Archive for the 'Corporate Welfare' Category

Obamacare decision throws constitutional shadow on federal tort reform

Posted by on Oct 18 2013 | Constitutional History, Constitutional Law, Constitutional Theory, Corporate Welfare, defunding Obamacare, federalism, House Republicans, Natelson Rob', obamacare, Originalism, Rob Natelson, U.S. Constitution

Just to show you that hypocrisy is alive and well in Washington, D.C. (as if you didn’t know), Title V of the Republican bill to “repeal and replace Obamacare” contains some of the same constitutional problems that led 27 states to challenge Obamacare. Under Title V, Congress would partially assume command of state court procedures—including how they conduct jury trials and what evidence is introduced.

Not surprisingly, the bill’s purported “justification” is the much-abused Commerce Power. However, it likely runs afoul of those parts of Chief Justice Roberts’ decision in which he held that (1) Congress could not invade certain core state powers and (2) although the individual insurance mandate was valid as a tax, it exceeded the Commerce Power.

This week I wrote an essay on the bill’s constitutional problems, which I’ve reproduced below, and in PDF form here.

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VIDEO: Ronald Reagan and Ending Corporate Welfare

Posted by on Sep 03 2013 | Corporate Welfare, Idiot Box (TV Show), Ronald Reagan

Just in case you missed my TV show last Friday before the big 3-day weekend, below are the two segments.

First I chatted with author and lawyer Perry Pendley from Mountain States Legal Foundation about his new book about Ronald Reagan and environmentalism.

Then I sat down with Lisa Ritland from Colorado Public Interest Research Group (COPIRG) to discuss one issue where we both agree 100%: ending corporate welfare.

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Independence Institute Writers In The News

Posted by on Jun 25 2012 | Corporate Welfare, criminal justice, Criminal Law, Drug Policy, energy, Health Care, overcriminalization, PPC

Plea bargains, corporate welfare, twinkie taxes and fracking are all topics of recently published works by Independence Institute writers.

In the Colorado Springs Gazette, frequent Independence Institute guest author Ari Armstrong examines the consequences to the right of a jury trial from having over 97 percent of Colorado’s criminal convictions be from plea bargains.  Writes Ari:

Colorado criminal statistics for the years 2006 through 2011 show that Colorado prosecutors rely on plea bargains to reach convictions an overwhelming 97.6 percent of the time, according to documents obtained by the Independence Institute through a Colorado Open Records Act request.

According to those documents, only 4,241 felony convictions resulted from a jury trial, or 2.4 percent of the total of 175,015 felony convictions. A total of 6,101 felony cases went to trial, so the conviction rate at trial was 70 percent.

Read the whole thing here.

In the Denver Post, senior fellow Fred Holden and research director Dave Kopel explain that Gaylord style corporate welfare violates the Colorado Constitution.  Fred and Dave ask:

By what authority can the state government take tax money out of your pocket and give it away to a private corporation? The answer is that corporate welfare schemes, such as so-called “public-private partnerships,” flagrantly violate the Colorado Constitution.

Check it out here.

Also in the Denver Post, Health Care Policy Center Director Linda Gorman makes the case that giving government more power to tax and control “bad” food (think twinkie tax) is offensive to liberty.  As Linda notes:

Obesity can impose costs on others, and the obvious solution is to allow people who provide services to charge the obese more when they are more costly to serve.

Full piece is here.

In the current Denver Business Journal, research associate Donovan Schafer reminds us to keep the relative risk of hydraulic fracturing (fracking) chemicals, Benzyne in particular, in perspective, finding that:

While Benzyne and other air pollutants shouldn’t be ignored when discussing oil and gas development. it’s important for the public to recognize the estimates and limits set by the EPA represent very small-though perhaps not insignificant-risks, and that these risks are comparable to those associated with automobile emissions, urban living and industrial activities in general.

The piece is behind the DBJ’s subscription wall, but can be read on the Independence Institute energy blog here.

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Education Reform and FREE Refrigerators!

Posted by on Jun 07 2012 | Corporate Welfare, education, Government Largess, obama, PPC

If you wanted an inside perspective on the open negotiations between the Douglas County Board of Education and their teachers union, take a look at Education Policy analyst Ben DeGrow’s article for Public Sector Inc, Challenging Union Power and Privilege: From Wisconsin to Colorado. Ben makes note that reforms are happening down in Douglas County and may help spread the message of parent and student empowerment over the entrenched special interests of teachers unions.

Have you ever heard of refrigerator welfare? Neither did I until I read this investigative piece by Todd Shepherd. Turns out, some of the stimulus funds used to “weatherize” homes and make them more “green” were used to buy home appliances for Coloradans. Todd writes,

In Colorado, stimulus funds helped more than 4,100 households get new refrigerators, at no cost to the recipient. Stimulus funds also replaced upwards of 3,900 water heaters, again, with no cost to the recipient.

How come I didn’t get one?!

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Just Missed the Big Gaylord Corporate Welfare Queen

Posted by on Jun 04 2012 | Corporate Welfare, Economics, PPC

Our Fiscal Policy Center director Penn Pfiffner was quoted the other day in this Denver Post piece on Aurora’s Gaylord Hotel debacle. To get you up to speed, the city of Aurora along with the Colorado Economic Central Planning Bureaucratic Nightmare Keynesian Association (CECPBNKA) decided to grant Gaylord Entertainment nearly $400 million in combined subsidies to come build a monstrosity of a hotel and entertainment center near DIA. What were we going to get in return for all that corporate welfare? JOBS! Strangely enough, it never occurred to the central planners to consider where the hundreds of millions in subsidies were going to come from. A moments reflection is all it takes to realize that neither unicorns nor magic tooth fairies would deliver the subsidies to Gaylord. The money in fact, would ultimately come from the productive class – the private sector. You know, that part of society that actually creates jobs. Anyways, our Penn Pfiffner weighed in on the big corporate welfare gone bad scheme in the Post’s article. I enjoyed what Penn had to say very much, but perhaps my favorite part of the article – and certainly the most illuminating – is this juicy quote,

Gaylord has said that without the subsidies, the project didn’t make financial sense and couldn’t be undertaken.

And that folks, is all you need to know. The project was inefficient, uneconomical, and a massive waste of resources from the start. Plain and simple: it would have destroyed wealth, not created it. And just like Penn said, we did dodge a bullet. A very large $400 million bullet.

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By All Means Hick, Strike Away

Posted by on Apr 06 2012 | Corporate Welfare, Economics, Economy, PPC

I read in the Post this morning that Governor Hickenlooper seems to be telegraphing his disapproval and potential veto of SB 124. SB 124 is a GOP sponsored bill that would expand Colorado’s tourism projects and allow for tax-increment financing (TIF) to fund all 6 pet projects at once. Not exactly the most free market bill ever dreamed up. In fact, when catch phrases like TIF, the Economic Development Commission, and tax incentives are describing the same bill, you can bet it’s more about central planning than the market.  It’s a strange scenario where I publically implore Hick to do the free market thing and strike down this bill that will force taxpayers to subsidize pet projects no one else seems to be willing to pay for with their own money. No, central planning doesn’t work no matter which party is pushing it.

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Independence Institute Writers In The News

Posted by on Apr 03 2012 | Constitutional Law, Corporate Welfare, energy, Environment, guns, Health Care, health control law, obamacare, PPC, Self-Defense

Stand your ground laws, water rights, health care cost-shifting, the folly of wind energy tax credits and the Medicaid mandates in Obamacare are all topics of recently published opinion works by Independence Institute writers.

In the Washington Times, research director Dave Kopel debunks some of the myths that have sprung up around ‘stand your ground’ laws in the wake of the Trayvon Martin shooting in Florida. Writes Dave: “The assertion that Florida law allows shooting whenever someone believes it to be necessary is a flat-out lie.”

Read the whole thing here.

In the Greeley Tribune, senior fellow in water policy Craig Green explains how a couple of proposed Colorado ballot initiatives “would confiscate the water rights of cities, water districts, farmers, and ranchers.”

Check it out here.

In the Boulder Daily Camera, health care research associate and blogger Brian Schwartz points out the dishonest “cost-shifting” argument made by proponents of government run health care such as the Colorado Trust. Writes Brian: “Don’t be fooled. Mandatory insurance isn’t about personal responsibility or reducing cost-shifting. It’s about using politically-controlled health plans to advance political control of your medical care.”

Whole thing here.

In the Pueblo Chieftain, energy policy center director Amy Oliver and research associate Michael Sandoval make the case against the wind energy tax credit: “We disagree with the majority and wonder why Americans should subsidize Colorado’s green fantasy and a resource that is neither practical nor economically viable.”

Read it all here.

At Health Policy Solutions, constitutional scholar Rob Natelson explains that the Medicaid mandates in Obamacare are unconstitutional, writing: “What few people know is that the Medicaid mandates are, if anything, even more constitutionally dubious than the individual mandate. That’s why Colorado’s Independence Institute has taken the unusual step of filing a brief urging the court to overturn them.”

Whole thing here.

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Why Not Make All Of Colorado An Enerprise Zone?

Posted by on Feb 03 2012 | Corporate Welfare, Economy, Government Largess, PPC

Today the Denver Post editorialized favorably on a legislative proposal to modestly rein in run-away tax incentives (read corporate welfare) in Colorado’s “enterprise zones.”

A better policy change might just be to get rid of enterprise zones altogether. Much to his credit, my former state representative Joel Judd (A Democrat from House District 4 in northwest Denver) tried to do just that a couple years ago and met with bi-partisan opposition. Judd was quoted in a recent Post series on enterprise zones: “In effect, it’s the state general fund paying for a local developer’s curbs and gutters, and that’s just not the intent.”

The following op-ed, written in 2010 by former Independence Institute intern Jacob Zax, makes the case for a free-enterprise friendly tax and regulatory environment throughout the state, rather than in specially designated “zones.”

Every year, Colorado extends around sixty million dollars in targeted tax credits to businesses operating in specially designated regions called enterprise zones. Politicians, enabled by business interests, encourage enterprise zones as a way to promote economic growth by encouraging businesses to locate in underdeveloped areas and hire more workers. Although targeted enterprise zones might have been worth trying, they are not working well in Colorado. Statistical analysis demonstrates that enterprise zones have a minimal effect on employment, businesses, and the larger economy, and instead mostly benefit private property owners.

So why don’t lawmakers pursue equitable policies to help make the entire state of Colorado, rather than “specially designated regions,” an enterprise zone?

A 2005 report by the state of Minnesota that reviewed both the economic theory and empirical evidence on enterprise zones states, “Most of the more sophisticated studies (conducted on the subject) show no increases in employment or per capita income.”

How is it possible that considerable tax credits designed to encourage hiring are so ineffective?

The surprisingly trivial influence of enterprise zones on employment is the result of tax credits that reward the use of capital. Businesses in the special zones get tax credits for hiring workers; but they often use that money to buy more machinery in order to replace other workers. The net result is a negligible increase in employment. In the United Kingdom, the first country to implement enterprise zones and the model for current systems, a government-commissioned study published in 1987 determined that the 300 million pounds spent on enterprise zones from 1981-1986 produced an embarrassing net total of just 13,000 jobs. A 1989 Congressional Quarterly report concluded that each new job cost the United Kingdom 250,000 dollars.

Furthermore, the few employees that are hired because of enterprise zone credits don’t necessarily receive higher wages. Businesses profit from the subsidies regardless of the new worker’s salaries; because of the competitive nature of the labor market, prospective employees will always end up working for whatever is the normal wage rate that is paid outside the enterprise zone.

But if employees and the public aren’t profiting from enterprise zones who is? Surprisingly, it’s not businesses. It’s private land owners.

When an enterprise zone is established, property values within the area skyrocket. Previously unappealing lots suddenly attract serious interest because businesses are willing to pay a premium to relocate into the area and take advantage of the tax credits. Furthermore, because the benefits are solely predicated on location, all companies, including those already doing business in Colorado, are eligible and, therefore, interested in relocating into the zone.

The resulting demand for limited space creates the ultimate sellers’ market as businesses bid against one another for space. In the end, businesses are willing to pay so much to move into the region that the tax credits they eventually receive barely offset the initial cost of procuring the property.

In other words, businesses are not the ultimate beneficiaries of enterprise zones. By providing region-limited tax credits, the government is effectively giving a boost to some private landowners to the detriment of other landowners.

In a July speech at the Rocky Mountain soda company, Denver mayor and democratic gubernatorial candidate John Hickenlooper stated that he was “absolutely interested” in strengthening and expanding the use of enterprise zones in Colorado.

In his speech Mr. Hickenlooper also said on the issue of enterprise zones: “This is the 21st century, the key to all of these issues is how you measure them.”

But by almost every statistical and empirical measure, enterprise zones have failed. In the 2010 Colorado legislative session, State Representative Joel Judd (D, Denver) proposed a bill that would have eliminated enterprise zones in Colorado. The measure was largely condemned by politicians of both parties, including Don Marostica, the state’s economic development director, who opposed the measure by arguing that subsidies bring businesses to Colorado.

While that is probably true, it ignores the point that Coloradans do not profit from the relocation of those businesses. There are no long term benefits from the slight increase in jobs, and businesses fail to realize greater profits which might strengthen to the larger economy.

So should the government be funneling close to 60 million dollars a year in tax credits based solely on geography towards private land owners?

Considering the current budget deficit, the Colorado Legislature cannot afford to waste more money either maintaining or expanding enterprise zones, but rather should concentrate on fostering a business-friendly tax and regulatory environment throughout the state.

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Another Attempt at Hollywood Handouts

Posted by on Jan 30 2012 | Corporate Welfare, Economics, Government Largess, PPC

Have no fear Hollywood! Your favorite Colorado legislator Tom Massey is back again with another movie-making corporate welfare bill. You may remember him from a gem of a bill last session that would have implemented a 10 cent movie ticket tax at your local theater in order to subsidize movie production in Colorado. Thankfully it failed, even after the tax was re-written to be a “voluntary” donation. The Reason Foundation’s Harris Kenny wrote an op-ed for us outlining the bad economics regarding movie production subsidies. Yes, subsidies for Hollywood might attract some movie-making in Colorado. However, that is not the full story. To see the big picture, you have to ask, “at what cost?” Harris shows that the cost of handouts are much larger than any benefit movie production might bring.

I learned this morning in the Chieftan that despite his lack of success in subsidizing Hollywood movie producers at rates higher than New Mexico and Utah for the past 7 years, he is determined to shake some more pennies from Colorado taxpayers before he gives his final farewell. Details of what Rep. Massey is cooking up are uncertain, but we do know that he’s been working with Governor Hickenlooper on his master plan. With Hick’s blessing, there’s no telling what corporate welfare scheme they’ll be able to sell to the public.

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Bad Loan Sharking + Bad Financial Investor = Corporate Welfare

Posted by on Jan 06 2012 | Corporate Welfare, Government Largess, PPC, Taxes

We’ve all heard about the Solyndra scandal, but have you heard about the Lowenstein Project? Wait, you didn’t know you had the Lowenstein “investment” in your portfolio? Didn’t know you made a loan that was never repaid? Me neither.

In an op-ed the Reason Foundation’s Harris Kenny wrote for us that landed on the pages of the Denver Post, we learn about Colorado’s version of corporate welfare gone crazy. (side note: Abound Solar will be next). Harris describes the filthy process that starts with an idea and ends with taxpayers getting hosed for millions of dollars. I find it odd that politicians discover these great “investment opportunities” and can only come up with other people’s money to use as capital…

Here’s the takeaway:

Government-issued loans are often based on insider favoritism and politics. They rarely fulfill their supposed purpose of the public good. The companies that receive government welfare are given an unfair advantage over those that don’t. Corporate welfare encourages companies to be good at politics, instead of good at business.

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