Red Clay Citizen

Anyone Surprised?

Is anyone at all surprised that the Department of Commerce appears to have inflated job creation numbers to paint the best light on the Apple incentives deal?

The N&O calls them out:

The $1 billion Apple data center headed for western North Carolina will create "more than 3,000 jobs in the regional economy."

At least, that's what the N.C. Department of Commerce said when the project was announced last month.

Records released by the agency, though, don't support that claim.

Apple won't create as many jobs as promised, the stimulus isn't creating as many jobs as promised, Dell's job creation numbers were overstated... anyone see a pattern here?

Maybe it's the fallacy that government can "create jobs."  Maybe it's government misleading the public to make themselves look better.  Either way all I know is tax dollars are being spent and the return on investment is not delivering as promised.  But that's nothing to be worried about, right?

The Nine Million Dollar Stimulus Tracker

The nice folks here at Red Clay want you to know that we are looking out for you. 

The fact that $787 billion of your money is being spent by 537 people who have probably never even met you really troubles us.  We think you know how to spend that money better then they do.  The only saving grace in this whole process is the fact that the 537 people were nice enough to give you a website that you can use to track the money, and how it is being spent...Red Clay already knows what the first item put up for tracking will be.  It will likely look like this:

$9.5 million Spent on Stimulus Tracking Web site

It is interesting that this happens at the exact moment when Red Clay is revamping its blog.  I am told that it will be state of the art, and capable of displaying multiple pie charts and bar graphs (and the occasional picture of Bev Pedue as money).  See, we here at Red Clay World HQ think that you deserve to know what is going on in your government and home state.  We do these things because we care.  And by the way, it is only costing us one intern, one Mountain Dew per day, and an Apple Computer (that is called job creation folks). 

Just here to help.

Another Incentives Failure

Dell, Google, now Inspiration Networks joins the list of unfulfilled incentive promises.

Thankfully, this one is South Carolina's problem, not ours.  But it is just one more example of the folly of the incentive game.

South Carolina pledged $26 million in incentives to Inspiration Networks, a non-profit religious broadcaster, to move its campus from Charlotte across the border a few miles to South Carolina.

Turns out, the network's owner is paying himself $1.5 million a year and is currently building a $4 million, 9,000 square foot lake-front mansion.  Not bad for running a non-profit.

Somehow, our state Department of Commerce dropped the ball and didn't ante up to pay to keep the network instate.

The Charlotte Observer has done an entire series on this entity and its failure to live up to the promises that gained it the incentives. 

Pork for Super Pier Ad

Here is the first glimpse of something I think you will be hearing a lot more about in the near future:

Money for Jets and Billion-Dollar Corporations, Yes. Teachers, No.

The Governor's office announced yesterday another corporate welfare handout to a multi-billion dollar corporation. This is your tax dollars being spent to bribe a manufacturing giant to "create jobs" here in NC. (I'll leave aside for now the economic truism that government can not "create" jobs)

So as the Gov. flies around the state on her tax-financed jet for her Taxapalooza tour to make the case that only massive tax  hikes can "save teachers," she also finds time to dole out even more of your tax money to bribe a company that enjoys higher profit margins than evil big oil villain Exxon Mobil.

According to their annual report, Baldor Electric Co. earned a profit margin of roughly 12.5% in 2008. But remember in 2008 how big oil companies such as Exxon Mobil were the targets of countless calls for a "windfall profits" tax because of their obscene profits? According to this CNN report, Exxon's profit margin in 2008 was roughly 9% - more than 3 percentage points lower than Baldor Electric.

So we have money to bribe corporations earning profit margins even more "obscene" than Exxon Mobil, but no money for teachers?

A Bigger Giveaway for Google and Apple?

Under the Dome is reporting that the NC Senate has proposed as part of their finance package increase the sales tax on electricity from its current rate of 3% to the sales tax rate of 6.75%.

Basically, a $1 billion tax increase on every household and business in North Carolina.

But this gets better...  As part of the incentive package to lure Google to the state, the General Assembly passed a law waiving the electricity sales tax for "data centers."  So if this proposal becomes law, the incentive package for Google and now Apple will increase dramatically.

If you'll recall, the estimated tax savings on electricity for Google was $89 million over 30 years.  This proposal would push that savings to roughly $200 million.  For Apple, the savings is considered even higher.

A potentially half-billion dollar giveaway to two multi-billion corporations while every household and business pays higher taxes.  Is this really the best way to foster economic growth?

Perdue Gives $1 Million to "Bank Terrorist"

While the NC House was busy raising your taxes by $780 million, Governor Bev Perdue was in Charlotte yesterday, giving a $1 million grant from the One North Carolina Fund to a group called the Neighborhood Assistance Corporation of America (NACA).

The NACA, while billing itself as "a nationwide nonprofit, community advocacy and home ownership organization" has been likened by many as a group similar to ACORN.  NACA's President Bruce Marks proudly calls himself a "bank terrorist" and has restorted to tactics such as protesting bank president's children at their schools.

Basically, NACA blackmails makes agreements with banks to offer low-interest loans to people who usually wouldn't qualify for loans.  His tactics have been profiled in the Wall Street Journal:

In the 1990s, Mr. Marks leaked details of a banker's divorce to the press and organized a protest at the school of another banker's child. He says he would use such tactics again. "We have to terrorize these bankers," Mr. Marks says.

Now, instead of bullying banks into making bad loans, he leads his group to bully banks into stopping foreclosures on people who can't pay their mortgages.

One has to question why Gov. Perdue would pay to locate a "bank terrorist" in Charlotte when the city is attempting to rebuild its banking industry since the loss of Wachovia.

These tactics smack of desperation and shows she will basically do anything to grab a headline to show she's doing something about the economy.  Unfortunately, this group is the wrong type of organization we should be bringing to our state. 

Last Hope for Chrysler Bondholders, Possibly the Bond Market

By 4 p.m. today, the U.S. Supreme Court must decide if it will hear a case for some Chrysler bondholders. This last effort by pensions in the state of Indiana may hold the future for the bond market as a whole. Historically, secured bondholders have had very safe investments because they are first in line to receive liquidated assets upon bankruptcy. This time, the US government ran the bankruptcy and over-turned 100 years of bankruptcy procedures. Hopefully, the Supreme Court will overrule the previous verdicts and uphold bankruptcy law. If not, then I'm afraid that the bond market will take a huge hit, since most of the market is run off speculation and anticipation.

If secured bondholders no longer are safe, what about the bondholders in U.S. securities? What about the FDIC? I would be willing to assert that if bankruptcy law is being overturned, what stops them from  overturning FDIC or declaring Treasury bonds to be worthless? I'm worried about the precedents that we are currently setting in America.

Cast Your Vote on the Incentive Issue

Fresh on the heels of the Legislature's vote to give Apple Computers large tax breaks to locate in North Carolina, Time Warner Cable's News 14 web site has a web poll up on the issue.

So all of you Red Clay Citizens out there can voice your opinion on taxpayer financed business incentives.

Cast your vote here.

Skybus Part Deux?

Remember Skybus?  The low-cost airline that was supposed to fly out of Greensboro's PTI airport supposedly lured to NC with million in incentives that ultimately failed miserably?

Well, it looks like the ex-CEO of Skybus is targeting a return to PTI with a new low-cost airline called JetAmerica.

No word yet on if an emergency meeting has been called at the NC Department of Commerce to again pour money down the drain.