Obama's statement, via Greg Mankiw:

"I applaud the Senate's passage today of the Farm Bill, which will provide America's hard-working farmers and ranchers with more support and more predictability."

"The bill places greater resources into renewable energy and conservation. And, during this time of rising food prices, the Farm Bill provides an additional $10 billion for critical nutrition programs. I am also pleased that the bill includes my proposal to help thousands of African-American farmers get their discrimination claims reviewed under the Pigford settlement."

"This bill is far from perfect. I believe in tighter payment limits and a ban on packer ownership of livestock. As president, I will continue to fight for the interests of America's family farmers and ranchers and ensure that assistance is geared towards those producers who truly need them, instead of large agribusinesses. But with so much at stake, we cannot make the perfect the enemy of the good."

"By opposing the bill, President Bush and John McCain are saying no to America's farmers and ranchers, no to energy independence, no to the environment, and no to millions of hungry people."

If the farm policy weren't driving food prices sky high, we wouldn't need "an additional $10 billion for critical nutrition programs." First American taxpayers funnel billions to agri-business so it can sell at anticompetitive prices; then taxpayers have to pay billions more so people can afford to eat.

Posted by Jay Hancock at 11:27 AM | Permalink | Comments (5)
Categories: Corporate welfare
        

The most-read article from the Web site of Area Development magazine. Inside tips on how companies can play states off one another to cut their taxes and win taxpayer grants. It's a perennial outrage that violates promises of equal treatment under the law. Company A pays "X" taxes, but company B in the same industry negotiates a lower rate. And no, it's not "pro-business" to allow this. When one taxpayer pays less, its business competitors have to pay more and compete with it for workers to boot.

If you want to cut taxes, cut them for everybody or nobody.

HOW TO PLAY THE INCENTIVES GAME

Many state and local governments are eager to negotiate incentives with companies that might revitalize the area’s economy....

Negotiation is an art, and the negotiation of incentives should not be taken lightly. States can be quite competitive with each other in the race to recruit major employers, and the ability to negotiate effectively with the different players is essential.

In one recent case, five states were vying to land a major manufacturing facility. The initial incentive offers ranged from $7 million to about $30 million. By the time negotiations had concluded, the final package had climbed to approximately $80 million.

It’s important to know which resources the various contenders bring to the table. For example, some states can tap the 1998 multistate tobacco settlement as a source for discretionary incentives. While much of the nearly $250 billion that states will receive from tobacco companies over the first 25 years has been earmarked for public-health expenditures, a substantial amount remains available for other purposes — including economic development....

The competition among jurisdictions for corporate expansion and relocation is intense. Savvy companies that know how to play the incentives game can gain a valuable strategic advantage.

And it's all done beyond the knowledge of the taxpayers footing the bill:

Maintain confidentiality. To maintain negotiating leverage, companies should refrain from making any public announcement of plans for expansion or relocation until the incentives package has been finalized and comprehensive due diligence has been performed.

Posted by Jay Hancock at 1:54 PM | Permalink | Comments (0)
Categories: Corporate welfare
        

Liberals know why corporate welfare is bad: It takes taxpayer money and gives it to fat cats. But there is a more effective conservative argument against economic development subsidies: They amount to government economic planning and, by taking resources from one company and giving them to another, they breach the Constitution's promise of equal protection under the law. Here is more of the conservative argument, as expressed by a professor at Jacksonville State in Florida and posted on the Web site of the Ludwig von Mises Institute.

Although we should always be wary whenever public officials ask for more of our money, increasing funding for state economic development programs increases the likelihood that states will waste resources competing with each other for the favor of firms...

When other states are competing for the same firms to operate in their states as well, wise firms will hold out for the best offer. This forces states to take into consideration economic development packages being made by their competitor states. An aggressive state can win the firm's favor, but the incentive package will cost much more. Is it still worth it?

Robert Lynch argues that it isn't. The Washington College economist has been studying state subsidy issues for 20 years and found that such packages rarely cause firms to expand in geographic areas that they would not have otherwise expanded to without state incentives. The implication is that many of the businesses choosing to locate in Alabama or any other state would have moved there anyway...

Indeed, these malinvestments are multiplied when carried out among a cartel of fifty states, each competing with the other for limited capital. When they do, each state development agency becomes a net negative to its state, at which time taxpayers would be better off if they all shut down. They should. As hard as it may be for the arrogant state development community to believe, the vast majority of economic growth that occurred in the United States was actually coordinated without any such such central planning boards.

Posted by Jay Hancock at 11:07 AM | Permalink | Comments (0)
Categories: Corporate welfare
        

Good Jobs First of Washington does a good job of beating up governors and mayors for giving away taxpayer money to corporate fat cats for too little in return. They've also built an excellent database and reporting mechanism on deals. Here's the latest newsletter, with reports on sports outfitter Cabela's, a serial abuser of subsidies; ThyssenKrupp, whose Alabama steel mill I wrote about a few weeks ago; and Radio Shack, which is laying off hundreds in Fort Worth after getting big taxpayer subsidies for its headquarters building.

Cabela's recently announced that it will begin collecting sales tax on catalog and internet sales to residents of states where it also has retail stores. That's big news: Cabela's has been a holdout among national retailers with both "bricks and clicks," most of whom quit dodging such sales tax collections years ago. Normally, state "nexus" rules require companies with a substantial physical presence in the state to collect sales tax on all purchases that occur in the state - whether they occur in a store, via the internet or by catalog.

But as it morphed from mostly a catalog operation to also include a chain of (massively subsidized) mega-stores, Cabela's sought and won rulings from attorneys general in a reported 19 states that its catalog, internet, and retail divisions were essentially separate entities and therefore did not create overall nexus.

Posted by Jay Hancock at 2:24 PM | Permalink | Comments (0)
Categories: Corporate welfare