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Stray Thoughts

There’s too little talk about corporate welfare

10/29/2019

Here we go again.

Many politicians and their followers are warning of the dangers of the United States drifting into socialism.

If you listen to those sounding the alarm, the culprits behind this trend are presidential candidates Bernie Sanders and Elizabeth Warren, the Democratic Party in general, and some of the party’s young lighting rods, notably Rep. Alexandria Ocasio-Cortez of New York.

I’m not here to defend Bernie, Elizabeth or AOC. Put me down as “highly skeptical” that a majority of us, or even a majority in Congress, want to provide everyone with government health insurance, want taxpayers to wipe out everyone’s student loan debts, or want everyone to receive a free college education.

But I am troubled that several projects in Iowa have advocates who think the projects should receive millions of dollars in government handouts.

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These projects would all amount to the “haves” getting government help at a time when political leaders in Des Moines and Washington, D.C., are quietly looking for ways to reduce what government spends on the “have nots.”

Don’t be surprised if government officials push once again for more restrictions on who qualifies for food stamps and for how long benefits are paid. Don’t be shocked when some in Washington talk about scaling back Social Security or Medicare. And don’t be surprised if there’s another run at further reducing the safety net we call welfare.

But government officials in Des Moines have shown little or no interest in reigning in another form of welfare — the kind that goes to successful corporations, without regard for the unfairness it creates for their competitors.

Three projects in the news illustrate this:

DINE-IN MOVIE THEATER. Developer Justin Mandelbaum is at work on a 40-story tower with 209 luxury apartments and a hotel, along with a parking ramp and an adjoining 5-story commercial building. The $200 million project is in Des Moines’ Court Avenue district, a popular entertainment area with restaurants, bars and apartments.

Construction already is underway, with the elevator shaft for the parking garage rising several stories. Two weeks ago, Mandelbaum received $800,000 in tax credits from the Iowa Economic Development Authority to lure a Texas dine-in movie theater chain, Alamo Drafthouse Cinema, to lease space in the project.

Mandelbaum said the tax credits are necessary to make the project feasible — although lenders must think the project already makes sense, since the site is filled with construction workers and their equipment.

DISTRIBUTION CENTER. Community leaders in the Des Moines area are a-buzz over Project Bluejay, a sprawling five-story, $250 million distribution center that could employ 1,120 people. The owner is still a secret, but speculation is rampant that it will be an Amazon “fulfillment center” where the retailing behemoth would package and ship customer orders.

Construction has begun on the site northeast of Des Moines in Bondurant. No economic development incentives have been requested yet, but that’s expected soon.

Officials involved in similar Amazon projects in other states told the Des Moines Register government assistance totaled $78 million for a center near St. Louis and $45 million for one in Alabama.

Amazon had profits last year of $11 billion, and for a second consecutive year, the company paid zero in federal income taxes. Jeff Bezos, its founder and chairman, is the world’s richest man, with $110 billion in his own sock drawer.

Based on Amazon’s 2018 profit, that $78 million in government assistance for the St. Louis project is the equivalent of an Iowa worker who makes $50,000 a year receiving a $350 incentive from the government. So, government assistance should not be a deal-breaker for Amazon.

With financial resources like the company has, why should Iowa taxpayers be expected to help underwrite the Bondurant project? Presumably, the company was attracted to the site by the proximity of Interstate Highway 80 a few miles south and by dependable electricity, water and labor.

Iowa State University economist Dave Swenson told the Register, “The facility wouldn’t be locating here unless it was an ideal location from a business point of view. There’s not a justification for subsidies.”

Justification or not, count on the Iowa Economic Development Authority to provide Amazon with plenty of corporate welfare.

PROFESSIONAL SOCCER STADIUM. Businessman Kyle Krause, whose family owns the Kum & Go convenience store chain, has proposed that a $60 million soccer stadium be built at the southwestern edge of downtown Des Moines to be the home for a new United Soccer League professional team.

Krause now owns the Des Moines Menace, a lower level minor league soccer team that plays at Valley High School’s stadium in West Des Moines. But he wants the city of Des Moines, Polk County government and the Des Moines public schools to shoulder a big portion of the cost of building the 6,000-seat stadium.

Krause said he would “contribute” to the construction cost. He also would own the new team and would receive the revenue from ticket and concession sales and from the rental of 18 “skybox” suites. The stadium itself would be owned and maintained by a sports authority made up of the local government entities.

Which leads, once again, to the question taxpayers should ask: “Why?”

Few taxpayers are clamoring for government assistance for a soccer stadium or for another dine-in movie theater. The clamor you hear is for better streets and for sewers that don’t flood people’s basements.

One of these days, perhaps the calls for fewer government handouts for businesses will become as loud and intense as the calls for spending less on food stamps, welfare or “socialism.”

But there I go again. ♦

Randy Evans can be reached at DMRevans2810@gmail.com

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