Even in a small-to-medium sized town like Janesville, city leaders have no problem handing a private firm a $315,000 gift masquerading as a forgivable loan predicated only on the borrowers ability to keep a certain number of employees. Never mind the thought that if the business is unable to move enough product or services, it will not only be unable to fulfill the employment contingency of the loan, it may also be financially unable to pay it back anyways.
It's difficult to understand public officials claim that they’ve created jobs by handing out tax payer dollars without any repayment and rubber stamp it just for the asking, when they would have quickly approved a new tax on established businesses to create a business improvement district(BID). It sets up a bad example for everyone down the line. $315,000 may not sound like a fortune in today’s shockless billion dollar deals, but it doesn’t just fall from the sky either.
Sure, they'll point to the obvious advantages of 21 jobs as the collateral and the potential of increased property values, but just try to pull that in the loan office of a commercial bank.
But by rubber stamping this deal, the city council identified the city's competitive market disadvantage and placed a value on it of $15,000 per employee. This also sends a bad signal in my opinion.
I find myself more and more in agreement with the idea that if government (tax payers) is the only entity that seems willing to take the risk whether it involves $300,000 or 700 billion dollars, the taxpayers should be given some vested ownership or lien rights in the enterprise. Private lenders and investors demand it when they “create jobs” – and so should the taxpayers.
Note: This posting is not a criticism of the business or individuals involved in the Janesville transactions. It's about the broken system and the wayward policies.
Masters of The Universe
When Hank Paulson took over as Secretary of the Treasury he listed one of his priorities as to prevent "creeping regulatory expansion." During Tuesday's Senate hearings on the Wall Street bail-out, Paulson, who was also the former CEO of Goldman Sachs said "I was shocked at how inadequate current regulation was."
A), is that before or after you fattened up over $500 million playing the financial markets?
or B), knowing now what you know, are you kicking yourself over the meager $500 million jackpot?
Malcontents like myself should be ashamed of criticizing the wealth successfully confiscated by those responsible for crashing the capital markets. Much better to bash the hardworking assembly-line workers over at the GM plant for their obscene wages.
5 comments:
Great point, and thanks for the info from SoWisc
Where are the free market bootstraps to pull on when Wall Street needs a lift? I say let Wall Street fend for themselves and let the free market cards fall where they may. If a recession follows, start with a bottom-up $700 billion jobs program.
While I disagree with you on most subjects, I believe you make a very accurate observation. It seems like everyone is against government handouts except when it comes getting one themselves.
As a taxpayer, I support the use of grants, earmarks, welfare, TIF districts and handouts to communities and those in genuine need or to entrepreneurs who have everything else except the capital for start-up.
But I have a difficult time giving wealthy companies and organizations or deep-pocketed individuals a taxpayer hand-out as an incentive to invest in their OWN business. Municipalities and politicians have opened a Pandora's box by offering taxpayer cash incentives to compete for jobs. It should be as wrong as bribing a congressman or a policeman.
I agree in principal but unfortunately states and local communities are in constant competition with each other. Right or wrong, Wisconsin is at a disadvantage because of our high tax environment.
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