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Corker: Their Subsidies Are Socialism, Ours Are Just Good Business?

Listening to the insufferable Bob Corker of Tennessee hector Ron Gettelfinger in the auto industry hearings is getting hard to take.  He’s demanding that the UAW screw over its pensioners because their reluctance to sacrifice the fund they paid into over a lifetime is somehow making the Detroit auto makers uncompetitive, and says that Republicans will be happy to give the companies money on the condition that they file bankruptcy and tear up their union contracts.   

It’s all about union busting.  

He hasn’t mentioned the subsidies his own state of Tennessee has given to foreign automakers, making it harder for the Big 2 1/2 to compete:

Tennessee offered its richest incentive package — and perhaps the most government assistance and tax breaks ever for an American automobile plant — to lure Volkswagen to Chattanooga.

But the state’s chief business recruiter said Wednesday that the benefits from VW’s $1 billion assembly plant far will exceed what could top $500 million in government assistance and tax breaks for the project.

“The Volkswagen investment in this community is going to have a tremendous economic gain for the entire region,” said Matt Kisber, Tennessee’s commissioner for economic and community development. “I’m confident we’re going to have a very reasonable incentive package when you look at the initial costs of what is being offered compared with a much bigger long-term return.”

Yes, that’s the logic — these incentives will bring more money to the region than they cost.  But it doesn’t always work out that way.  Ask South Carolina:

By the late 1990s there were signs that the big giveaway to BMW by South Carolina was exacerbating a fiscal crisis in the state. While the carmaker and other companies were enjoying minimal levels of corporate taxation, the state’s schools were falling into greater disrepair and educational achievement was worsening. Funds for other government services such as highway maintenance and public safety were also in short supply, leading to tax increases for families. "The foreign companies that come in here don’t care that the schools are terrible," one philanthropist told a reporter. "They just want the cheap labor. And the incentives are so extraordinary."

As David Cay Johnston noted in Free Lunch, these kinds of subsidies frequently wind up costing communities much more than they ever make back:

Johnson writes: "The tribute Cabela’s demanded from Hamburg [Pennsylvania] amounted to roughly $8,000 for each man, woman, and child in town." Johnson points out that between 2004 and 2006, Cabela’s earned $223.4 million. During those years, it collected at least $293.7 million in subsidies, more than its reported profits. Meanwhile a family business selling fishing and hunting gear was driven out of business in Hamburg.

Funny nobody is mentioning this.

Bob Casey also takes on the $73 an hour myth that Richard Shelby, John Kyl and others keep repeating.  "It’s a lie, and they know it’s a lie" said Casey.

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Jane Hamsher

Jane Hamsher

Jane is the founder of Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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