August 10, 2013

Maine Voices: A new tax break for BIW would be corporate welfare we can't afford

Bath residents are lulled by hints of added jobs and silenced by veiled references to job losses.

By BRUCE K. GAGNON

BATH - I recently spoke at a Bath City Council meeting against the request by General Dynamics, which owns Bath Iron Works, for the citizens of Bath to fork over another round of tax breaks for this very wealthy corporation. 

BIW is seeking from the city a tax break known as tax increment financing for an expansion project, which would be completed in 2015, and this time they don't even promise more new jobs. 

The ongoing transfer of public funds to private corporations is corporate welfare that our city, our state, and the nation cannot continue to afford. 

But sadly, tax dollars get shifted away from schools, sewer and water systems, and roads, to the bottom line of already well-endowed corporations.  

Corporations often trade corporate welfare for promises to hire more workers. BIW is a classic example. After being given $197 million in state and local tax subsidies to modernize its Bath plant, employment went from nearly 7,700 in 1999 to below 5,200 in 2011. 

Modernization often means increasing mechanization of production facilities, which ultimately translates to fewer jobs. But hey, who is paying attention anyway? 

Corporations pit community against community in a race to the bottom. At the recent City Council meeting, BIW corporate lawyer John Fitzgerald complained about looming federal cutbacks in military spending and growing competition in other parts of the country. 

"We need the city of Bath's help to meet the challenges," he said. 

He also posed a veiled threat by saying, "There are real concerns about BIW's affordability.  BIW's partnership with the city of Bath is essential." 

At the same time, corporations like General Dynamics make massive profits and their top executives come away with big bucks. 

Former General Dynamics CEO Jay Johnson's annual compensation in 2011 was more than $16 million. Last year his compensation from General Dynamics was just over $18 million. 

Current General Dynamics CEO Phebe Novakovic's compensation, so far in 2013, comes to over $6.5 million. 

General Dynamics generated $2.6 billion in profits in 2011 on almost $33 billion in revenue.  The company's value (known as "market cap") as of June 30 this year: $29,858,000,000. 

I was recently at a conference in Washington, D.C., where I learned that the world's largest weapons corporation, Lockheed Martin, has built a hotel in Montgomery County, Md. They got the state to pass a law that exempts Lockheed Martin from paying the state hotel occupancy tax. Then Lockheed Martin tried to get the county to exempt them from their occupancy tax as well, but public outrage put a stop to those plans. 

Not to be denied, though, Lockheed Martin then went back to the state and got them to pass a law requiring Montgomery County to exempt the company's new hotel from their local occupancy tax.  

The examples of corporate greed these days are numerous and outrageous. 

The UMass-Amherst economics department has done the definitive study on jobs created by government spending. They found that $1 billion spent on domestic priorities (education, health care, home weatherization, repairing roads and bridges, creating clean energy systems, etc.) will create substantially more jobs within the U.S. economy than would the same $1 billion spent on military production.  

So while we are told that granting more corporate welfare is good for Bath's local economy, the study shows that if we invested those same dollars in building rail systems, for instance, at a place like BIW, we'd double the number of jobs created. Military spending is capital intensive -- all other government spending is labor intensive. 

The Bath City Council is likely to give General Dynamics everything it wants. I felt it was at least worth the effort to stand before the council and offer good economic reasons not to do so.  

But the corporations rule our political system these days -- the Bath City Council acknowledged as much when it recently unanimously agreed to pass a resolution calling for a ban on corporate money in our elections. 

The public is growing tired of seeing our meager funds go for more corporate welfare. But when it comes down to the people versus corporate power, we know who triumphs. 

It's a sad commentary on our current state of affairs. Democracy has been trumped by corporate power and profits.

Bruce K. Gagnon of Bath is coordinator of the Global Network Against Weapons & Nuclear Power in Space.

 

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