By FITSNews || As the taxpayer-funded incentives tab for Chicago-based aircraft manufacturer Boeing continues climbing far beyond original legislative estimates, the debate over whether this economic development deal was a good one for taxpayers is raging hotter than ever.
A recent analysis by the Charleston Post and Courier – which had been praising the deal in fawning terms – recently found that the value of the total incentive package could top $900 million. That’s more than twice what Gov. Mark Sanford and state lawmakers said the deal would cost – and it’s also well above the $750 million Boeing is investing in the construction of its 787 Dreamliner assembly facility in North Charleston.
Worse still are reports that Sen. Hugh Leatherman – who is widely credited for finalizing the Boeing deal – remains oblivious as to exactly how much of your money he spent to land the aircraft manufacturer.
“I’m not sure I’ve ever seen a number that’s been compiled,” Leatherman told the Post and Courier last month.
For more information on all of that, click here (and props to Post and Courier reporters David Slade and Katy Stech for their excellent work).
Now, onto the real question: Are we going to get our money’s worth out of this deal or not?
Obviously, we supported the initial Boeing incentives plan (you know, back when it was half what it is today), although the day after Boeing made its big announcement, we published a story urging state leaders to keep their eyes on the ball as it relates to job creation in South Carolina.
It’s nice to land one big manufacturing project every fifteen years, but that’s not enough. South Carolina needs to focus on small businesses – which are responsible for creating 95% of jobs in this state.
That means enacting long-overdue reforms to our tax code, legal and regulatory climate.
Anyway, we’ve reported – with confidence – that the 3,800 direct jobs Boeing is bringing to South Carolina will be accompanied by thousands of additional spin-off jobs. But how many?
Welcome to the heart of this debate – because the answer to that question will tell us whether this winds up being a good investment for South Carolina taxpayers or not.
Supporters of the massive incentives deal say that Boeing is going to provide the state with an unprecedented “multiplier effect,” perhaps bringing as many as 35,000 -40,000 jobs to the state (on top of the 3,800 direct jobs). The logic is that Boeing jobs will be high-paying positions, which means more disposable income that will be spent in South Carolina.
Supporters of the deal also point out that Boeing’s network of suppliers will “dwarf” that of BMW’s in the upstate.
Higher incomes + more suppliers = more spin-off jobs.
In fact Boeing jobs already rank very favorably in terms of the number of spin-off jobs they create. But is such a high multiplier of spin-off jobs reasonable to assume?
Most of the “multiplier” estimates we heard in the days leading up to the deal’s announcement were much lower, with total employment (including the 3,800 direct positions) ranging between 15,000 – 19,000 jobs.
So who’s right?
And who’s wrong?
Does it really matter?
After all … you’ll be picking up the tab regardless …
By Katherine Jenerette February 24, 2010 at 11:43 am
PLEASE REPEAT OVER and OVER and OVER CHILDREN:
“South Carolina needs to focus on small businesses – which are responsible for creating 95% of jobs in this state. That means enacting long-overdue reforms to our tax code, legal and regulatory climate.”
By No Name February 24, 2010 at 12:11 pm
Politicians in the State that quote the famous ” I want to be like Campbell and BMW” show a fundemental stupidity of the process and the innovation.
What Campbell did…. to his great credit……and did against the mighty forces of the Textile and Apparel Oligarchs who threw everything but the kitchen sink to stop the deal from raising wages and expectations in the Upstate….is not replicatable today because of a force called competition.
Other States…recognizing what Campbell accomplished now replicate every incentive ploy used or since invented to buy these jobs into a State.
The propsective companies all play the States against each other to get the best deal and many times the investment does not pan out.
For examples of this risk…..Google the North Carolina Dell deal…an example of a County in North Carolina( Forsyth) going to extroidinary lengths to land the “gold mine” of a Dell factory…a gold mine since closed and all returnes have been flushed.
So the fact that this sweet heart deal is even being exposed at this time is an example of how Fits News has legitimized the whistle blowing role of the net.
The Nerve can only be if Fits had not proven that people wanted to know what is really going on.
Two related points….although Ken Ard has retreated from his stump speech where he often mentioned the slipery slope of this type of investment and more importantly the failure of government to claw back when the company fails to perform…..he does a great riff on what they have done rationally in Florence….and yes haters I know Ken is a terrible person because he supported the baby killer Rudy in the primary.
The other point is that I still believe that Boeing…a union dominated defence contractor…. only came to SC because that was the quid pro qou that Lindsey got for doing …or trying to do Cap and Trade with Ketchup Kerry.
No doubt Billy Wilkins Nexxen Pruit helped …and Premier Leatherman not doubt had to sign off on it…but I still think it was Rahm Obama for Lindsey…who may never have to actually deliver on Cap and Trade if it dies before launched.
And finally….the public will never know the actual cost of this program as it will brew forever if the deal holds and it all goes through.
Just like Protera in Greenville…these are government dollar purchase programs. If government has no money …which is does not….because Electric buses are bought by States and municipalities….both of which are busted broke ….so neither program is worth a damn.
The problem is that the private consumer has stopped buying many things….there is a lack of private demand as all the leverage has been removed from the system.
Politicians do not create jobs… as they have only money they tax from us….and all new companies being recruited to SC now must look at the increases neccessary to pay back the ESC deficits.
By Matt February 24, 2010 at 12:25 pm
I think a lot of South Carolina taxpayers would much rather their tax dollars go towards major economic development deals that not only create jobs but put South Carolina on the map (the way BMW has) instead of having them go towards things like bloated school district administration expenditures, the inefficient waste that is the endowed research chairs program, and extending unemployment benefits to those people who are not genuinely engaging in an active job search.
By General Washington February 24, 2010 at 12:41 pm
And tomorrow the “Republican” Senate will consider a real boondoggle, Sembler. Under the Sembler package it is estimated that we will be paying 200,000$ in taxpayer dollars for every 1 job that is MOVED from the mall down the street. So Boeing is 40,000 for every new job and we are going to give away money for jobs we already have here. Only in SC.
If you want any legislation passed, stand up and say jobs 42 times and it will pass, even if it is a bill giving the gov control of the leg. Sembler makes it obvious ACTUALLY creating jobs is nowhere on the Senate’s radar.
Lets just write Mr. Sembler a check and save time.
By Billy Bob February 24, 2010 at 1:14 pm
I can’t believe I’m wasting my time responding, but -
First Katherine J – the best way to help small business is to plop a big business next door. VERY few small businesses really create many jobs – most of them are thru franchises of bigger businesses.
Second No Name – you don’t know Jack
1) Campbell barely gave BMW anything for the first deal I know EXACTLY what was in the deal- it was only after the Mercedes deal fell thru 2 years later that big incentives were created – and Beasley was Gov by then and 2) Boeing was probably coming anyway, but not because of any favor for Graham – that is about the stupidest thing I ever heard. A Company is gonna risk billions of dollars and it’s future to do a favor for a politician???????
By Billy Bob February 24, 2010 at 1:26 pm
Oh, and 3) if Roger Milliken hadn’t helped push thru the needed improvements to GS Airport the deal would have still probably fallen thru, so I’m not sure which textile executives you’re referring to?????
By stimulus February 24, 2010 at 1:34 pm
well, it should help the local real estate agents because they are bringing in their own employees…
By No Name February 24, 2010 at 2:13 pm
Billy Bob
Since you proclaim to know….. please enlighten us as to what was given to BMW.
Please include everything since the inception……..a point I made… and for the record I did not say Campbell gave a lot I said that since then…as covered by Harvard Prof. Kantor…it is now a horse race of perks that make the packages difficult to justify.
Your right of course….. no company ever developed on a site for political favor….please….. UFDB.
Try to mask that
By Katherine Jenerette February 24, 2010 at 2:29 pm
Thanks Billy Bob – Good point.
But, 500 new small businesses that create three to five jobs each, thru mom-and-pop or thru franchises of bigger businesses is over a thousand people working and buying. That’s a plus for a market driven economy.
I’m a pretty simple Carolina girl; I tend to measure in pluses of net gain above a zero baseline over time.
By me February 24, 2010 at 2:46 pm
Katherine Jenerette:
you measure pluses and net gain over a zero baseline? How come you weren’t doing everything in your power then to stop dumb rhodes and his cronies from destroying myrtle beaches economy with that biker bs?!? There isnt much net gain in removing the biggest tourist event in myrtle beach!
By Over My Dead Body February 24, 2010 at 3:44 pm
The small jobs mantra isn’t even that its propaganda. Starting a small business requires capital and since American’s are mortgaged to the hilt…Boeing’s arrival – and the arrival of similar companies – is going to be crucial to advancing the state unless you want Charleston, Myrtle Beach, and Hilton Head to be the only places with jobs.
Boeing’s deal might have been poorly executed, but its in the ballpark of what we need.
By TomBradySucks February 24, 2010 at 3:49 pm
Boeing and Sembler, who cares? Bruce Bannister has been working his ass off to bring us curling. That is how government should work!!!
By me February 24, 2010 at 5:50 pm
curling is the shiznit
By stimulus February 24, 2010 at 5:54 pm
where did she go???
By Old Green Beanie February 24, 2010 at 7:29 pm
This is about much more than the land acquisition and construction costs. SC is getting thousands of very good paying jobs that translate into economic activity and revenue at the state and local levels. Seems to me we will all appreciate private sector jobs more and more each day. SC landed a huge deal on this one. 49 other states are envious, including my home state of Pennsylvania.
By whos getting the jobs February 25, 2010 at 9:55 am
boeing is a great company and has great benefits and pays extremely well, but who are the people that will be getting these 3800 jobs, everything i have read says 3-6 years experience, which means not alot of local people qualify, so we are bringing more jobs to sc but for others to move here and take those jobs that locals don’t qualify for. I am sure there will be entry level jobs but those are far and few. So there will be an increase in the real estate for a while and local business will get so much needed traffic as well.
By dwb619 March 2, 2011 at 11:20 am
Boeing has good pay and benefits for it’s union workforce. I’ll wait and see what the package for the average employee is in South Carolina.
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