by Bruce Walker
Gov. Gretchen Whitmer has signed into law a $1 billion bipartisan economic development package.
The Strategic Outreach and Attraction Reserve (SOAR) package aims to support small businesses and attract businesses to the state, and includes:
- Establishment of an economic development fund.
- Funding programs “to make our economy more adaptable to the rapid pace of technological change, supporting small businesses, and creating or retaining good-paying jobs.
- Creation of a financing mechanism for both programs.
- Appropriates $407 million to fund small businesses affected by COVID-19.
“Governor Whitmer and the Michigan legislature just decided to pour a billion dollars down a corporate welfare rathole rather than use it for things that actually matter to the people of Michigan,” John Mozena, president of the Center for Economic Accountability, told The Center Square. “A billion dollars could fill a lot of potholes, but instead it’s going right back out the door to political campaign donors and powerful special interests.”
Mozena said the only true beneficiaries of economic packages such as SOAR are politicians and bureaucrats.
“There’s a reason that states where a governor is running for re-election is twice as likely as other states to suddenly start making a bunch of big subsidy deals, and why companies that make political donations to elected officials are four times more likely to get subsidies than those that don’t,” Mozena said.
Noting claims for job creation made in the past by the governor and the Michigan Economic Development Corporation were exaggerated, Mozena stated businesses pondering relocating or staying in the state are more interested in infrastructure than government subsidies.
“Michigan would literally have been doing a better job of economic development if that money had gone to the Michigan Department of Transportation rather than the Michigan Economic Development Corporation. That’s especially true because the Michigan Department of Transportation at least fixes roads when they say they are, while the MEDC’s ‘job creation’ numbers have been shown over and over again to be pure fantasy,” Mozena said.
“Michigan is a great place to live, work, and raise a family. But our business climate is still holding us back from what we can be. Small businesses are struggling to fully reopen, large employers are picking other states for long-term investments, and far too many local workers are still on the sidelines. We need to step in and provide a shot in the arm that will lead to new opportunities for everyone. That is exactly what these bills do,” Wentworth said.
“With this plan, we are giving small businesses a way to create new jobs in every corner of the state,” he continued. “We are helping large employers keep more opportunities here at home where they belong. And we are providing certainty, stability and opportunity to people worried about making ends meet when they sit down to pay their monthly bills. Those are the kind of results hard-working families need to see from their state government.”
Mozena disgreed.
“Fundamentally, this money is going to be wasted. That’s because subsidies change corporate site selection decisions like rebates change car-buying decisions. You’re choosing the car or truck that works best for you, that has the options you want, that you think you’ll be happiest with for the next three or five years or whatever. And maybe there’s two or three potential cars that are so close in size, features, cost and everything else to each other that one dealer offering a rebate makes the decision for you, but it’s much more likely that you’re going to try to use that rebate to get a better deal out of the dealer that has the car you’re planning on buying regardless. Very, very few companies actually decide where to go based on subsidies – and those that do tend to end up regretting it, because now they’re not in the best place for their business.”
Present at the bill signing were House Speaker Jason Wentworth, R-Farwell, and Senate Majority Leader Mike Shirkey, R-Clarklake.
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Bruce Walker is a regional editor at The Center Square. He previously worked as editor at the Mackinac Center for Public Policy’s MichiganScience magazine and The Heartland Institute’s InfoTech & Telecom News.
Photo “Gretchen Whitmer” by Office of the Governor, State of Michigan. CC-BY-SA-3.0. Background Photo “Plymouth Road” by Dwight Burdette. CC BY 3.0.
