Questioning the Cost and Philosophy of the Stimulus Plan in Michigan

July 15, 2010

President Barack Obama is in Michigan today to promote the ground breaking for the LG Chem battery plant in Holland. The President is lauding the ground breaking as a sign that the Stimulus Package is working, and creating jobs. But at what cost?

Without question, Michigan NEEDS jobs. With unemployment in the state currently lingering around an astounding 14%, some would say that we need to do anything to bring jobs to Michigan. There are others, however, who disagree.

According to the Mackinac Center for Public Policy, Michigan taxpayers will write $100 Million in checks to the Korean battery maker. From the article:

Last week the the Michigan Economic Development Corp. upped the ante on a $100 million “refundable” business tax credit approved by the state House and Senate for a subsidiary of the South Korean battery maker LG Chem. The MEDC in effect converted the credit into an outright cash subsidy from Michigan taxpayers by granting the firm’s 120-acre plant site in Holland “renaissance zone” status for 15 years.

The legislation authorizing the credit, Senate Bill 466 sponsored by Sen. Wayne Kuipers, R-Holland, was passed last year. This spring, the firm was also approved for a federal “stimulus” grant of $151 million for the plant, the cost of which is pegged by various sources at between $244 million and $303 million. Essentially, taxpayers are all but giving the Korean manufacturer a brand new factory.

The Mackinac Center isn’t the only one questioning the price tag on these jobs.

In an article published today by the Wall Street Journal, Congressional candidate Jay Riemersma (R- Holland) stated, “”This is one instance where you can see job creating coming from it (the stimulus), but again…at what cost?” Riemersma went on to add, “People don’t want government stimulus and government spending…In their mind we’re mortgaging their future and their grandchildren’s future.”

The Heritage Foundation makes the argument that Obama’s Stimulus Plan is a failure, and the LG Battery Plant is a prime example. According to the article:

“Specifically, this factory is being subsidized by $151 million of stimulus funds from an even larger $2 billion honey pot of stimulus money set aside for electric car battery investments. This one plant is expected to employ 300 workers. That works out to more than $500,000 per job created. $500,000 per job. This plant, in a nutshell, explains why the President’s stimulus plan has been an objective failure.

In plain English, does it really make sense to pay 100x the annual salary of a new job? That’s assuming that the average employee would make $50,000 per year, which I suspect is unlikely. At what point do we say, “Gee, we probably shouldn’t be spending $100 to make $1?” It just doesn’t make sense.

$500,000 per job? That makes about as much sense as The Michigan Film Tax Credit, which is supported by Michigan State Representative Bill Huizenga (R-Holland), another Congressional candidate for Michigan’s 2nd District seat. The Film Incentive is another attempt by government to buy jobs for Michigan, and another example that begs the question of when is the price for new jobs too high? The Film Incentive grants ridiculous amounts of money to filmmakers who shoot in Michigan. To learn more, check out this video.

Rather than buying jobs for Michigan, we should be focusing on repealing punitive businesses taxes, removing cumbersome regulations, and making Michigan more attractive to business in a way that is sustainable and beneficial to the employer, the employee, and the state.

It’s time to elect officials who get the idea that wasting money is a bad thing. We need officials who are ready to do the hard work it will take to convince businesses to invest in Michigan. Officials who understand that the key to long-term, sustained economic growth lies in fixing the root of the problem: our tax code and business regulations.

People like Jay Riemersma for Congress, Pete Hoekstra for Governor, and Jon Bumstead for the 100th District State Representative.

These are the men I’m supporting this August 3rd. I hope you’ll get out and do the same. It’s time to fix the problem.


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3 Responses to “Questioning the Cost and Philosophy of the Stimulus Plan in Michigan”

  1. Elka Majeed Says:

    Kuipers believes in next gen batteries, Huizenga in the Film Industry. Good for them. But last time I checked, they were elected to represent ALL of us, not their favorite industry. This is the kind of crony capitalism that gets elected officials from both parties in trouble.
    +1


  2. Questioning the Cost and Philosophy of the Stimulus Plan in Michigan…

    I found your entry interesting do I’ve added a Trackback to it on my weblog :)…

  3. Great Hart Says:

    Great post, Tim. I hope people make the distinctions between those that are free-market proponents (Riemersma), and those that believe government should operate like a tax-payer funded venture capital firm.

    Kuipers believes in next gen batteries, Huizenga in the Film Industry. Good for them. But last time I checked, they were elected to represent ALL of us, not their favorite industry. This is the kind of crony capitalism that gets elected officials from both parties in trouble.

    Let all the asparagus farmers in Hart say it together, “Dude, where’s my stimulus?”


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