September 28, 2020
John C. Mozena, president of The Center for Economic Accountability:
Ohio’s decision to allow General Motors to keep a reported $20.3 million in unearned subsidies after the closure of its Lordstown plant would have been a bad decision in the best of times, but it’s especially unacceptable in 2020. Ohio’s taxpayers are facing plenty of “market factors” of their own right now, and it’s a shame the bureaucrats who supposedly represent the people’s interests failed miserably right when they were needed the most.
It’s especially insulting that part of the deal includes GM paying a reported $12 million toward “workforce, education and infrastructure needs.” That’s the corporate equivalent of “Give me $20 and I’ll buy you a drink.” When a company is being allowed to keep $20 million in unearned public money, a promise to spend $12 million on public services is a net negative to the community, not a positive.
We talk a lot about the rising cost of education, but Ohio’s taxpayers just got one of the biggest tuition bills in history when it comes to the $20 million lesson they’ve received about how little subsidies actually change companies’ decisions about where to build or who to hire. Ohioans have been told time and again by politicians and bureaucrats that they have to keep handing out bigger and bigger subsidies, or the jobs will go someplace else. Well, Ohio handed out the subsidies. And guess what? The jobs are still going someplace else, but now they’re taking Ohio’s money with them.
Ohioans would have lived up to their side of the bargain had the Lordstown plant stayed in business. They have the right to expect that their elected representatives would require the same of General Motors, or any other subsidy recipient that did not live up to their end of the deal.
This kind of failure of politicians to enforce so-called “clawback” agreements is depressingly common across the country. In many cases, such as this one, we’re told that enforcing contracts and holding businesses accountable would make the state less attractive to future big subsidy-driven deals. For Ohioans who are now paying to subsidize jobs that no longer exist, that probably seems like a good idea.
Contact: firstname.lastname@example.org, 313-460-7441.
About the CEA:
The Center for Economic Accountability is an independent and nonpartisan organization that works for transparency, accountability and market-based reforms of state and local economic development programs across America. Founded in 2018, it is headquartered in Michigan. Learn more at www.economicaccountability.org.