PA Republicans Want to Play Another Round of the Ripoff Game to Get Boeing Factory

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Besides granting natural gas drillers their every wish, the Corbett administration’s other signature economic strategy is blowing a bunch of taxpayer money in the Ripoff Game. And it looks like Harrisburg Republicans are gearing up for a high-stakes election-season round with the new Boeing factory.

The Ripoff Game works like this: a company like Boeing or Shell wants to own a large new production facility, but they don’t want to spend any money building it, so they ask states to give them a bunch of free money to build the factory. The state who offers them the most free money and infrastructure subsidies and tax breaks wins!

Except they don’t win:

But Boeing’s wish list for building a 777X factory is extremely ambitious. For example, they would like to build the factory in a city that will pay for the entire building of the factory, with the following three points listed as desirable:

— “Site at no cost, or very low cost, to project.”

— “Facilities at no cost, or significantly reduced cost.”

— “Infrastructure improvements provided by the location.”

As Matt Yglesias points out, this is basically the entire cost of the factory, and all the infrastructure supporting the factory. Also they don’t want to pay taxes.

There’s just no way the small number of jobs we’d get from this long term is worth all the money we’d lose on it. Remember the Shell cracker? Lawmakers thought even $2 billion wasn’t a generous enough subsidy, and they left it open-ended. We’re probably talking tens of thousands of tax dollars per job that we have no hope of making back in taxes. That is an extremely expensive campaign talking point.

This entry was posted in Miscellany.

12 Responses to PA Republicans Want to Play Another Round of the Ripoff Game to Get Boeing Factory

  1. GDub says:

    Of course its preposterous, but is there anything unusual about the project? This kind of “you have to spend money to make money” theory underpins lots of economic development “thinking” these days–from the Allentown NIZ to any team in America that wants to build a stadium. Using actual tax revenue to actually make places attractive for business and life is so old fashioned.

    • Jon Geeting says:

      To the extent that the NIZ makes downtown Allentown a more attractive place to live and work, apart from the stadium, it’s going to be successful. These factories always end up in the middle of nowhere, where they won’t stimulate any kind of additional local investment in housing and services. The benefits are more diffuse and harder to verify. Perfectly reasonable to say it’ll stimulate additional business-to-business demand, but that’s less observable. By contrast, if the downtown core of Allentown adds a bunch of office jobs and residents, we’ll know it worked, and if not, not.

      • GDub says:

        I’d say its rather early to assume the success of the NIZ. Whether or not it brings new buildings to Allentown doesn’t mean that it will generate benefits to the city correlating to the cost of the tax relief. There aren’t many projects out there where cities/states give up revenue for 30 years to draw inspiration from.

        There’s no doubt that auto plants and such built in rural areas (or non-rural areas like Greenville Spartanburg SC) create jobs with wages far higher than existed before. What makes these initiatives laughable is that they cost so much to bring in (and later, to keep) in tax relief and expenditures that its unclear who really does benefit.

        What unites this kind of thinking is a belief that costs now always equals benefits in the future. It would seem economic prosperity is a lot more complicated than that.

  2. Matt Thomas says:

    Imagine…this from the same guy who has no problem with trans-national corporations raiding the national treasuries of small nations across the globe, exploiting their workers and polluting the environment of these same countries, as well as destroying the economic futures of millions of American families.
    Yes folks, our very own in-house libertarian, Mr. Jon Geeting and his laissez-faire love of unrestricted global trade.
    And we should worry and fret over the admittedly greedy Boeing trying to snatch some freebies by way of the Corbett Administration in turn for 8,500 high quality jobs with a 3:1 multiplier effect resulting in an additional 25,500 employment opportunities for a total of 34,000 jobs that never before existed.
    When has Pennsylvania ever had a shot at achieving such rapid economic growth?
    For a primer on the multiplier effect of solid manufacturing jobs see:
    http://www.huffingtonpost.com/jerry-jasinowski/jobs-multiplier_b_4002113.html
    If this proves anything it is that Jon Geeting is not even as smart as Tom Corbett.

    • Jon Geeting says:

      LOL Matt, who is the real liberal here? The guy waiving around the notoriously right-wing National Association of Manufacturers’ propaganda op-eds, or the guy calling out the corporate welfare?

      What’s this Boeing grift going to cost us, another $2 billion? How many of those jobs are just construction jobs that’ll go away after Boeing’s free factory is finished? This whole game is pure waste. We can put that $2 billion to much better use restoring education cuts.

  3. Tim Potts says:

    I wish someone would propose an alternative. I.e. how many jobs in every PA community would result from putting $2-4 billion into upgrading public schools? The answer is far more than two mega-projects, but how many more?

  4. Matt Thomas says:

    Where was the propaganda in the link I included?
    I did no more than use the findings of a objective analysis on the multiplier effect of manufacturing jobs done by the NAM. I did not partner with them (as did yourself with the anti-union Commonwealth Foundation) in a privatization effort with a goal of destroying the state store system along with many hundreds of family-supporting UNION jobs.
    As for construction jobs going away…who in hell do you think will be employed permanently by Boeing within that major facility…unskilled minimum wage workers?
    They are certain to to be highly skilled men and women carrying union cards.
    Beyond your already documented anti-union mentality, what you don’t know about economic development would fill a small book.

    • Jon Geeting says:

      “Objective analysis” done by right-wing lobbying group the National Association of Manufacturers. Assuming more than a 1:1 multiplier under non-recession conditions is highly dubious. Claiming that even greater than a 1:1 multiplier exists in normal times is just loony.

      • Matt Thomas says:

        Once again, you have managed to embarrass yourself by remonstrating on issues (in this case economic development) of which you know little or nothing.
        Actually, the NAM findings are a bit too conservative.
        As for me posting right-wing sources, allow this excerpt from the “right-wing” Economic Policy Institute: “Every 100 jobs in durable manufacturing (such as automobiles, aircraft, etc.) support 372 jobs in other industries, both in supplier industries and re-spending employment industries.” For the entire EPI article link to:
        http://www.epi.org/publication/wp268/
        You really need to limit yourself to those issues more familiar to yourself (whatever these are). Otherwise you risk coming across as both a boorish and pretentious ass.

        • Jon Geeting says:

          Matt, first of all this is from 10 years ago. Second, assuming a multiplier of greater than 1:1 is ridiculous. There is some credible evidence that during a recession it is higher, but under normal circumstances, you are simply wrong. If this project manages to stay under $2 billion, it would cost us over $200,000 per job. That is obviously not worth it, especially with all the new infrastructure we’d need to build and maintain, and with the tax breaks Boeing wants. There is not reason for us to play this game. It is an extraordinarily bad value for our tax dollars.

    • They are certain to to be highly skilled men and women carrying union cards.

      Why do you think Boeing wants to, or maybe already has, built a plant in South Carolina?

      • Matt Thomas says:

        Enlighten us…
        Are you suggesting that Pennsylvania workers need to work for less under inferior conditions such as down in that southern rat hole?