Boeing falls most since April After Cantor loss

Double Rainbow Over Boeing
Double Rainbow Over Boeing

The most amusing headline we read the day after Eric Cantor (Smug R) lost his primary to the Tea Bagger, and Ayn Randian acolyte, David Brat, was this one. Poor, poor Boeing, lost one of their sugar daddies…

Boeing Co. (BA) fell the most in two months as U.S. House Majority Leader Eric Cantor’s defeat in a primary election threatens congressional reauthorization of low-cost lending that benefits the world’s largest planemaker.

Keeping alive the Export-Import Bank will be an “even more high-profile/challenging fight,” Chris Krueger, a senior policy analyst for Guggenheim Securities LLC, said today by e-mail. Boeing was the “biggest loser” besides Cantor in the Virginia Republican’s surprise loss yesterday, Krueger wrote.

Ex-Im arranges financing that helps foreign airlines buy jets, a service that Boeing said last month would support $10 billion of 2014 sales. As Congress debates reauthorization, House Financial Services Committee Chairman Jeb Hensarling of Texas is being promoted as a possible Cantor successor. He has said the U.S. should “exit the Ex-Im.”

(click here to continue reading Boeing Tumbles as Cantor Loss Clouds Ex-Im Bank’s Future – Bloomberg.)

Boeing - El Segundo
Boeing – El Segundo

So what exactly is the Export-Import Bank? The Wikipedia entry:

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a three-year term in 2012 which will expire in September 2014. Its Charter spells out the Bank’s authorities and limitations. Among them is the principle that Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal.

(click here to continue reading Export-Import Bank of the United States – Wikipedia, the free encyclopedia.)

Golden Plowshares
Golden Plowshares

Corporate welfare, in other words. Propping up the bottom line of the military-industrial complex, and other crony capital chores. Sure, after World War 2, the bank was perhaps justifiable, the Marshall Plan and all that. But in today’s economy? Why does Boeing, GE, Halliburton or ExxonMobil need special low-interest loans subsidized by US taxpayers, loans that are not available to the rest of the business world? Especially when so much of what the bank subsidizes is bad for the planet. 

Like:

The bank’s environmental policy is a disappointment because it would allow an increase in spending on coal and other technologies harmful to the environment, said Steve Kretzmann, who runs Washington-based Oil Change International, which seeks to curb government aid to fossil-fuel companies.

“It makes a mockery of the Obama administration’s supposed commitment to phase out fossil-fuel subsidies,” Kretzmann said in an interview.

The project in Papua New Guinea led by Irving, Texas-based Exxon has become a particular point of contention.

The pipeline’s construction will destroy pristine tropical forests, PacificEnvironment’s Norlen said in a submission to the lender in September.

Exxon “is the most profitable corporation on the planet,” Kretzmann said. “This is the last place that taxpayer support should be going.”

(click here to continue reading Obama’s Trade Goal Fights His Clean-Energy Plan (Update4) – Bloomberg.)

and:

President Barack Obama’s goals of boosting U.S. exports and combating climate change are colliding as the U.S. Export-Import Bank expands financing for oil, gas, mining and power-plant projects.

Bank-supported ventures approved in the year ended Sept. 30 will emit an estimated 17.9 million metric tons of carbon annually, more than triple the previous year and the most since the lender started releasing data in 2001, according to its annual reports. Among companies aided were General Electric Co. and Petroleos Mexicanos, Mexico’s state-owned oil business.

“Ex-Im is on a fossil-fuel binge,” said Doug Norlen, policy director at PacificEnvironment, an environmental advocacy group in San Francisco.

You Can't Bribe No one
You Can’t Bribe No one

We’re not alone in wondering why in our current economic climate, this corporate welfare bank continues to exist.

For instance, from those hippies at Forbes:

Nothing brings out the well-tailored lobbyists in Washington quite like a threat to corporate welfare.  With the Export-Import Bank’s legal authorization set to run out this year, the Chamber of Commerce recently led a Big Business march on Capitol Hill to protect what is known as Boeing’s Bank.  Over the last eight decades ExIm has provided over a half trillion dollars in credit, mostly to corporate titans.  Congress should close the Bank.

ExIm was created in 1934 to underwrite trade with the Soviet Union.  The agency piously claims not to provide subsidies since it charges fees and interest, but it exists only to offer business a better credit deal than is available in the marketplace.  The Bank uses its ability to borrow at government rates to provide loans, loan guarantees, working capital guarantees, and loan insurance.

The result is a bad deal for the rest of us.  For instance, ExIm is not free, as claimed.  Recently made self-financing, the agency has returned $1.6 billion to the Treasury since 2008.  However, economists Jason Delisle and Christopher Papagianis warned that the Bank’s “profits are almost surely an accounting illusion” because “the government’s official accounting rules effectively force budget analysts to understate the cost of loan programs like those managed by the Ex-Im Bank.”

In particular, the price of market risk is not included, even though doing so, explained the Congressional Budget Office, would provide “a more comprehensive measure of federal costs.”  Delisle and Papagianis figured ExIm’s real price to exceed $200 million annually.  Indeed, both the Government Accountability Office and ExIm Inspector General raised questions about the accuracy of the agency’s risk modeling.

Federal Reserve economist John H. Boyd took another approach, explaining:  “For an economic profit—that is, a real benefit to taxpayers—Eximbank’s income must exceed its recorded expenses plus its owners’ opportunity cost, a payment to taxpayers for investing their funds in this agency rather than somewhere else.”  If ExIm was private, he added, “one must suspect that its owners would have pulled out long ago in favor of a truly profitable enterprise.”  He figured the Bank’s real cost averaged around $200 million a year in the late 1970s but had increased to between $521 million and $653 million by 1980.  Given the recent explosion in Bank lending the corresponding expense today could be much higher.

(click here to continue reading Close the Export-Import Bank: Cut Federal Liabilities, Kill Corporate Welfare, Promote Free Trade – Forbes.)

Patriotism and Taxes: Walgreens Considering Fleeing US

Walgreens Coming Soon

Walgreen Co. is allegedly considering relocating its headquarters from Deerfield, IL to somewhere in Europe, probably Switzerland, perhaps Paris to avoid contributing extra dimes to our national good. Shareholders are more important than schools and roads, never forget.

In a twist on economic globalization less obvious than moving factories overseas, a small but growing number of corporations have relocated headquarters to Europe to escape the 35 percent tax on U.S. profits, the highest in the developing world.

Walgreen Co., the nation’s largest drugstore chain, is under pressure from some shareholders to move its headquarters to Europe, where it owns nearly half of Swiss-based pharmacy giant Alliance Boots.

Deerfield-based Walgreen has called Illinois home for all its 113 years.

Though a move would make financial sense for Walgreen and its investors, it’s an executive decision fraught with political risk for a company as high profile as the pharmacy chain, analysts said Monday after news leaked that Walgreen and investors discussed the possibility.

Walgreen plays an integral role in the U.S. health care system, dispensing drugs to millions of consumers through its more than 8,000 stores. A significant portion of its $72 billion in annual sales comes from Medicare, the federal government’s insurance program for the elderly.

 

(click here to continue reading Investor group pressures Walgreens to move HQ to Europe – Chicago Tribune.)

Tax Refund Received
Tax Refund Received

Not mentioned in this Chicago Tribune (Republican) article is that most U.S. corporations pay much, much less than the 35% corporate tax rate often cited. Loopholes, deductions add up to reduce corporate taxes in a way that an individual tax filer can never hope to replicate.

The biggest, most profitable American companies paid only a fraction of the taxes they would owe under the official corporate rate, according to a study released on Monday by the Government Accountability Office.

Using allowed deductions and legal loopholes, large corporations enjoyed a 12.6 percent tax rate far below the 35 percent tax that is the statutory rate imposed by the federal government on corporate profits.

The report found that even when foreign, state, and local taxes were included, the tax rate of large companies rose only to 16.9 percent of total income, still well below the official 35 percent.

“Some U.S. multinational corporations like to complain about the U.S. 35 percent statutory tax rate, but what they don’t like to admit is that hardly any of them pay anything close to it,” Mr. Levin said in a statement. “The big gap between the U.S. statutory tax rate and what large, profitable U.S. corporations actually pay is due in large part to the unjustified loopholes and gimmicks that riddle our tax code.”

(click here to continue reading Big Companies Paid a Fraction of Corporate Tax Rate – NYTimes.com.)

Three Thousand Walgreens
Three Thousand Walgreens

Now, if Walgreen Co. pays 35% in tax, and the rest of their competitors pay only 12.6% or similar, than perhaps Walgreen’s should hire a few accountants before moving their entire operations to socialist1 Europe. I’d hazard a guess that Walgreen’s has as good of accountants and tax lawyers as any other U.S. corporation, and thus is not paying 35% of its income in tax. 

Also, I don’t see how Walgreen Co. could depend upon maintaining its Medicare cash-cow if it was a non-US corporation. That would not play well during election season.

Footnotes:
  1. kidding, kidding, of course []

ADM to move headquarters to Chicago after all, sans tax break

I Am A Lonely Visitor
I Am A Lonely Visitor

We’ve been following this story for a while, so an update from Phil Rosenthal and Ray Long:

Archer Daniels Midland, unable to secure the special tax incentives it sought from Illinois legislators, nonetheless announced Wednesday that it will go forward with its plan to move its world headquarters to Chicago from Decatur, Ill.

The agriculture giant said it plans to locate 50 to 75 executives in Chicago to a site that has not yet been selected. That’s down from the 100 jobs the company originally cited in its bid to win Springfield approval for special payroll tax incentives worth up to $30 million over 20 years.

“While we considered other global hubs, Chicago emerged as the best location to provide efficient access to global markets while maintaining our close connections with U.S. farmers, customers and operations,” said ADM Chairman and CEO Patricia Woertz said in a statement Wednesday morning. “Chicago also provides an environment where we can attract and retain employees with diverse skills, and where their family members can find ample career opportunities.”

The politicians who opposed a cash-strapped state giving a $1.5 million annual tax break to a company with a market cap of more than $27 billion can claim they held their ground. But absent the incentives package, ADM would not have to make assurances about ongoing staffing levels.

(click here to continue reading ADM to move headquarters to Chicago – chicagotribune.com.)

Like I said before, talented executives want to live in a place that’s interesting, in a city that has culture, restaurants, and so on. If free money is offered, of course corporations are going to take it, but without it? They would still rather live somewhere where nightlife consists of more than just Wednesday night bingo.

Your Allusion Was Too Subtle
Your Allusion Was Too Subtle

It appears that ADM has a robust enough business that they don’t need corporate welfare to stay in business after all, in contrast to the barely above-water Office Depot/OfficeMax corporation, which decided to keep its HQ in Florida. 

Office Depot said Tuesday it has chosen Boca Raton, Fla. for its new headquarters over Naperville.

Office Depot completed its merger with Naperville-based OfficeMax last month, but the pair hadn’t yet announced where the combined company would be based.

The companies asked for tax breaks from both states. Illinois lawmakers adjourned last week before making a decision.

(click here to continue reading Office Depot picks Florida over Illinois for new headquarters – Chicago Tribune.)

A cynic might note that Office Depot was the purchaser of OfficeMax, and Office Depot’s HQ was already located in Florida, thus any discussion of moving to Illinois was mostly about leverage to shake down the State of Florida for tax breaks. Also, for what its worth, Florida doesn’t have a state income tax, a fact overpaid executives are probably well aware of.

One last point, ADM might have negotiated a back-room deal with Illinois politicians – the tax incentives might miraculously show up during next year’s legislative session, we’ll have to continue to pay attention.

Companies Say Goodbye to the Dead Zones of the Suburbs

Deeper Than Your Heart Allows
Deeper Than Your Heart Allows

I’ve long suspected this to be true:

When Motorola Mobility lined up a Silicon Valley candidate a few months ago for a VP-level role, the phone maker was hopeful he’d accept. After all, the company offered the chance to develop products at a subsidiary of Google Inc. 

The engineer declined. His reason: the prospect of relocating to Libertyville, Ill., about 35 miles from downtown Chicago, said Scott Sullivan, Motorola’s head of human resources.

Mr. Sullivan expects recruiting to get a lot easier next February when the company moves into a new space in the storied Merchandise Mart building in downtown Chicago.

Motorola will join United Continental Holdings Inc., Hillshire Brands Co. —the successor to Sara Lee Corp.— and other corporate giants abandoning vast suburban campuses for urban offices nearer to the young, educated and hyper-connected workers who will lead their businesses into the digital age. Archer Daniels Midland Co. recently said it would move its headquarters from Decatur, Ill., and in the Bay Area, startups like Pinterest Inc. are departing Silicon Valley for San Francisco.

After decades of big businesses leaving the city for the suburbs, U.S. firms have begun a new era of corporate urbanism. Nearly 200 Fortune 500 companies are currently headquartered in the top 50 cities. Many others are staying put in the suburbs but opening high-profile satellite offices in nearby cities, sometimes aided by tax breaks and a recession that tempered downtown rents. And upstart companies are following suit, according to urban planners. The bottom line: companies are under pressure to establish an urban presence that projects an image of dynamism and innovation.

(click here to continue reading Companies Say Goodbye to the ‘Burbs – WSJ.com.)

Apollo Visits the New Google HQ
Apollo Visits the New Google HQ

which makes it more puzzling why governments (state, city both) dangle tax breaks to encourage corporations to relocate. The truth is the executives much rather would live in vibrant cities, not B.F.E. rural Alabama for the most part. The employees would rather live in a place that is fun to live in, a place with culture, award-winning restaurants, recreation, and even sports teams. As a totally random example, Sinead O’Connor came through Chicago, playing for a few days at the City Winery. Do you think she’s playing in Gulfport, Mississippi? Or Decatur, IL? So why does ADM, for instance, stamp its feet for a tax break from a state that’s already operating at a deficit? Happily, the Illinois House adjourned before granting payola graft to ADM, though the IL Senate passed their version of this travesty, right before cutting pensions for teachers.

Two bills that would grant special tax breaks for three companies have stalled until state lawmakers return here in the spring. The bills, aimed at allowing Archer Daniels Midland, Office Depot, and Univar to retain withholding taxes that would go to the state, passed the Senate during a one-day special session Tuesday. But the House adjourned, stalling the bills.

All three companies have said they are considering proposals from other states.

“We appreciate the support of the senators who voted for the bill, especially the leadership of Sen. (Andy) Manar. Given that the House did not act, we will review our options. We expect to make an announcement soon,” Jackie Anderson, an ADM spokeswoman, said in a statement.

…Office Depot and Univar declined to comment.

Had the bills been approved, the incentives would have cost the state an estimated $88 million.

Unions, which opposed the plan to deal with worker pensions, criticized the incentives bills.

“At a time when Illinois is a chronic deadbeat and critical resources such as education, public safety and healthcare remain woefully under-funded, our elected representatives today voted to sink the state further into red ink by absolving some of its richest corporations from paying their fair share in taxes,” Keith Kelleher, president of SEIU Healthcare Illinois, Indiana, Missouri and Kansas, said in a statement.

Office Depot, chemical distributor Univar and agriculture giant ADM are among at least a half-dozen companies seeking special state legislation to keep their employees’ tax withholdings instead of forwarding them to the state. The companies want the special breaks because they have years in which they have little or no state corporate tax liability and can’t take advantage of state tax breaks awarded to spur economic development.

 

(click here to continue reading Tax breaks for Office Depot, Univar inch closer to approval – chicagotribune.com.)

Yeah, I’d rather Office Depot and A.D.M. have strong enough businesses that they could survive without resorting to corporate welfare…

Corporate Welfare For ADM, Office Depot, Univarc

ADM butt-crack
ADM butt-crack

Corporate welfare is an ugly practice. I’ve long been opposed to the sports stadium boondoggle, where the public pays for an expensive stadium, instead of the billionaires who own the team, but at least with those sorts of deals, the area gets to root for laundry with the city name on it. Some form of civic pride, some vague benefit. Corporate vampires like ADM draining the nearly bloodless corpse of the state government is much worse. It is as if Illinois was flush with cash – it isn’t – and a backwards state that no business wants to be located in – it isn’t. Notice too how Greg Webb of ADM won’t even guarantee that ADM will stay until the ink is dry on the bill.

So ADM basically says, “Give us money you don’t have, and maybe you’ll get something in return come election time. Or not”. What a crock.

State lawmakers Wednesday took a step closer to granting special incentives to companies seeking thousands of dollars per job created or retained in Illinois.

Agricultural giant Archer Daniels Midland Co. is seeking $5,000 per job per year, chemical distributor Univar Inc. almost $3,000 and OfficeMax, which became Office Depot after its merger this week, $1,570.

All the companies are seeking to collect their employees’ tax withholdings instead of forwarding them to the state. The reason for the requests is that companies have years in which they have little or no state tax obligation and can’t take advantage of incentives negotiated with the state.

The ADM measure would tie incentives to 300 jobs: moving 100 jobs from Decatur, where it’s based, to the company’s new global headquarters, and creating 100 jobs at the headquarters and 100 jobs in Decatur. The company would also be required to fill 100 positions annually in Decatur for five years, including jobs created because of retirements. The incentive will total about $1.5 million a year for 15 to 20 years, a company spokeswoman said.

Sen. David Luechtefeld, of downstate Okawville, asked during a Senate committee hearing whether ADM would guarantee it would keep its headquarters in the state if the measure is approved.

“I don’t know about the guarantee part,” said Greg Webb, ADM’s vice president of government relations. He later added: “I’m going to tell you that we have a preference for Illinois.”

(click here to continue reading Lawmakers closer to granting special incentives to companies creating or retaining jobs in Illinois – chicagotribune.com.)

Reliable, ADM In afternoon light
Reliable, ADM In afternoon light

The corporate vampires have such a low tax burden, despite their profitability, they cannot “take advantage of incentives negotiated with the state”. Right, here is their great idea. Create even more incentives negotiated with the state, with a half-hearted promise to keep the headquarters in Chicago. There is no language in the bill that even requires ADM to create the jobs the $30,000,000 is allegedly buying. In other words, if the bill passes, and in 2014, ADM decided to move to Mississippi, well then, this was all for nought. 

And then there’s these vampires, playing one area against another:

At the same hearing, Office Depot interim co-CEO Ravi Saligram said a new proposal requiring the company to create 200 jobs in the state, in addition to retaining 2,050, would cost Illinois $53 million over 15 years.

Saligram said the newly merged company is also seeking incentives from Florida before deciding where to locate its new corporate headquarters. Office Depot, which merged with Naperville-based OfficeMax, employs 1,700 at its Boca Raton, Fla., headquarters.

Office Depot already has a multimillion-dollar package of incentives with Florida and Palm Beach County based on job creation.

(click here to continue reading Lawmakers closer to granting special incentives to companies creating or retaining jobs in Illinois – chicagotribune.com.)

Industrial Devolution
Industrial Devolution

and these one:

Separately, House lawmakers Wednesday approved a bill that paves the way for chemical distributor Univar Inc. to receive incentives worth $5 million over 10 years. The Redmond, Wash.-based company is considering moving its headquarters to Downers Grove, said Rep. Michael Zalewski, D-Riverside, the sponsor of the bill.

Zalewski said Univar is different from other companies seeking incentives because it’s considering moving its headquarters to Illinois.

(click here to continue reading Lawmakers closer to granting special incentives to companies creating or retaining jobs in Illinois – chicagotribune.com.)

Whoever came up with this system should be exiled to Somalia. There is exactly zero evidence any of these corporate welfare programs help the state government, in any tangible way. None! or as Rep. Jack Franks of Marengo said:

There is no evidence that this is a good deal for the state.

Don’t buy the right-wing myth about Detroit

Money Won't Change You
Money Won’t Change You

David Sirota has an excellent point about the conservative narrative about Detroit. Notice how many times pensions get mentioned in coverage of Detroit’s bankruptcy and how many times corporate welfare does. 50 times to once? Something like that kind of ratio. Basically ignored, in other words. Corporate welfare is sacrosanct; pensions, not so much.

That brings us to how this all plays into the right’s push to enact ever more regressive tax cuts, protect endless corporate welfare and legislate new reductions in workers’ guaranteed pensions.

These latter objectives may seem unrelated, but they all complement each other when presented in the most politically opportunistic way. It’s a straightforward conservative formula: the right blames state and municipal budget problems exclusively on public employees’ retirement benefits, often underfunding those public pensions for years. The money raided by those pension funds is then used to enact expensive tax cuts and corporate welfare programs. After years of robbing those pension funds to pay for such giveaways, a crisis inevitably hits, and workers’ pension benefits are blamed — and then slashed. Meanwhile, the massive tax cuts and corporate subsidies are preserved, because we are led to believe they had nothing to do with the crisis. Ultimately, the extra monies taken from retirees are then often plowed into even more tax cuts and more corporate subsidies.

We’ve seen this trick in states all over America lately. In Rhode Island, for instance, the state underfunded its public pensions for years, while giving away $356 million in a year in corporate subsidies (including an epically embarrassing $75 million to Curt Schilling). It then converted the pension system into a Wall Street boondoggle), all while preserving the subsidies.

Similarly, in Kentucky, the state raided its public pension funds to finance $1.4 billion a year in tax subsidies, and then when the crisis hit, lawmakers there slashed pension benefits — not the corporate subsidies.

The list of states and cities following this path goes on — but you get the point. In the conservative narrative about budgets in general, the focus is on the aggregate annual $333 million worth of state and local pension shortfalls — and left out of the story is the fact that, according to the New York Times, “states, counties and cities are giving up more than $80 billion each year to companies” in the form of tax loopholes and subsidies.”

The mythology around Detroit, then, is just another version of this propaganda.

(click here to continue reading Don’t buy the right-wing myth about Detroit – Salon.com.)

Stilton with candied lemon peel
Stilton with candied lemon peel

and those evil, greedy workers are always the problem. How dare they depend upon $19,000 a year pensions – that they paid with their work for 20 years or longer – when corporations need free cheese! $80,000,000,000 a year in free cheese – cheese that could be spread elsewhere…

So, for instance, from the administration of right-wing Gov. Rick Snyder, we are hearing a lot of carping about the $3.5 billion in pension obligations that are part of the city’s overall $18 billion in debt. The focus leads casual onlookers to believe that — even though they on average get a pension of just $19,000 a year — municipal workers’ supposed greed single-handedly bankrupted the city. What we aren’t hearing about, though, is the city and state’s long history of underfunding its pensions, and using the raided money to spend billions of dollars on corporate welfare.

For a good sense of some of the most expensive, absurd and utterly wasteful boondoggles in the Detroit area over the last few decades, read this piece from Crain’s Detroit or see this 2011 article entitled “Detroit’s Corporate Welfare Binge” by Detroit News columnist Bill Johnson. Alternately, recall this is in the heart of a region that infamously spent $55.4 million in 1975 (or a whopping $180 million in inflation-adjusted dollars) on a football stadium and then sold it off for $583,000. Or, just note that Detroit is the largest city in a state that, according to the New York Times, spends more per capita on corporate subsidies — $672 (per capita) or $6.6 billion a year — than most other states.

It Pays to Play
It Pays to Play

There’s more to the myth of course, NAFTA, taxes and the like.

In the conservative telling of this particular parable, Detroit faces a fiscal emergency because high taxes supposedly drove a mass exodus from the city, and the supposedly unbridled greed of unions forced city leaders to make fiscally irresponsible pension promises to municipal employees. Written out of the tale is any serious analysis of macroeconomic shifts, international economic policy failures, the geography of recent recessions and unsustainable corporate welfare spending.

This is classic right-wing dogma — the kind that employs selective storytelling to use a tragic event as a means to radical ends. In this case, the ends are — big shocker! — three of the conservative movement’s larger long-term economic priorities: 1) preservation of job-killing trade policies 2) immunity for corporations and 3) justification for budget policies that continue to profligately subsidize the rich.

Read David Sirota’s entire indictment yourself, and remember it when you next hear a bloviator discuss Detroit pensions, or austerity…

Ricketts family Screws Up

 Chicago Cubs

Chicago Cubs

Talk about stupid moves: the New York Times reported today that Joe Ricketts, founder of TD Ameritrade, and patriarch of the family that owns Wrigley Field, is planning to spend at least $10,000,000 on attack ads targeting President Obama, bringing up old smears, and doing whatever nasty tricks the PAC can come up with to defeat Obama.

 Except that the Chicago Cubs are trying to get money from former Obama Chief of Staff, and current Chicago Mayor, Rahm Emanuel, to pay for renovations on Wrigley Field. Ooops.

The Cubs are trying to work out a deal with the city that would involve using $150 million in city amusement taxes for a $300 million renovation of Wrigley Field.

The presidential campaign issue was widely viewed as threatening to upend the delicate talks between the family and city and state government. A mayoral aide said Emanuel was furious when he read about the anti-Obama ad proposal.

At City Hall, it did not go unnoticed that part of the Ricketts family is asking for taxpayer support while gearing up to spend millions on a presidential campaign. The mayoral aide described that as hypocritical.

The Emanuel aide said the Ricketts family has tried to contact Emanuel to discuss the situation, but the mayor declined the overture. Publicly, Emanuel did not have an immediate comment on how the effort by Joe Ricketts might affect those talks. “I’ll have some conversations on that later — comments rather,” Emanuel said.

(click here to continue reading Ricketts family moves to control fallout on Obama attack ad – chicagotribune.com.)

Assholes. I hope they don’t get a single dime of taxpayer money. In fact, the city ought to use the power of eminent domain, and seize control of the stadium until the Ricketts divest from it. Sell the Cubs to Mark Cuban, he’s much smarter than these tone-deaf idiots. 

Las Vegas Showgirls
Las Vegas Showgirls

The media buy for the proposal (source document here – PDF) includes advertising on Meet the Press, Face the Nation, the History Channel, the Weather Channel, TNT, Anderson Cooper’s show on CNN, Fox and Friends, of course, aerial banners to fly over the Democratic Convention in Charlotte, blanketing the Charlotte airport with 15 screens running this clap-trap four times an hour, full page 4-Color newspapers ads, and more. 

No Corporate Welfare for The Ricketts

more from the NYT on the Rickett plan:

Timed to upend the Democratic National Convention in September, the plan would “do exactly what John McCain would not let us do,” the strategists wrote.

The plan, which is awaiting approval, calls for running commercials linking Mr. Obama to incendiary comments by his former spiritual adviser, the Rev. Jeremiah A. Wright Jr., whose race-related sermons made him a highly charged figure in the 2008 campaign.

“The world is about to see Jeremiah Wright and understand his influence on Barack Obama for the first time in a big, attention-arresting way,” says the proposal, which was overseen by Fred Davis and commissioned by Joe Ricketts, the founder of the brokerage firm TD Ameritrade. Mr. Ricketts is increasingly putting his fortune to work in conservative politics.

The $10 million plan, one of several being studied by Mr. Ricketts, includes preparations for how to respond to the charges of race-baiting it envisions if it highlights Mr. Obama’s former ties to Mr. Wright, who espouses what is known as “black liberation theology.”

The group suggested hiring as a spokesman an “extremely literate conservative African-American” who can argue that Mr. Obama misled the nation by presenting himself as what the proposal calls a “metrosexual, black Abe Lincoln.”

A copy of a detailed advertising plan was obtained by The New York Times through a person not connected to the proposal who was alarmed by its tone. It is titled “The Defeat of Barack Hussein Obama: The Ricketts Plan to End His Spending for Good.”

The document, which was written by former advisers to Mr. McCain, is critical of his decision in 2008 not to aggressively pursue Mr. Obama’s relationship with Mr. Wright. In the opening paragraphs of the proposal, the Republican strategists refer to Mr. McCain as “a crusty old politician who often seemed confused, burdened with a campaign just as confused.”

“Our plan is to do exactly what John McCain would not let us do: Show the world how Barack Obama’s opinions of America and the world were formed,” the proposal says. “And why the influence of that misguided mentor and our president’s formative years among left-wing intellectuals has brought our country to its knees.”

The plan is designed for maximum impact, far beyond a typical $10 million television advertising campaign. It calls for full-page newspaper advertisements featuring a comment Mr. Wright made the Sunday after the attacks of Sept. 11, 2001. “America’s chickens are coming home to roost,” he said.

The plan is for the Democratic National Convention in Charlotte, N.C., to be “jolted.” The advertising campaign would include television ads, outdoor advertisements and huge aerial banners flying over the convention site for four hours one afternoon.

The strategists grappled with the quandary of running against Mr. Obama that other Republicans have cited this year: “How to inflame their questions on his character and competency, while allowing themselves to still somewhat ‘like’ the man becomes the challenge.”

Lamenting that voters “still aren’t ready to hate this president,” the document concludes that the campaign should “explain how forces out of Obama’s control, that shaped the man, have made him completely the wrong choice as president in these days and times.”

(click here to continue reading G.O.P. ‘Super PAC’ Weighs Hard-Line Attack on Obama – NYTimes.com.)

Look, if Papa Ricketts wants to attack the president with his own TD Ameritrade money, well, I don’t like it, nor their moronic intentions, but I don’t object. However, the Ricketts simultaneously having their hands out to take my tax money is just wrong, and I hope Mayor Emanuel tells them to fuck off, in those words.  If I had a TD Ameritrade account, I’d close it right away. You should close yours right away.

Taking Back Wasted Tax Breaks

Illinois Department of Revenue
Illinois Department of Revenue

Speaking of corporate welfare, who will be the first state to start demanding corporate welfare recipients pass drug tests? Or at least do what the taxpayer funded subsidy was supposed to accomplish?

For example: Many states compete for new jobs by offering taxpayer-funded subsidies to companies to entice them to open in their state. In many ways, these states are just like consumers: those willing to pay the most (in this case, offer the most generous subsidy) ultimately get the product they demand (the jobs a company promises to provide in exchange).

So if these companies ultimately fail to produce the jobs they promised, shouldn’t the taxpayers get their money back? Seems right, but according to a new report from Good Jobs First, this is hardly ever the case. Their analysis of  “clawback” efforts for 238 different state-based business subsidies reveals just how tough it is to demand fairness and accountability when it comes to public handouts to private companies.

At first glance, many of these subsidies do appear to have return policies in place: fully 90 percent of these programs actually require companies to deliver regular reports to state agencies estimating how many jobs they have successfully created thanks to public subsidies; furthermore, 75 percent of the programs they studied contain some type of penalty measure in the event that job creation fails to meet the agreed upon standards.

But here’s the bad news: 31 percent of the programs that require proof of job creation do not require any independent third-party reviewer to ensure that the data these companies submit is actually accurate. And those penalty provisions? Forty-seven percent of them are only enforced voluntarily, meaning that they are basically never enforced at all — in fact, only 21 of the 178 programs with penalty provisions actually publish any documentation of enforcement efforts.

 

(click here to continue reading No Subsidies For You: Taking Back Wasted Tax Breaks – The Demos Blog – PolicyShop.)

Flag Waving
Flag Waving

What about your state? What is its ranking on this list of Clawbacks and Other Enforcement Safeguards in State Economic Development Subsidy Programs? Illinois scored 52/100 on the Monitoring, Enforcement & Penalty Score, covering 5 projects totaling nearly $150,000,000 of state budget.

Illinois’ worst score was for IDOT Economic Development Program ‐ a funding stream for road infrastructure built primarily to benefit specific companies, primarily big‐box retailers, for these reasons:

  • Agency awarding subsidy does not verify performance outcomes reported by recipient
  • No penalty
  • No recalibration of award
  • No online publication of statistics regarding award
  • No online publication of names of companies penalized and dollar amounts
And yet our state is in dire financial straits, and our leaders cannot seem to figure out why…

Upcoming Corporate Welfare Pleas

Dunking on the Sears Tower
Dunking on the Sears Tower

Just like the major league sporting franchise boondoggle, the corporate tax break boondoggle is like a never ending bowl of soup for politicians to ladle out favors from…1

Ramsin Canon of Gapers Block notes:

This week Governor Quinn signed into law special tax incentives for the insanely profitable Chicago Mercantile Exchange and the poorly run Sears. The Associated Press offers a sort-of warning: that scores of companies have tax “packages” that are to expire over the next few years. If you are a shareholder in any of those companies, would you expect anything less than threats to relocate from your CEO? And if you’re a government affairs person representing a business in Springfield, what would your attitude be towards a legislator who voted for this tax package but won’t put forward one for you?

I never bought for a minute that CME and Sears were actually going to leave. Nor do I suspect that Mayor Emanuel, who helped engineer the cuts for CME, or most of the legislators who voted for the cuts, actually bought the threats either. But the threat to leave is a formality that gives cover to politicians who want to hand their political supporters a nice plum but want to obscure the quid pro quo. Seeing now that the tactic works, we should fully expect a tidal wave of employers demanding incentives to stay in the state.

You know, if we cut our tax rates to 0%, we’ll get all the businesses. All the businesses!

(click here to continue reading Give Em An Inch, They Tax Break All Over You – Gapers Block Mechanics | Chicago.)

 

Enraged

Oh joy!

As state senators sent the tax package to the governor’s desk last week, economic development experts said other companies are likely to threaten to move as well unless Illinois offers them more financial goodies. More than 100 companies, including Deere & Co. and Abbott Laboratories, have incentive packages expiring in the next three years — and may want better deals to keep jobs in Illinois.

Businesses thinking of moving to the state could demand even bigger incentives or play Illinois against other states in a bidding war, experts said.

“Once it becomes known that you’re giving incentives, other companies are going to ask for them. Why wouldn’t they?” said Judith Stallmann, a professor at the University of Missouri-Columbia who has studied economic development.

 

(click here to continue reading In the game of tax breaks, states play at their risk | The Salt Lake Tribune.)

Footnotes:
  1. yeah, a horrible metaphor, sorry, pressed for time []

Hoffman Estates Battle Over a Tax Break For Sears

A Matter of Degree
A Matter of Degree

Of course, corporate welfare for the 1% trumps education, schools, kids every single time. I’d hoped the outcome was different since Hoffman Estates is not a poor district, and thus has a little clout, but I was wrong.

When Ms.  1 Crates met with Hoffman Estates officials in March, she learned the money might not be coming after all because the tax break might not expire.

“I cried,” Ms. Crates said. “The school district has cut for the last two years. We’ve had no wage increases, and we were planning on that revenue to bring down our class sizes. We have one algebra class with 47 students. It was devastating.”

Ms. Crates and her school district had suddenly found themselves at the epicenter of Illinois’s latest political and financial crisis, described by one lawmaker as round-robin blackmail among Midwestern states. Unless Illinois agreed to extend the tax break, Sears threatened to leave. The state of Ohio, for one, dangled $400 million in tax incentives as a lure.

But when lawmakers agree to corporate demands for property tax relief, they induce strain on the financial stability of schools, local governments, libraries and parks that rely on those taxes as their most stable form of revenue. The State of Illinois, with $3 billion in unpaid bills, has already disrupted local governments’ revenue streams, often delivering payments to schools at least four months behind schedule.

So when Ms. Crates and her colleagues learned in March that Sears might win an extension of its tax break, they followed the lead of many corporations with well-connected lobbyists. They began a fierce campaign.

At first, the district wasn’t even involved in discussions about the bill. The village of Hoffman Estates oversees the distribution of the Sears property tax revenue. Village officials did not mention that they had helped write and introduce legislation to extend the tax break until months after they did so, according to Ms. Crates. “I was dumbfounded that a public agency like ourselves, right next door, didn’t bother to tell us and tried in the middle of the night to pass legislation without telling us,” Ms. Crates said.

(click here to continue reading Town and School District Battle Over a Tax Break – NYTimes.com.)

and I’m with Representative Currie: some state needs to have the gumption to stand firm, and see if moving a giant corporation’s HQ is as simple as renting a moving truck.

The House Democratic leader, Barbara Flynn Currie, questioned whether the state should keep bending to satisfy threats from businesses entertaining other offers.
“Do we respond or do we just say goodbye? Or do we even call their bluff?” she asked. “I mean, sometimes I think we should start calling the occasional bluff and say: ‘Wait a minute. Is this for real?’ Because the costs of moving are certainly significant.”

Footnotes:
  1. Chief Financial Officer Cheryl Crates []

Illinois being held hostage over tax breaks

South Loop Construction
South Loop Construction

For maybe the first time, I agree 1 with something Dennis Byrne writes, namely that Sears shouldn’t get a dime from a broke-ass Illinois.

If Ohio wants to shower Sears Holding Corp. with $400 million to lure the retailer away from Hoffman Estates, I say, “Fine, do it.” And let Ohio Gov. John Kasich (R) explain to his taxpayers why his state’s bribe is four times greater than the $100 million that Illinois reportedly had offered.

But if I were a stockholder in Sears, I’d ask its board, have you lost your mind? Your stock, say some analysts, is underperforming; you’re losing business to competitors, and last quarter’s financials were disappointing. When you’ve got plenty of challenges just running the business, why are you even thinking about wasting precious time, money and energy moving? Think about the cost of everything — from printing new stationery and business cards to relocating or severing 6,000 employees, hiring new ones, transporting equipment and records, creating new business relationships and on and on.

Seems to me that your problem isn’t so much where you are doing your job as how well you are doing it.

Of course, you’re not the only one trying to extort money from taxpayers to stay. CME Group Inc., the giant derivatives marketplace whose Chicago roots, like Sears, go back more than a century, also wants taxpayer “assistance,” even though it’s already making a nice hunk of change. And Caterpillar Inc., the Peoria-based manufacturing giant, is shopping a new plant and its 1,000 jobs around the country to lure some serious coin from a willing state.

The line of companies whose demands for taxpayer largesse seems endless. Motorola Mobility Holdings copping $113.7 million in tax credits over the next decade, $1.25 million in training funds and a $3 million grant to retain 2,500 jobs. Chrysler in Belvidere. Mitsubishi Motors to come and stay in Bloomington-Normal for a mere $276.1 million. Sears, you’ll recall, originally squeezed a taxpayer-subsidized incentive package to move from the former Sears Tower in Chicago to Hoffman Estates. That deal is about to expire and Sears now wants more. If we give it to Sears, why, we can ask ourselves, won’t it happen again? And again. And again.

(click here to continue reading Dennis Byrne commentary: Illinois being held hostage over tax breaks – chicagotribune.com.)

Corporate welfare is never the answer, from my perspective. Politicians need cash to get elected however, so corporations seemingly can always buy tax favors, exemptions, loopholes that are not available to commoners.

Footnotes:
  1. mostly – Byrne adds some clap-trap about IL raising corporate tax rates by a percentage point. The state is broke, remember? []

As Tax Receipts Lag, Another Hole Opens in Chicago Budget

To Soldier Field
To Soldier Field

Another entry in the stadium boondoggle file – an already-overstuffed folder full of corporate welfare for the 1%. They get to own the teams, act like big shots, but we the taxpayers get to pay the debts.

A recent audit of the city-state stadium authority’s books revealed that for the first time, hotel tax revenues are not yielding the amount needed to pay off the debt that the agency took on 10 years ago to rebuild Soldier Field.

The shortfall means that Chicago’s bottom line, which is already sagging, will take yet another hit, because the city is required to come up with the money under the Soldier Field deal.

Officials for the Illinois Sports Facilities Authority said Thursday that the shortfall would not be as bad as it was first feared and should not be repeated next year. Still, one of Mr. Emanuel’s new appointees to the authority’s board looked at the debt service payments due in the next 20 years and expressed concern that the problem could get far worse, even if tourism revived and hotel tax revenues rose again.

“The city has to begin to plan for some significant outlays,” said Jim Reynolds, an investment manager and new member of the board, who was attending his first agency board meeting since Mr. Emanuel replaced the three hold-over mayoral appointees on the seven-member panel.

Thursday’s meeting took place in the agency’s offices at U.S. Cellular Field, built on the South Side more than 20 years ago to keep the White Sox from moving to Florida. State lawmakers created the I.S.F.A. to guide the ballpark’s $150 million construction and then to operate the facility.

The new fiscal problem for City Hall, however, stems from the Soldier Field deal and represents another time bomb that Mr. Emanuel inherited from Mayor Richard M. Daley. To keep the Bears in Chicago, Mr. Daley pushed successfully for the authority to issue almost $400 million in bonds for the $606 million Soldier Field renovation.

 

(click here to continue reading As Tax Receipts Lag, Another Hole Opens in Budget – NYTimes.com.)

and Mayor Emanuel isn’t so happy about the mess the Daley Gang left behind:

The $1.1 million shortfall was disclosed in an independent audit obtained by the Tribune through a records request. The firm, , declined comment.

Earlier in the day, Emanuel said that Chicago taxpayers should not be treated like cash machines to help cover renovations at the two sports facilities. He said he wants a healthy Chicago sports industry to add the city’s quality of life, but it should not come at taxpayer expense.

“I don’t want the taxpayers of the city of Chicago to be treated as if they’re just an ATM machine; they’re not,” he said at an unrelated news conference.

The mayor recently replaced three members of the authority’s board with veterans of the financial services industry and said he “gave them clear instructions” about what role he wanted them to play.

“You’re not there for yourself, you’re not there socially, you’re there as the voice of the taxpayers of the city of Chicago,” Emanuel said.

(click here to continue reading Mayor: Don’t use taxpayers as ‘ATM machine’ to cover costs at U.S. Cellular Field, Soldier Field – chicagotribune.com.)

The clouds in july are mostly in the plain
The clouds in july are mostly in the plain

whether or not there was an extra $1,000,000 the City of Chicago was liable for or not, this year, we still covered most of the costs of both Soldier Field and U.S. Cellular Field, and pay at least $5,000,000 every year, and sometimes more:

This was the first time the tax revenue fell short since 2001, when a new law allowed the authority to issue bonds for renovations at Soldier Field – changes that at the time officials like then-Mayor Richard Daley and others said were needed to keep the Bears in Chicago.

At the time, the agency provided more than $400 million toward the $600 million project, which included some money for work at U.S. Cellular Field. The ISFA increased its debt, but the city agreed to cough up the extra money if hotel tax revenue fell short. Soldier Field reopened in 2003, but cost overruns made the total for the entire project about $690 million. A Tribune analysis showed the public portion was actually about $432 million.

The $1.1 million transfer was disclosed in an October independent audit that the Tribune obtained via a public records request. This goes beyond the annual $5 million subsidy the city provides already.

…More recently, the agency has come under scrutiny for its deal with the White Sox. The Tribune and WGN-TV reported last month that the authority picked up the $7 million tab to build a restaurant outside the stadium but allowed the team to keep the profits.

(click here to continue reading Chicago taxpayers helped pay for work at U.S. Cellular Field, Soldier Field – Chicago Tribune.)

Sears offered $400 million to Flee Illinois

Demon Eyed Truck
Demon Eyed Truck

I say, good riddance. If a company like KMart/Sears cannot survive without corporate welfare, then maybe they deserve to be banished. Their executives can home school their kids, etc., and maybe even visit Chicago over the holidays…

Ohio has offered $400 million in incentives to retailer Sears Holdings Corp. to relocate its headquarters from Illinois to Ohio, a source familiar with the discussions told Reuters. The news comes just days after the Illinois state house voted down a proposal that would have given $100 million in tax relief to CME Group and Sears, which have threatened to move to other states. Sears declined to comment. Earlier this week, a Sears spokesman said the retailer had received proposals from about a third of the 50 U.S. states, and executives of the parent of Sears department stores and the Kmart chain have visited Columbus, Ohio, and Austin, Texas, to explore possible sites.

(click here to continue reading Sears offered $400 million to move to Ohio | Consumer | Crain’s Chicago Business.)


TIF Slush Fund

Mayor Daley’s budget is in deficit, municipal projects don’t get funded, schools don’t get funded, yet developers can get as much TIF money1 as they need, no matter what. No consequences, no strings. Just plain ole corporate welfare.

Half Done

A city panel approved another major increase in financial assistance for planned Loop apartment development that has struggled to get off the ground because of rising costs and the tough lending climate.

The Community Development Commission signed off Tuesday on a $34-million tax-increment financing subsidy to help pay for the conversion of a vintage Loop office tower at 188 W. Randolph St. into a 310-unit apartment building.

That’s more than four times the $8 million in TIF funds the city initially approved for the development back in 2006, when its total cost was estimated at $79 million.

But the projected cost had soared to $139 million in 2008, and the project’s developer, Village Green Cos., went back for more. The city complied by hiking the subsidy to $20 million.

[Click to continue reading Loop project poised to get another big TIF boost – Chicago Real Estate Daily]

Via Lynn Becker, who adds:

When, in 2006, a developer announced plans to rehab Vitzhum & Burns Steuben Club Building at 188 W. Randolph, an $8 million dollars contribution from the massive Central Loop TIF was going to kick in about 10% of the $79 million cost.

But wait – there’s more! The project is also getting $40 million dollars in tax-exempt bonds from the state, plus $37 million in tax credits. You, lucky taxpayer, kick in almost half of the project cost and the private developer gets the building. Socialism, Chicago style.

When Draconian cutbacks are effecting everything in Chicago from the CTA, to the schools, to 4th of July Fireworks, the city is diverting another $26 million in tax revenues to an economically unsustainable development.

[Click to continue reading ArchitectureChicago PLUS: Welfare Queen]

Really disgusting. The Vitzthum & Burns Steuben Club Building is not a cookie-cutter square box, but it isn’t in the upper echelon of Chicago architecture either.

from a CBS Chicago report (presumedly based on the press release from Village Green Companies)

The Community Development Commission approved a plan to redevelop the vacant and historic Randolph Tower at 188 W. Randolph St. into 310 apartments, retail and commercial space, according to a release from the CDC.

The action recommends the designation of Village Green Companies as the developer for the proposed $145 million renovation.

Plans call for the mixed-use building, formerly known as the Steuben Club Building, to be converted into 168 studios, 98 one-bedroom and 44 two-bedroom units, the release said. Sixty-two of the residential units will be made affordable to households at or below 50 percent of median area income.

Village Green bought the 45-story office building out of bankruptcy in 2005 and will convert the 80-year-old structure into apartments. Plans also include 9,500 square feet of ground floor restaurant and retail space. Village Green will occupy 11,400 square feet on the second floor as its Chicago regional office.

Amenities will include a fitness center, swimming pool and spa. A social club will be located on the 38th and 39th floors, offering 360-degree views of the skyline and Lake Michigan, the release said.

The Gothic-style building will have extensive work done to preserve its historic terra cotta façade and other ornamental details and a gut rehabilitation of the interior.

The CDC also approved a redevelopment plan for the proposed Randolph/Wells tax increment financing district. Creation of the district will support the renovation of Randolph Tower and help redevelop other underutilized and vacant buildings in the area.

[Click to continue reading
City OK’s Rehab Of Loop Tower, Home For Teen Mothers On West Side – cbs2chicago.com
]

Hey, build for the future, right? Demand for new condos might be low now, but in twenty years…

Via EveryBlock’s hyperlocal news

Footnotes:
  1. tax increment financing []