John Locke Update / Research Brief

Central Planning on Steroids, Part 2: Cooper cripples businesses statewide, but gives a few corporations big bucks

posted on in Economic Growth & Development, Economics, Spending & Taxes
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The first part of this series showed how so far this year Gov. Roy Cooper has already pledged nearly $445 million in corporate welfare to just 22 corporations. That’s approaching half a billion dollars in corporate welfare in this year, of all years, and it’s still September.

What is going on? Isn’t Cooper supposed to be a staunch opponent of corporate tax breaks? Why is he pledging millions of dollars of state money to corporations, and why so much to so few?

After this year’s cannonball dive into the shallow end of tyranny, Cooper’s decision to triple down on Central Planning & Cronyism should not surprise anyone. This is the man who unilaterally took it upon himself to rule which North Carolinians were “essential” and “nonessential” workers. This is the man who not only shuttered whole industries, but repeatedly deceived them about when he’d allow them to reopen and also vetoed several bills passed by the legislature to let them get back to business.

This is a man who pretends, with media joining in the charade, that a virus actually obeys the Central Planner’s absurd distinctions. They include Cooper drawing such fine lines between, e.g., bars (unsafe) vs. other bars (safe), fast-food and dry cleaning drive-throughs (safe) vs. church service drive-throughs (unsafe), tour buses (unsafe) vs. party buses (safe), and mass gatherings for political causes he personally supports (safe) vs. mass gatherings for reopening businesses, watching stock-car races, seeing your kids play football, attending the Republican National Committee, or hearing Roy Cooper’s opponent in the governor’s race speak (all unsafe).

The situation for many small business is dire. Just this morning, the News & Observer reported on the death of bars, closed by Cooper since March, under the title “It might be too late.’ North Carolina bars closed since March will struggle to reopen.”

WRAL wrote that “The businesses that were not allowed to open under Phase 2.5 [sic] are anxiously awaiting the governor’s decision.” (The fact that those businesses still aren’t allowed to be open is why the nomenclature “Phase 2.5” is false. The governor has still not allowed full Phase 2 yet.) Here is what Cooper is doing to the small businesses he’s destroying while he’s off handing out hundreds of millions to a few big corporations:

Zack Medford, who owns four bars in Raleigh, said he has tried everything, from spearheading a legal challenge to the shutdown order to personally writing to Cooper.

“You can only go for so long without making revenue, and the rent keeps still being due and your bills still keep coming in the mail without any money to pay them,” Medford said. “You’re out of options.”

This Research Brief looks into a few of Cooper’s giveaways in detail.

$388 million to Centene Corporation

On July 1, Cooper’s press office announced a Transformative JDIG award worth $387,890,250 to Centene Corporation. What is a “transformative” JDIG? It is the monstrosity birthed between the General Assembly and the governor back when they were chasing Amazon and Apple’s big expansions. I wrote about it here.

The transformative JDIG for Centene is the state’s first one of this kind of megacronyism. It authorizes state payouts to this one company for 39 years.

Put in context, children born this year will nevertheless spend 21 years of their adult lives paying Centene for the supposed privilege of having that one corporation here in North Carolina. Think about what Cooper has done. Newborns this year will be on the hook paying this particular crony for over two decades after they turned 18. By the time it’s done, their tax obligation for paying Centene would be old enough to drink.

Nearly $3.3 million to Retirement Clearinghouse, LLC

On August 11, Cooper announced a JDIG award worth $3,267,000 to Retirement Clearinghouse, LLC. This one is noteworthy because – how do I put this — it has to be a gullibility test rather than a serious proposal, and Cooper’s incurious media failed it with flying colors. Take the home test! Read this from the governor’s press office:

Retirement Clearinghouse, LLC (RCH) … will invest more than $4.1 million to expand their headquarters and corporate office in Charlotte. … Retirement Clearinghouse’s North Carolina expansion will be facilitated, in part, by a Job Development Investment Grant (JDIG) approved by the state’s Economic Investment Committee earlier today. Over the course of the 12-year term of the grant, the project is estimated to grow the state’s GDP by more than $672 million. Using a formula that takes into account the new tax revenues generated by the 300 new jobs, the JDIG agreement authorizes the potential reimbursement to the company of up to $3,267,000 over 12 years.

Cooper announced, essentially, that he would give a corporation $3.3 million to spend $4.1 million here, and that’ll make $627 million. That isn’t economic development; it’s economic alchemy. But all it’ll really accomplish is turning your hard-earned coin into dust.

$18 million to the United States Golf Association

On September 9, Cooper announced $18,000,000 to United States Golf Association, a combination of awards from JDIG, OneNC, and $14.4 million from some as-yet undetermined source.

As for the USGA award, I had some words about that for Carolina Journal after reading through the newly passed law authorizing that award. What struck me most:

  • USGA is obligated to spend only $5 million to qualify for $18 million from taxpayers
  • Of the 50 jobs required, USGA need ensure only 35 are new hires
  • USGA’s other obligation is to furnish a “hospitality pavilion” at each championship for use by the Commerce Department or a nonprofit corporation contracted with the Commerce Dept., which the law defines legally as a “gift”
  • This gift of hospitality pavilion is required only when it’s a men’s championship event

Here’s how that last bit is written in the bill:

At each men’s major professional championship event held in this State as required by this subdivision, the business provides at no cost a hospitality pavilion to the Department or a nonprofit corporation with which the Department contracts pursuant to G.S. 143B-431.01 or both that will accommodate at least 40 people. The requirement of this section does not include costs for staffing the hospitality pavilion or catering costs. This provision constitutes a gift accepted on behalf of the State for use by the State or for the benefit of the State as permitted under G.S. 138A-32(f)(5).

Chapter 138A of the General Statutes is the State Government Ethics Act. The law provides an exception to government ethics in order to require the USGA to give three-dozen-plus Commerce bureaucrats and their pals with private, catered access to men’s championship events (apparently they wouldn’t be interested in icky women’s championships), or else they’d be disqualified from the $18 million.

As I told CJ, “Defining [these hospitality pavilions] as a ‘gift’ lets the governor and legislators do a statutory Jedi hand wave and say it isn’t a form of quid pro quo.”

These are some of the games Cooper is playing with other people’s money while keeping businesses across the state shut down, half shut down, and saddled with heavy restrictions.

Part one of this series can be found here:

Central Planning on Steroids, Part 1: Cooper has pledged nearly half a billion dollars to 22 corporations

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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