Capitol Report
By State Representative, Leon D. Young
Leon D. Young
Scott Walker has long touted his ability as a jobs creator. After all, we remember one of his ardent campaign promises seven years ago that he would create 250,000 jobs during his first term in office. That simple hasn’t happened.
Now Walker, who is up for reelection next year, is trying to pull a rabbit out of his proverbial hat, to assure a third term. The governor now finds himself on the cusp of delivering a major investor to the state, but at what cost to Wisconsin taxpayers?
Foxconn, the technology giant that supplies gadgets to Apple, Google and Amazon, has shown a willingness to make a hugs investment in Wisconsin – in exchange for a similarly hefty commitment from the state. The Taiwanese company has agreed to build a factory that will stretch 20 million square feet, the size of 11 football fields, and Governor Scott Walker has offered to set some financial rewards to seal the deal.
On the table is up to $3 billion in state tax breaks. The state legislature (controlled by the Republican majority) could approve the economic incentive package as early as August. Obviously, these payouts come with rather lofty expectations. If Foxconn keeps hiring U.S. workers at the new flat-screen manufacturing facility, Wisconsin would cut the company $200 million to $250 million a year for up to 15 years. That works out to a rough cost to the state of about $230,700 per worker. Assuming the factory goes on to generate 13,000 jobs.
It should be noted that Foxconn has so far committed to creating 3,000 jobs at the plant by 2020, with an average wage of $53,000. Moreover, the company is on record as having said that number has the “potential to grow” to 13,000 [jobs]. Approval of the full incentive package would mean Foxconn, which made nearly $140 billion in revenue in 2015, could net up to $1.5 billion for creating Wisconsin jobs and another $1.35 billion for building the plant in the southeastern part of our state.
Foxconn said it will pour $10 billion of its own money into the plant. An estimated $5.7 billion of that amount will go toward construction and equipment from Wisconsin businesses. The company would also be allowed to skip another $150 million in sales tax on purchases such as building goods.
On its face, this would seem like an attractive offer. But, a closer analysis is in order. Let’s begin by asking a seminal question: How many jobs has Scott Walker left on the table during his watch? We all remember his stubborn refusal to accept federal cash to expand the Medicaid program that would have provided much needed health care for elderly, poor and disabled adults in Wisconsin; while promoting real job expansion.
Equally egregious, the governor let politics and personal ambition to influence his decision in turning down a fully-funded federal appropriation (approximately $900 million) for a high-speed rail project. This project alone would have generated countless jobs and, more important, would have been a major catalyst in stimulating economic and business development for the entire state.
Wisconsin voters should have some real reservations about this alleged “sweetheart” Foxconn deal. Walker literally refused to capture billions of Medicaid dollars being returned to the state. All because, he didn’t want to give the public perception that he was willing to play ball with the Obama White House. Despite the fact, it was very prudent public policy.
The Foxconn deal merely epitomizes more of the same: tax breaks and handouts for corporate cronies and the wealthy. Meanwhile, the financial burden of these incentives continues to be shouldered squarely on the backs of working-class and poor families. Here are some other troubling concerns about this deal: First, a wide array of Wisconsin environmental regulations would be waived to speed up construction of a $10 billion Foxconn electronics factory. This means that Foxconn would have a license to pollute our rivers and lakes for years to come. And second, Foxconn alleges that deal could net the state as many as 13,000 new jobs. But, Foxconn has a poor record on worker rights, has a business philosophy of replacing workers with robots, and a long history of making grand promises that don’t always play out.