How Obama learned to love picking winners & losers
Winningreen Discourse A062411
How Obama learned to love picking winners and losers - 2nd in a series
Crony capitalism is an Illinois specialty
By Tom Randall
Date: June 24, 2011
Sears, Roebuck and Co., alias Sears Holding Co., we wrote just a short while ago, is threatening to leave its Prairie Stone campus northwest of Chicago if its multitudinous tax breaks aren’t extended. This is the campus they vowed to never leave when the breaks were first granted, years ago — just as they vowed never to leave Sears Tower, in Chicago, when they got tax breaks to build North America’s tallest building. It’s now known as Willis Tower.
Now the Blanche DuBois of retailing, its once-50-percent market share of the major appliance business long gone, its bond-rating lower than a snail’s belly, is planning to leave the state of its birth and long climb to now-faded glory. Latest rumor has them going to the Washington, DC area. Seems fitting enough.
But that is just an example of what happens all the time here in Byzantium, where Barack Obama learned whatever he learned about governing.
The most recent, and bizarre picking of favorites is the freshly-minted deal between Governor Slack Jaw and Motorola Mobility. The former cell phone giant is now fading even faster than Sears due to its failure to keep up with the likes of Nokia, then Research in Motion, now the agile Apple. But Slack Jaw found Motorola’s star to be sufficiently bright to dole out $100 million in tax breaks to keep the company in Illinois. Slack Jaw said that, according to the deal, Motorola agreed to keep 3000 jobs in the state.
But Wait! The company the company has 3,290 employees here now. That means they get the tax breaks for potentially cutting 290 jobs.
But wait, again! The written contract requires Motorola to maintain only 2,500 workers in the state. They can cut 790 employees — nearly one-fourth of their current work forces and still be subsidized with taxpayer dollars.
Now that companies see Governor Slack Jaw bargaining to keep jobs in the state, the Chicago Board of Options Exchange, parent of the Board of Trade, is also threatening to leave Illinois because of the steep increase of business tax rate (now 9.5%).
Illinois has previously given other companies tax breaks which are set to expire between 2012 and 2014 including $34.7 million for J.P. Morgan Chase and $7.2 million for Deere and Company. A total of 107 companies whose tax breaks run out in the next few years such as Abbott Labs, Wells Fargo and U.S. Cellular will be lining up at the door of Governor Slack Jaw for a new deal to offset one of the highest corporate tax rates in the industrialized world. (Tax Foundation)
Comment: It not surprising that, being from Illinois, Obama would nationalize General Motors, rather than allowing them to declare bankruptcy and shed their devastating union contracts.
Comment: Crippling GM’s toughest, biggest competitor, Toyota, with false charges of sticking accelerators and forcing the largest recall in history was, in typical Illinois logic of course, necessary to protect the People’s investment in GM.
Comment: Of course, by the Byzantine logic that can only be borne in Illinois politics, it also makes sense that Obama would invest the People’s money to subsidize GM’s disastrous Volt plug-in hybrid.
Contact: Tom Randall