RALEIGH – The North Carolina General Assembly is about to convene for a special session to consider Gov. Mike Easley’s veto of a precedent-setting incentive package for the Goodyear tire plant in Fayetteville. Lawmakers could make state history by overriding a gubernatorial veto for the first time, or they could make good public policy by sustaining the veto. Less appreciated, but in my view likely to determine the outcome, is the political angle.
Others have already made a persuasive case on the merits for Easley’ veto of the measure, so let me make an electoral case: many Democratic and Republican legislators will run a significant risk by voting to override it.
The 2007 legislative session again featured a big increase in spending and a round of tax increases. Whether you agree with what the General Assembly did or not, surely it cannot have escaped members’ notice that handing tens of millions of tax dollars to Goodyear is difficult to explain in this context. It’s hard to defend tax increases on individuals (sales and excise in the 2007 case) while giving, in effect, a tax cut to a favored corporation. The ad copy virtually writes itself.
In Republican primaries, business subsidies are politically problematic because many voters want tax relief to be broader-based. Some just see selective incentives as unfair, while others embrace the basic free-market principle that government central planners are inherently incapable of knowing which businesses will succeed or failure, and thus which businesses should be bet on with taxpayer money.
In Democratic primaries, corporate welfare can be toxic for somewhat-different reasons. Some primary voters just don’t like big business at all. Others believe, correctly, that if you punch holes in the tax base to favor certain corporations, you reduce the revenue coming in to pay for schools and other public services without reducing the demand for those services.
Alas, in the general election, most incumbent lawmakers have little to fear. The Democrats will win nearly all Democratic districts. The Republican will win nearly all Republican ones. There are only a handful of competitive seats – a dozen or so in the House, half that in the Senate – but in those races, I think a vote to support the Goodyear subsidy could be used effectively by a skillful challenger. More broadly, it’s worth remembering that a number of incumbents have, indeed, been taken out in recent election cycles in their party primaries. There’s nothing to say that 2008 will be a safe cycle for incumbents. In fact, given general voter disaffection with the direction things are going, there’s a lot to say that 2008 could be a problematic year to represent the status quo, either in Washington or in Raleigh.
For Republicans, the prospect of upholding Easley’s veto may hold some irony but it remains politically promising. Many GOP members voted for the original incentives bill, but say now that they didn’t know the details. Rather than being a defect in their political position, it can be used as an example of how bad public policy occurs when the General Assembly wastes a tremendous amount of time early in a session and then rushes through important legislation at the last minute.
Democrats would be foolish to give them such an opportunity. In a sense, upholding Easley’s veto is a sort of “free vote” for them. The governor is, after all, proposing a new measure that would still give Goodyear a state subsidy (ugh) but wouldn’t be limited to a single recipient or invite the most explosive charges against the Goodyear deal (that it would allow state subsidy to a corporation that may cut, not expand, its employment in the future). Democratic lawmakers can vote “no” on a controversial incentive now and then vote “yes” on a less-controversial measure later without risking blame for chasing Goodyear out of the state.
I’d rather lawmakers vote “no” on all corporate welfare, naturally. But politically speaking, there’s a strong argument for at least voting “no” for the moment.
Hood is president of the John Locke Foundation.