Gov. Scott Walker’s Economic Development Record in Wisconsin Has Been a Scandal-Wracked Failure

Walker’s development record consists of giving taxpayer dollars to his friends—while Wisconsin’s economy has remained in the toilet.

David SirotaJuly 31, 2015

Scott Walker, Wisconsin's Republican governor-elect.

The con­tin­u­um of Amer­i­can pol­i­tics is not a straight line — it is more like a cir­cle. Trav­el far­ther out on the right and left, and ulti­mate­ly the sides bend to a com­mon posi­tion on an issue like tax­pay­er sub­si­dies for big busi­ness. To many pro­gres­sives, such expen­di­tures are give­aways to the already wealthy. To many con­ser­v­a­tives, they are a free-mar­ket-dis­tort­ing waste of tax­pay­er resources. Both sides also often crit­i­cize the sub­si­dies as an instru­ment of crony­ism and corruption.

As Walker’s record faces intensifying scrutiny during his presidential campaign, his free-market rhetoric may conflict with his embrace of market-distorting subsidies for private businesses.

In recent years, tax­pay­er sub­si­dies for cor­po­ra­tions have become a huge expense: The New York Times esti­mates that states and cities now spend more than $80 bil­lion a year on such so-called incen­tives.” For the most part, this gravy train has not faced much pres­sure to slow down. 

But now, as the 2016 pres­i­den­tial cam­paign inten­si­fies, both the Left and the Right will have a prime oppor­tu­ni­ty to spot­light its cri­tiques. That is because one of the most promi­nent Repub­li­can pres­i­den­tial can­di­dates, Wis­con­sin Gov. Scott Walk­er, has made such sub­si­dies a cen­tral part of his pub­lic pol­i­cy agen­da. Those sub­si­dies have pro­duced both high-pro­file scan­dals and lack­lus­ter eco­nom­ic results.

In 2011, Walk­er cre­at­ed the Wis­con­sin Eco­nom­ic Devel­op­ment Cor­po­ra­tion to give busi­ness­es tax­pay­er loans and grants. With­in a few years, state audi­tors pub­lished reports spot­light­ing con­cerns with WEDC’s admin­is­tra­tion and over­sight of its eco­nom­ic devel­op­ment pro­grams and its finan­cial man­age­ment.” Specif­i­cal­ly, audi­tors said WEDC did not require grant and loan recip­i­ents to sub­mit infor­ma­tion show­ing that con­trac­tu­al­ly required jobs were actu­al­ly cre­at­ed or retained” and also not­ed that mon­ey was hand­ed out in ways that did not con­sis­tent­ly com­ply” with state law.

Much of the cash flowed to Walker’s polit­i­cal allies. Accord­ing to a new report by the left-lean­ing One Wis­con­sin Insti­tute, 60 per­cent of the $1.14 bil­lion giv­en out by the WEDC went to firms con­nect­ed to Walker’s cam­paign con­trib­u­tors — that includes more than $2.1 mil­lion those donors have giv­en Walker’s elec­tion cam­paigns directly.

Had the tax­pay­er largesse sig­nif­i­cant­ly boost­ed Wisconsin’s econ­o­my, per­haps the finan­cial man­age­ment prob­lems and the alle­ga­tions of crony­ism could be down­played. But Wisconsin’s econ­o­my has suf­fered under Walk­er. As Bloomberg News report­ed, Wis­con­sin ranked 33rd among U.S. states in eco­nom­ic health improve­ment dur­ing Walker’s first term” with the state only a lit­tle more than half the 250,000 pri­vate-sec­tor jobs that Walk­er promised dur­ing that time.” 

Those results, though, have not deterred Walk­er: His most recent bud­get pro­posed to slash $300 mil­lion out of high­er edu­ca­tion fund­ing and spend rough­ly the same amount to help finance a new are­na for the Mil­wau­kee Bucks. One of the mem­bers of the investor group that owns the NBA team is the nation­al finance co-chair­man of Walker’s pres­i­den­tial cam­paign. Walk­er pushed the sub­si­dies despite a wide­ly cit­ed 2008 study by researchers at the Uni­ver­si­ty of Mary­land and Uni­ver­si­ty of Alber­ta, which found the over­whelm­ing pre­pon­der­ance of evi­dence” shows that no tan­gi­ble eco­nom­ic ben­e­fits are gen­er­at­ed by these heav­i­ly sub­si­dized pro­fes­sion­al sports facilities.”

As Walker’s record faces inten­si­fy­ing scruti­ny dur­ing his pres­i­den­tial cam­paign, his free-mar­ket rhetoric may con­flict with his embrace of mar­ket-dis­tort­ing sub­si­dies for pri­vate busi­ness­es. Par­tic­u­lar­ly in the Repub­li­can pri­ma­ry, con­ser­v­a­tive can­di­dates and groups will have an oppor­tu­ni­ty to spot­light Wis­con­sin as an illus­tra­tion of why they cru­sade against cor­po­rate welfare. 

Walk­er, of course, may try to shift the blame for Wisconsin’s trou­bles — but the facts, stats and poli­cies tell a clear and com­pelling sto­ry about why states can­not rely on sub­si­dies as a tool of eco­nom­ic growth.

David Siro­ta is an award­win­ning inves­tiga­tive jour­nal­ist and an In These Times senior edi­tor. He served as speech writer for Bernie Sanders’ 2020 cam­paign. Fol­low him on Twit­ter @davidsirota.
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