By Doug Porter
Labor unions and their supporters rallied in Sacramento yesterday surrounded by symbolic containers of gravy in support of Senate Bill 434, legislation introduced by Sen. Jerry Hill (D – San Mateo) that would bring about reforms in the Enterprise Zone tax (EZ) credit system in California.
I’m not so sure that reform is even a good idea, given just how outrageously this law has been used by large corporations. California taxpayers gave up $700 million in tax credits last year that were intended to create small business jobs in economically distressed areas.
Who are these businesses? Glad you asked, because much of that information is not available to the public. We do know that Walmart, Hyatt, Wells Fargo and the Déjà Vu Showgirls Club are among those enjoying this taxpayer largess.
Just in case you’re wondering about that last company, here’s the Déjà vu Wikipedia entry:
Déjà Vu Consulting, Inc. is a U.S. company that (as of 2013) owns about 67 strip clubs in 16 U.S. states, as well as one club inCroyden, UK.
The company is headquartered in Lansing, Michigan; it was founded and is controlled by Harry Mohney, who partners with Roger Forbes and opened his first Déjà Vu strip club in the Lake City neighborhood of Seattle in 1985. At the time, his main business was the large-scale distribution of pornography.
An astounding 91% of the tax credits were claimed by companies with more than $1 million in assets; 61% went to companies with more than $1 billion in assets. And a state survey found that nearly half of businesses report that the EZ hiring credit “never” or “rarely” influenced their hiring decisions. Moreover, many of the claimed credits were applied retroactively to jobs that already existed.
It’s another scam, not unlike the community redevelopment programs shut down by Gov. Jerry Brown. Call it corporate welfare. Call it a gravy train, as the unions do. Just call it wrong. According to the California Department of Housing and Community Development, in 2011 only 7 percent of hiring credits went to workers that are economically disadvantaged and less than one percent went to veterans.
As with the redevelopment boondoggle, elected officials and chamber of commerce types around the states have rallied to defend their interests. Mayor Filner is a signatory on a letter from elected officials urging the governor to preserve the program.
Here’s the capper(s): the EZ program has no cost cap, no sunset date and no transparency as to what companies claim credits and how many jobs they create. And it will take a two-thirds vote of the legislature to reduce, reform or eliminate the program.
Studies from the Public Policy Institute of California and the California Budget Project have demonstrated that the EZ program has “no statistically significant effect on either employment levels or employment growth rates” and that it’s “expensive and not strongly effective.”
Given the realities of politics I suppose reform is the best we can hope for. Labor unions are pushing to bring accountability and transparency to the EZ program, along with measures to encourage employers to pay something close to living wages. So I’ll say that you should encourage your California Legiscritter ™ to support SB 434.
It just really sucks that all these Democrats and Republicans can stand up and say that a scam like this has anything to do with the public interest. Once again another program designed to help economically disadvantaged people has turned out to be nothing more than a plan to increase the wealth of those who are already wealthy.
‘Bah, Humbug’ Says Nestlé CEO
An Austrian documentary entitled We Feed the World is causing quite a stir in European circles. Filmmakers managed to land a quite candid interview with Peter Brabeck, Chairman and CEO of Nestlé International, the largest food company in the world.
With 8,000 brands and a wide range of products across a number of markets, including coffee, 10 brands of bottled water, beverages, breakfast cereals, infant foods, , seasonings, soups and sauces, frozen and refrigerated foods, and pet food, Nestlé’s is a global force to be reckoned with. Here’s a list of all their brands.
From the Union Solidarity International blog:
In a candid interview for the documentary We Feed the World, Nestlé Chairman Peter Brabeck makes the astonishing claim that water isn’t a human right. He attacks the idea that nature is good, and says it is a great achievement that humans are now able to resist nature’s dominance. He attacks organic agriculture and says genetic modification is better.
Nestlé is the world’s biggest bottler of water. Brabeck claims – correctly – that water is the most important raw material in the world. However he then goes on to say that privatisation is the best way to ensure fair distribution. He claims that the idea that water is a human right comes from “extremist” NGOs. Water is a foodstuff like any other, and should have a market value.
Nestlé’s aggressive lobbying to get women to stop breastfeeding and use their brands of infant formula has already led to various boycotts that have been ongoing since 1977. Nestlé has lobbied governments to tell their health departments to promote formula.
The United Nations (not that anybody pay attention to them) says ‘safe and clean drinking water and sanitation is a human right essential to the full enjoyment of life and all other human rights’.
Of course the Ayn Rand set thinks differently. And Nestlé’s PR people are pushing back against the negative comments people are making about their Big Guy’s words.
Water rights and access to potable water may prove to be one the biggest issues facing civilization in the not-so-distant future. If companies like Nestle they lock up the water business, how far behind can breathable air be? It’s already available for sale in heavily polluted areas in Asia.
‘The Swill That is Toxic to Democracy’
That’s what my friend Chip Berlet calls the pap pushed by conspiracy theory set. As I said yesterday, I am unwilling to even link to these people’s speculations about the Boston Marathon bombings.
But, should your crazy twice-removed-by-marriage cousin send you an email along those lines, I thought you’d like to have a handy-dandy ‘fact checker’ at your fingertips: http://www.snopes.com/
More of Those Darned Facts
Another cherished conservative economic assumption bit the dust yesterday as University of Massachusetts researchers released a paper pointing out fundamental errors in an earlier study done by U.S. economists Carmen Reinhart and Ken Rogoff.
The Reinhart and Rogers work claimed an association between higher levels of public debt and slower economic growth, an assumption that underlies austerity centered deficit reduction policies being pursued in the United States and elsewhere.
In other words, maybe all this contemporary panic about the ‘debt crisis’ is based on a false premise. From financial writer Mark Gongloff viathe Huffington Post:
Washington‘s constant state of panic over government debt and budget deficits has contributed to severe cutbacks in government spending that have slowed economic growth and helped keep unemployment high. The situation has been even worse in Europe, particularly in troubled nations like Greece, where austerity has been enforced as a bailout condition, only to result in slower growth and higher debt burdens.
Still, that evidence has been in sight all along, yet the pro-austerity crowd has kept up its drumbeat of deficit panic. This new research probably won’t change that.
He’s right about this new research being not likely to change much. Despite overwhelming evidence pointing out there is no connection (I know, you want links: here, here, here, and here) between tax reductions for the wealthy and job creation, ‘trickle down’ economics continues to be one of the main tenets of GOP economic theory.
Don’t Get Your Hopes Up
It’s a sad day for our democracy. Once again a minority of our so-called representatives will pander to financial interests to stop legislation favored by a vast majority of the population. Sixty votes are required. From this morning’s Washington Post:
The Senate plans to vote on nine proposed changes to a gun control bill Wednesday, with a centerpiece proposal on background checks appearing headed for defeat.
The chief architects of the background check proposal, Sens. Joe Manchin III (D-W. Va.) and Patrick Toomey (R-Pa.), acknowledged Wednesday morning that they still don’t have the votes necessary to pass their amendment.
A Republican Senator who voted to allow debate on gun control measures to come to floor of the Senate, and now the President have been the intended recipients odf letters purported to be laced with poison. From the New York Times:
A letter addressed to President Obama, containing a suspicious substance, was intercepted at a screening facility outside the White House, the Secret Service said on Wednesday.
The letter was received on Tuesday – similar timing to the letter addressed to Senator Roger Wicker, Republican of Mississippi, which tested positive for ricin. The letter had similar markings and is similar in appearance to the one addressed to Mr. Wicker, according to a law enforcement official.
On This Day: 1704 – John Campbell published what would eventually become the first successful American newspaper. It was known as the Boston “News-Letter.” 1961 – About 1,400 U.S.-supported Cuban exiles invaded Cuba at the Bay of Pigs in an attempt to overthrow Fidel Castro. It was an unsuccessful attack. 1964 – The FBI lab reported that it could not determine the lyrics to “Louie Louie.”
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