Friday, November 13, 2015

Iowa Oscar Mayer deal takes corporate welfare to a new level!

It was part of Scott Walker's “Open for Business” policy; take neighboring states businesses away with taxpayer supported handouts and tax cuts.

But corporate giveaways like this just went off the Richter scale with the relocation of Oscar Mayer to Iowa, and the Des Moines Register noticed, with the following scathing opinion. Make no mistake, this is a Republican policy spurred on by special interests and irresponsible tax cuts. WSJ:
If you needed another sign that Iowa’s economic development incentives are out of whack, get a load of this baloney. Kraft Heinz is closing the world’s largest bologna plant, which employs about 1,400 workers at the Oscar Mayer works in Davenport, Iowa. The company plans to build a $200 million, state-of-the-art plant that will need just 475 workers.

In return, the company could get $20.75 million in state and local assistance. That works out to nearly $43,700 for every job Kraft Heinz agrees to keep. (About 200 of the jobs pay less than $37,000 a year, according to the state’s contract with the company.)

The deal represents a new low in the out-of-control race to keep or attract employers.

Incentives were once solely used to reward companies that actually created jobs. But then the state gave aid to companies for “retaining jobs,” such as investing in new equipment for their factories, even if no jobs were added. Now the state is giving Kraft Heinz $4.75 million, and the result is a net loss of 900 jobs. But Debi Durham, director of the Iowa Economic Development Authority, declared victory and argued that without the incentives, Iowa would have lost everything.

Iowa also awarded Kraft Heinz $750,000 in research and development tax credits. For what? To build a better bologna? This company produces such nutritionally rich “food” as ketchup, Lunchables, Velveeta and Jell-O. Or will the R&D investment go toward increased automation to reduce the number of processing jobs?

Our congressional delegation can work together to end the national bidding wars. We can ask presidential candidates their plan to stop the madness.

We can stop feeling helpless, as Davenport Mayor Bill Gluba sounded on Thursday as his city considered a $16 million incentive package: “It’s a sad commentary on modern-day capitalism that you have to give up property tax money, which is used to fund our schools, for jobs. But if you don’t do it, we don’t have the jobs to pay our taxes.”

A winner of a deal? More like a wiener.

2 comments:

MarkGisleson said...

History repeats itself. When Terry Branstad was first elected governor in 1982, he brought IBP and other cut-rate meat packers into the state. They got tax breaks that let them outbid existing packing plants and put them out of business, costing thousands of union meatpackers their jobs.

Under Branstad in the '80s, over 100,000 blue collar Iowans had to leave the state to find work, and their families followed later. That shifted the balance of power in Iowa politics and turned a state that was equally Democratic-Republican-Independent into an older conservative majority.

Just like Walker is trying to do in Wisconsin.

Anonymous said...

Isn't John Kerry married into the Heinz family? Seems like this is a big boost for his bottom line.