Corporate Welfare

Another Lousy Case of Corporate Welfare

Virginia is for cronies.

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Earlier this session, the Virginia General Assembly spiked proposals to drug-test welfare recipients. Executives at Newport News Shipbuilding must be grateful: They're in line to get a huge government handout.

The shipbuilding company is now a subsidiary of Huntington Ingalls Industries, which is valued at almost $6 billion. Why it needs $46 million from the taxpayers is anyone's guess. Yet that's what it might get thanks to state lawmakers.

Suffolk Del. Chris Jones (R) took the lead by sponsoring the legislation, which will help underwrite a new, $750 million production facility to build the Navy's new Ohio-class nuclear submarines, and create at least 1,000 jobs in the process. The legislation makes the grant, which could be paid out over four years starting in 2022, conditional upon meeting certain criteria.

That's an important safeguard, given Virginia's recent experience with another economic-development handout. The state ladled out $1.4 million from the slush pile known as the Governor's Opportunity Fund to a Chinese-run venture that was supposed to create almost 350 jobs in Appomattox County. The governor's office boasted that the deal was "a direct result of the Governor's meeting with company officials in Beijing." Gov. Terry McAuliffe (D), with his typical reserve, called it "transformational." But it was all a scam. Nothing ever got built, no jobs materialized, and now the state is trying to get its money back.

Granted, NNS is hardly the type of company to take the money and run. If it wins the $13 billion Pentagon contract, or part of it, then it will build the manufacturing facility and hire the workers to get the job done.

But that's precisely the point, isn't it? The shipbuilding company would love to win the contract, and if it does, it is going to build the subs—and it will have all the funds necessary to do so from the Pentagon, which is to say from U.S. taxpayers. So why give it another $46 million from state taxpayers to do what it plans to do regardless? That's like paying a hungry man to eat.

To make matters worse, the subsidy won't even help NNS land the contract. The Pentagon expects to award it by 2017. The state's payments to NNS wouldn't start until 2022.

A representative for NNS says the state money will support "capital investments" to aid building warships "more efficiently and cost effectively." Sure it will. People are always so much more tight with a dollar when they're spending somebody else's money rather than their own, right?

There is a case for some corporate welfare. It's a bad case. It's usually supported by made-to-order studies that gin up dubious assumptions and laughable projections to promote the desired conclusion. But at least it's a case. It says that if our state pays a few bucks to Acme Consolidated, we all stand to reap much bigger economic gains—whereas if we don't, Acme will go to some other state and we'll lose out. Corporations have become expert at playing states off one another in just this way.

Some politicians are wising up to the con game, at least regarding subsidies for Hollywood movies and sports stadiums. But even if it were not a con game in those cases, it still has no relevance to building nuclear submarines.

The state grant will not affect whether NNS builds Ohio-class subs. NNS is not trying to decide whether to put its operations in Virginia or Oklahoma. It's not threatening to pull up stakes and move to Nebraska. So not only do state lawmakers have no good reason to give the shipbuilder a fat wad of cash—they don't even have an excuse.

A few days ago, Republican lawmakers professed to be shocked at the amount of money Virginia was shoveling out in economic-development incentives. Since 2010 the state has spent $679 million on such sweeteners. A House Appropriations Committee presentation says incentives have grown 298 percent over the past decade, which one is supposed to take as Not a Good Thing.

The chairman of that committee, by the way, is Del. Chris Jones, sponsor of the shipbuilder's handout. Perhaps it's time he sat down and had a tough conversation with himself.

This column originally appeared at the Richmond Times-Dispatch.

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  1. Why does Reason and the Richmond Times-Dispatch want to weaken our national defense?

    1. Because they hate children.

    2. A. Barton Hinkle.

      You didn’t know the A stands for Abdullah?

  2. That’s an important safeguard, given Virginia’s recent experience with another economic-development handout. The state ladled out $1.4 million from the slush pile known as the Governor’s Opportunity Fund to a Chinese-run venture that was supposed to create almost 350 jobs in Appomattox County. The governor’s office boasted that the deal was “a direct result of the Governor’s meeting with company officials in Beijing.” Gov. Terry McAuliffe (D), with his typical reserve, called it “transformational.” But it was all a scam. Nothing ever got built, no jobs materialized, and now the state is trying to get its money back.

    lol. McAuliffe is such a fucking carpetbagger.

    1. It transformed someones bank account.

  3. The flip side of this is that the govt can also step in and totally fuck a guy over at the drop of a hat via a Historic Preservation Commission.

    Local shady business guy is trying to build something on a lot with an old armory. Paid for it with his own money, now the Historic Preservation Commission is stepping in:

    On January 19, the city’s Heritage Preservation Commission voted to nominate the property as a local historic landmark. City staff were concerned that some of Abdul’s proposed changes would damage the historic character of the building.

    The vote grants interim protection to the property, which hampers Abdul’s ability to make big changes. According to the city’s staff report, interim protection is “to protect a nominated property from destruction or inappropriate alternation during the designation process.”

    WTF? If you care about the building, get some money together and buy it.

    1. They sidn’t realize how cool the building was until this Sbdul character bought it. Before it was just an old brick building. But now it is an important piece of city history.

      1. In the words of McAuliffe, it was ‘transformed’!

    2. One of the reasons this perturbs me is that I worked in an office building that was designated Historic and the levels of busy bodiness that went on were scary.

      The building was an old warehouse and if you dared to use a thumb tack to put something on one of the 2′ x 2′ timbers, you could be assured not only of a nasty note from the Historic inspectors but also from the craven management of our company because they were so worried about fines.

    3. We have a real problem with these historic preservation areas in Virginia. What the white liberals that love them don’t want to admit is that the point of them is to elevate property values and keep poor blacks away.

  4. I think whoever put “Virginia is for Losers”-graffiti on their signs is mean

  5. $46 million is chump change. Here in Florida, Governor Skeletor wants to splash out $250 million.

  6. Virginia got scammed by the chicoms?

    That’s one step above falling for the Nigerian email.

    1. Hey, where’s that guy that makes 50 dollars an hour working from home. Del. Chris Jones needs his info.

  7. The sad part is that Virginia isn’t hurting economically. They are situated right next door to D.C.. Businesses located their can lobby government bureaucrats on the cheap, because everyone lives in Virginia and commutes in (way way cheaper rents and housing prices).

    1. There not their. Freaking need an edit button.

  8. Suffolk Del. Chris Jones (R) took the lead by sponsoring the legislation, which will help underwrite a new, $750 million production facility to build the Navy’s new Ohio-class nuclear submarines, and create at least 1,000 jobs in the process.

    Well, isn’t that nice of him? Of course it isn’t like he is going to underwrite that investment himself. No! The taxpayers will. And it is not like building submarines is the type of investment that delivers returns in pecuniary terms. No! It delivers a return for plastic model makers and obviously for the cronies who build the things but for the taxpayer there’s only the comfort that the boondoggles are out there safeguarding the shores from attacks. We’re number one! Yay!

  9. Jack of all trades says it doesnt always work like that. Wow.

    http://www.Anon-Net.tk

  10. How many green cards were issued to “investors” in the Chinese-run scam? Because it sounds like the old green car company Gov. Terry McAuliffe (D) ran – no cars ever made, but lots of green cards.

    funny, he also had connections at State department…

    1. I am shocked-SHOCKED!- to discover that there is any shadiness connected with the Clintons!

  11. DC owns Virginia and MD…and has the gall to claim that it isn’t represented.

  12. A similar thing just happened in Mississippi. 270 million to a multi-billion dollar tire company. My libertarian lives in MS and asked his “conservative” senator about it. The senator answered the email which basically said “that’s how business gets done in Washington and I will not let MS lose jobs to make a moral stand”.

    1. My libertarian friend

    2. An unusually substantive and uncharacteristically honest response, for a politician.

      And then they wonder why the great unwashed will vote for ANYONE who even appears to come from outside the whole “that;s how business gets done” in DC game. The political class is unendingly mystified by this “Don’t you know you’re getting good and paid off on this deal, and with money stolen from OTHER taxpayers? What the hell’s wrong with you?”

      1. IKR? Still, promising to hand out “free” shit has gotten Bernie this far. It has some appeal.

  13. So state governments compete for industry that builds stuff for the federal government?
    That right there is what’s wrong with our system.

  14. There is a dude that makes no sense at all man.

    http://www.Anon-Net.tk

  15. If we don’t have crony capitalism in government, how will our elitist turds enslaving us get our hard earned tax dollars to their cronies?
    Did you ever think about that?

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