PLANT SUPPORTERS SAY THOUSANDS OF JOBS COMING
at least $53,000 plus benefits, according to Walker.
“It’s a very, very costly package, and I’m skeptical that the benefits justify such big incentives,” Bartik said. “This is well beyond the typical deal.”
The White House and Wisconsin officials said Foxconn’s investment would create at least 3,000 jobs initially, with up to 22,000 more coming indirectly in the future as suppliers spring up and other local businesses benefit from the new plant.
If Foxconn lives up to its investment commitment and receives the full $3 billion tax break, it will be the fourth-largest incentive deal in U.S. history, according to Greg Leroy, executive director of Good Jobs First, a nonpartisan nonprofit research group in Washington that tracks economic development subsidies.
“We can only describe this as a gift from Wisconsin taxpayers to Foxconn shareholders,” Leroy said. “This is a guaranteed loser for the state.”
Foxconn representatives had no immediate comment.
Luring a high-tech, growing manufacturer like Foxconn will deliver economic gains for the state, especially for once-thriving factory towns in Ryan’s district, like Racine and Kenosha. At the event Thursday in Milwaukee, Walker cheered the project as “transformational” for Wisconsin and acknowledged the state’s significant financial commitment.
“It’s bigger than anything we’ve done before,” Walker said of the incentives. “But if you want to play in the big leagues, it’s comparable with just about every other major financial incentive like this for a major project anywhere — not only in this country, but around the world.”
(The Nevada Legislature in 2014 approved a $1.25 billion package of tax breaks to lure Tesla’s Gigafactory to near Reno, by comparison.)
Foxconn executives approached the White House in the spring to talk about an array of policy issues, and began meeting regularly with Jared Kushner, Trump’s son-in-law and senior adviser, and Reed Cordish, a top technology and innovation adviser, according to a senior administration official who insisted on anonymity to discuss private talks.
The company identified several states — including Michigan, Ohio and Wisconsin — that would be potential sites for its facility, and Kushner and Cordish facilitated meetings between Foxconn executives and officials from those states. They hosted meetings at the White House between company executives and Walker and Gov. Rick Snyder of Michigan, the official said.
But White House officials played no role in negotiations between Foxconn and state officials, leaving it to the company to determine which state would be most favorable as a location.
Walker first contacted Ryan in June about the possibility of luring Foxconn to Wisconsin, and over the next few weeks, they began negotiating with Terry Gou, Foxconn’s chairman, and executives to encourage them to choose the area, according to an aide to Ryan.
Foxconn executives traveled to Washington later in the month to discuss the potential move to Wisconsin, and a few weeks later, Walker and Ryan, along with state elected officials, had dinner with Foxconn executives to work out details.
Aides to Ryan also lobbied state officials including Robin Vos, the speaker of the Wisconsin assembly, to support an incentive package for Foxconn, and met with executives to talk about federal workforce development and training programs that would be available if they made the move, a topic that Cordish had also emphasized in his meetings with Gou.
According to a presentation by the state, the incentive package consists of $1.5 billion in state income tax credits for job creation, $1.35 billion in state income tax breaks for capital investment, and as much as $150 million for a sales tax exemption. A 2016 study by Ernst & Young found that local subsidies are a key factor when companies decide where to locate new capital investments.
A special session of the Wisconsin legislature is planned to approve the incentive package, which is projected to cost $200 million to $250 million per year. The tax benefits would be contingent on Foxconn’s actual hiring and investment.
Still, the package hardly conforms to the kind of fiscal conservatism that Walker and Ryan have long espoused.
“Obviously, there is a strong desire for the state to land a company as big as Foxconn,” said Jared Walczak, a senior policy analyst at the conservative Tax Foundation in Washington. “But they’re also forgoing the opportunity to make a more competitive landscape for other businesses.”
Walker has been a lightning rod for Democrats after successfully taking on public employee unions in bitter state budget battles and backing cuts in government spending, and liberal experts were quick to criticize him Thursday for providing Foxconn with billions in aid.
“It doesn’t fit with a governor that said we can’t spend much money,” said Martin Baily, a senior fellow at the Brookings Institution and a member of President Bill Clinton’s Council of Economic Advisers. “This is a guy who decimated the University of Wisconsin by budget cuts. On the one hand, he’s saying we can spend billions to pay Foxconn, but what about our own prized educational institution?”
Baily added, “It certainly could be a boost to the economy, but it’s just a big, big price to pay.”