Progressive Thinking

Rhetoric from Foxconn cheerleaders on deal may be too good to be true and $3 Billion is a lot to spend on vague promises.

HOWARD, WI - While President Donald Trump, Gov. Scott Walker, and U.S. Rep. Paul Ryan are busy celebrating and advertising the Foxconn deal toboost their re-election campaigns, others are looking more closely at the deal and finding things to be concerned about – like the fact that the Taiwan-based electronics giant is one of the world’s most brutal employers, notorious for driving workers to suicide.

They are now poised to reward Foxconn with a whopping $3 billion “incentive” package — the largest in Wisconsin history – with the bulk of this subsidy being paid out in cash.

Reports from economic development specialists say that incentives like these for Foxconn are a waste of money for state and local governments.

Promises of family-sustaining wages are often forgotten by major corporations once the public funding is in hand, and Foxconn is undergoing a major automation plan that might very well leave those hired at lower wages without jobs at all within 15 years.

Finally, the big question remains whether Foxconn can be counted on to hold up its end of the deal and keep its promise to invest $10 billion in Wisconsin in exchange for $3 billion in state tax incentives.

Legislators would be wise to fully scrutinize the agreement in terms of jobs, wages, and the state’s capacity to provide services as it shells out $3 billion to Foxconn.

Things that appear too good to be true, generally are.

As lawmakers and citizens consider the Governor's proposal to bring Foxconn to the State of Wisconsin, it is critical to be aware of all the details of the state’s commitments to lure Foxconn and the precedent this will create for other companies considering coming here.

MADISON - Great News! A big tech company called Foxconn is coming to southeast Wisconsin and bringing with it a lot of new jobs. The new company will build a big factory and make flat screens for computers.

The Governor tells us the company will create 13,000 jobs that pay nearly $54,000. Other businesses will benefit because the company will buy things from Wisconsin businesses.

But, as Paul Harvey used to say, “Here’s the Rest of the Story.”

For its part, Wisconsin will pay $3 billion in tax credits and other subsidies over 15 years to the company. Tax credits are refundable – meaning if the company owes nothing in taxes, they will still get a check from the taxpayers of Wisconsin for the amount of the tax credits. It is important to note that manufacturing companies already pay almost nothing in state income tax.

Foxconn announced the company would create up to 3,000 new jobs. Local people will not get any benefit of property tax dollars from the factory for 30 years. We don’t yet know who the local community is but rumors point to Racine.

The bill to authorize the project was made public late Friday.

In the proposed legislation, there is no mention of 13,000 or 3,000 jobs. Tax credits can be awarded for full time jobs with a salary of $30,000 in Racine or $22,600 for a job in Milwaukee.

At a salary of $30,000 in Racine for 3,000 jobs, the state would be paying all the salary of the workers for 15 years at a cost of $90 million a year. At $3 billion in state dollars, the state will be paying a million per job – more than the total cost of all the new jobs.

Marketwatch, a publication of Dow Jones, analyzed the deal. How, the author asks, will this plant find and keep its workers in an economy with 3.2% unemployment by paying less than state average wages?

The answer may be found in an assumption made in the economic analysis paid for by the company and touted by the Governor’s office. Job numbers reflect “job location” and could be filled by residents or nonresidents.

The company will pay nothing in sales tax for building materials, supplies, equipment and services. This provision is directly at odds with the economic analysis. If sales taxes are not paid, the projected state and local tax benefits fall in the short term by half and in the long term by a quarter.

Other details one might ponder.

The bill borrows over a quarter billion to fix the Interstate between Milwaukee and the state border. This move helps finesse the impasse on the state’s transportation budget.

The Governor adds five new enterprise zones to be given away. Remember enterprise zones make refundable tax credits – a check that goes to the company’s owners even if they pay nothing in state taxes. Some legislators are cautious of these giveaways. Efforts beyond what is needed for the Foxconn deal might be seen as a way to expand giveaways later without legislative oversight.

Nestled in the bill is the authorization for local government to write no-bid contracts; exemptions from state environmental protections including for navigable waters and wetlands. The company is not required to submit an environmental impact analysis to the state. The bill changes the law related to diversion of water under the Great Lakes Compact. Some rules related to permitting utilities do not apply to the project. The claw back provisions are only permissive, not mandatory.

And nothing about the company’s obligation to the state is set. The three-page Memorandum of Understanding (MOU) released by the Governor’s office ends with a vague paragraph that reads all the terms of the MOU are “subject to final negotiations” with the State and Mr. Gou “acknowledging the importance of finalizing an agreement” by the end of September.

All of the environmental and economic concerns must be taken into consideration in the context of an industry rapidly moving toward automation and robotic workers; a company with a history of not delivering promised jobs. And a company with a history of abusing its relationship with its workers.

All of the details should be public before the legislature approves the project.

We wouldn’t want to buy a $3 billion lemon.

State Republican cheerleaders for $3 billion payoff to Foxconn for new plant call Hansen's caution “beyond appalling” and “insane.” Anyone concerned about Wisconsin taxpayers should be urging caution says Hansen.

GREEN BAY - Yesterday, on these pages, State Senator Dave Hansen (D-Green Bay) said that Wisconsin should be extremely cautious in any use of taxpayer dollars to lure Foxxconn to the state citing concerns that new technologies could eliminate any promised jobs.

Hansen was referring, of course, to the much ballyhooed announcement in Washington that Taiwanese technology giant Foxconn, maker of the LCD displays on iPhones among other things, planned to build a factory in southeastern Wisconsin creating something like 3,000 to 13,000 jobs. On top of that, the average pay for jobs would be around $54,000 a year.

Republicans from President Donald Trump to Governor Scott Walker were quick to claim it as one of the greatest deals of the century and one that would put "rust belt" Wisconsin back on the manufacturing map. Walker especially wanted the glory of landing a big one to justify his rather lackluster record on job creation. He has still not reached, well into his second term, his campaign promise to create 250,000 new jobs by the end of his first.

Industry observers were more skeptical of the Taiwanese company, highlighting Foxconn's poor record on worker rights, its goal of replacing workers with robots, and a history of grand promises that don't always play out.

Another bump in the road was that Foxconn wants a massive $3 billion in state tax breaks to build it's new plant here. The Washington Post was quick to report that the "Foxconn deal to build massive factory in Wisconsin could cost the state $230,700 per worker".

In this environment, any "legislator thinking of supporting what could be a $3 billion incentive package should be very wary,” said Hansen. “To do otherwise would be a serious case of legislative malpractice."

Simple good sense in stewardship of our tax dollars one would think. But not so for four Republican lawmakers from northeast Wisconsin who called Hansen’s concerns that Foxconn could replace jobs at the plant with robots after taking the money “beyond appalling” and “insane.”

As reported by the Post, “One need look no further than the shipyards and foundries in Marinette or the paper manufacturers scattered throughout the area to see that our area’s economy thrives on manufacturing,” said state Rep. John Nygren, co-chair of the Legislature’s budget committee. Rep. David Steffen, of Green Bay, said there will be countless economic benefits across the state. “To think that someone would actively cheer against this type of economic growth is insane,” Steffen said.

Senator Hansen had this response late today on the comments by the Republican Foxconn deal cheerleaders:

“As someone who worked successfully with Senator Herb Kohl and Governor Doyle to bring over a 1,000 new jobs to Marinette Marine, efforts to paint me as anything but supportive of manufacturing and new jobs are disingenuous at best and a deliberate distortion of my comments at worst.

“Nowhere in my statement did I say I am opposed to what could be a great opportunity for our state. But pardon my skepticism when the comments made in regard to my call for caution are from the very people who still have not been able to produce a budget and who created WEDC with its long history of failing to hold companies that receive state tax dollars accountable when they fail to create jobs.

“Anyone concerned about Wisconsin taxpayers should be urging caution when it comes to offering a foreign corporation $3 billion of our precious state tax dollars. Especially when it involves a corporation which recently replaced 60,000 low-paid workers with lower cost technology and has stated that its goal is to automate its manufacturing facilities to the fullest extent possible.”

Wisconsin has been burned before by Walker's blind faith in big business and trickle down economics. Hansen's cautions should be taken seriously.

Politicians typically try to build the economy top down, showering tax breaks and subsidies on a few thousand of the richest among us or even just one company like Foxconn. The other way is from the bottom up, giving the whole population the means to do more for themselves. Bottom-up is best.

ALTOONA - To me, the most important question is not whether Foxconn is a good company. Or whether Foxconn can be trusted to deliver on its promises. Or whether the benefits of this deal for Wisconsin will at least equal the costs to the public when all is said and done. These are all very important questions, but not the most important.

The most important question is what basket should we be putting our eggs in? If we're going to spend $3 billion, should it be to subsidize the expansion of one company from Taiwan, or should we spend it to empower the more than 5 million people who call Wisconsin home?

I think we should spend it on people. We should concentrate on developing the human potential of our own population. We should be equipping people to do for themselves rather than hoping that a multinational corporation from the other side of the world will work some magic for us.

Most new jobs get created by small businesses, not global conglomerates. But countless people with great ideas who dream of starting their own businesses too often feel trapped, with no choice but to stay in dead-end jobs because that's the only way they can hold on to health insurance for their families. Using our resources to guarantee health care for all and detach health insurance from employment would be one of the single best investments we could possibly make to unleash the creativity and ingenuity of our state's population. People would be free to be entrepreneurs and take their ideas and turn them into new businesses.

What's the best use for $3 billion? What basket should we be putting our eggs in? The way I see it, the best investment is developing the potential of Wisconsin's population through things like health care for all, affordable and debt-free education and job training, and bringing 21st Century necessities like high-speed Internet to every household in the state.

There are two paths to building a sturdy economy. Politicians typically try doing it from the top down, showering tax breaks and state subsidies on a few thousand of the richest among us or even just one company in hopes that some of what they get will trickle down to the rest of us. The other way is from the bottom up, giving the whole population the means to do more for themselves and each other.

The bottom-up approach is the best bet.

Wisconsinites should not blindly put their faith, and money, in this jobs promise. We’ve been deceived by Walker’s rose-tinted glasses before.

MADISON - It is with good reason that Wisconsinites are not yet willing to blindly put their faith, and money, in a feeble jobs promise. We’ve been deceived by Walker’s rose-tinted glasses before.

Since taking office, Walker has left a trail of broken promises. His pattern of deception has resulted in our hard-earned tax dollars being handed over to campaign donors and companies that outsource, as well as some of the biggest tax breaks going to the richest people in the state, some of whom have used tax loopholes to avoid paying any state income tax for years.

Our neighbors care about making sure this is a good deal for everyone in Wisconsin. Any move for Foxconn to locate in Wisconsin must also fit with the spirit of our great state. We look to partner with companies that will respect our state’s shared lands and waters. We should reward companies that pay our neighbors a living wage and treat them fairly. If they expect special treatment, they need to have a long-term commitment to our state so we know they won’t abandon Wisconsin as soon as a new enticement goes on the table from somewhere else.

Wisconsin leaders should not commit to corporate welfare or anything that carves out special exceptions in our laws if it will unfairly hurt local businesses already in our state. Every small-business owner knows: with a billion dollar pinky swear, the devil is always in the details.

Too many people in our state are struggling in low-wage jobs and living in fear that any day the security of health care could be pulled out from under them. They deserve leaders who will be looking out for their future.

We demand fairness, and that’s what we’ll be looking for in this deal.