drop his support for incentives and recommend that the NCSL committee support the court’s decision. Bravo for Weiss and Frye for bucking the tide.
A majority of legislators among the states have shown that they are unable — make that unwilling — to ban the payouts. The Supreme Court is one tool that taxpayers have to stop the nonsense. Now that their machinations have been exposed, it’s time that all state legislators and members of Congress stop playing both sides of the fence. Wasn’t it President Lincoln who said something about fooling some of the people some of the time?
Richard Wagner is editor of Carolina Journal.