Corporate Welfare

Constitutional Amendments: Big Business Wants Billions of Taxpayer Dollars

(download a .pdf version of the article)

On November 7, Texas voters are being asked to approve $13.8 billion in new spending over the next two years proposed by the Texas Legislature. As noted elsewhere, this is because the Texas Legislature wanted to spend more money than allowed by the Texas Constitution. So instead of taking a dangerous political vote themselves to “bust” the state spending cap, Texas politicians decided to pass the buck to voters.

The new spending, which is covered by eight propositions on the ballot (see below), is for things like infrastructure, teacher retirement, and parks. While there might be some debate about the merits of these propositions, the primary beneficiaries of the $13.8 billion is seen in the sponsors of the political advertising in support of the spending.

For instance, above are the members of the Texas Infrastructure Coalition, sponsored by the Texans for Opportunity and Prosperity PAC, that are advocating in support of propositions 6, 7, and 8, which would spend $7.5 billion if approved by voters. However much Texans might benefit from the spending, these businesses—and the Texas politicians that have proposed it—would benefit more.

Here is a list of the amendments that would increase state spending by $13.8 billion and benefit special interests and corporations:

Families in Uganda had their land confiscated and were forced to move under an economic development program funded by the World Bank

“The conventional approach to economic development … is based on a technocratic illusion: the belief that poverty is a purely technical problem amendable to … technical solutions.” ~ William Easterly

Under significant political pressure from the left and the right, the Texas Legislature last year let expire the Chapter 313 "economic development" program that allows Texas school districts to offer property tax abatements to politically connected businesses. Now, big business interests are joining with many of those politicians to bring the program back to life, despite evidence of the great harm it has caused.

According to Dr. William Easterly, programs like Chapter 313 are economically and ethically flawed. In his book, The Tyranny of Experts, he explains there are two different approaches to economic development. One is authoritarian development, a technocracy in which “well-intentioned autocrats advised by technical experts” focus on technical solutions to economic development while ignoring the “rights of real people” (p. 5). The second approach he calls “free development,” which gives free individuals with political and economic rights “the right to choose amongst a myriad of spontaneous problem-solvers, rewarding those that solve our problems” (p. 6). Here, I'll refer to them as technocratic development and free-market development.

Last Thursday I spent 11 hours at the Texas state Capitol in Austin. The occasion for all the fun was a hearing by the House Ways and Means committee on issues related to property taxes.

It was pretty amazing to watch the proceedings. One of the biggest problems we have in America today is that our various governments take far more of our money than they are entitled to and then spend it on things they do not have authority to spend it on or give it to people they do not have authority to give it to. This is certainly the case when it comes to property taxes in Texas.

Yet throughout the day, most of the discussion from both House members and those who testified was focused on how to make Texas' property tax system more efficient or to use it to give big tax breaks to big business. Nobody on the committee seemed concerned that property taxes in Texas are driving people out of their homes, being spent to groom our children to ignore God and instead live a life serving Marxist and gay ideologies, and being used to attract renewable energy generators who are wrecking our electric grid.

It was not that long ago that property tax abatements were illegal in Texas because they were considered to be theft.

This historic and biblical perspective was embedded in the Texas Constitution. Acknowledging the ethical and economic problems with the government giving taxpayer money to individuals or businesses, the Constitution contains what is known as the Gift Clause, which at one time prohibited the “grant[ing of] public money or thing of value in aid of, or to any individual, association or corporation.” This provision helped Texas avoid the corruption inherent with private citizens getting rich at the expense of taxpayers and reduced the transfer of wealth from productive Texans to those who were less productive but more politically connected.

Property tax abatements under Chapters 312 and 313 of the Texas Tax Code allow counties, cities, school districts, and special purpose districts to reduce the amount of taxes paid by favored businesses that locate or expand within their geographic boundaries. They are used by renewable energy developers in concert with state and federal subsidies to turn a profit on what would otherwise be an unprofitable investment in highly inefficient renewable energy.

Exemptions from Texas’ Open Meetings and Public Information Acts means that negotiations between the taxing entities and private businesses usually take place behind closed doors.

These exemptions mean that most public input into the process will take place after the governing bodies have negotiated with the business seeking the abatement for months and essentially decided to move forward with the abatement.

“The conventional approach to economic development … is based on a technocratic illusion: the belief that poverty is a purely technical problem amendable to … technical solutions.” ~William Easterly, The Tyranny of Experts

There are two different approaches to economic development, according to Dr. William Easterly. One is technocratic or authoritarian development, a technocracy in which “well-intentioned autocrats advised by technical experts” focus on technical solutions to economic development while ignoring the “rights of real people” (Easterly 2013, p. 5). The second approach he calls “free development” which gives free individuals with political and economic rights “the right to choose amongst a myriad of spontaneous problem-solvers, rewarding those that solve our problems” (Easterly 2013, p. 6). In this paper, we’ll refer to them as technocratic development and free-market development.

Following his recent speech to the Texas Oil and Gas Association, Rep. Dade Phelan, speaker of the Texas House of Representatives, tweeted that the Texas Legislature is “developing a program to replace Chapter 313,” the soon to be defunct provision in the Texas Tax Code that allows school districts to give property tax breaks to businesses.

Members of the Legislature are attempting to do this now because last year Texans all across the political spectrum sent them a clear message that it is wrong for Texas school districts to give multi-million dollar property tax breaks to big business while average Texans’ property tax bills are skyrocketing.

I don't usually find a lot worth quoting in the mainstream media. But the Houston Chronicle as been on a bit of a rampage of late against corporate welfare in the form of Chapter 313 property tax abatements offered by Texas school districts to big businesses--especially renewable energy wind and solar farms:

"As millions of Texans struggle with the economic devastation of COVID-19, the biggest corporate tax giveaway in Texas has helped businesses cut more than $10 billion from their property taxes — and there are no limits on the program’s exponential growth.

"The gusher of tax incentives is flowing to firms ranging from petrochemical plants on the Gulf Coast to sprawling wind farms in the Panhandle. Companies are saving billions by promising to bring their business to Texas — even if evidence suggests some never would have gone anywhere else.

"Meanwhile, nothing has changed during the pandemic for Texas homeowners who must pay their property tax bills on time or face stiff penalties." - Mike Morris, John Tedesco, Stephanie Lamm.

You really ought to go play their Billion Dollar Texas Tax Giveaway. It is brilliant in the way it lays bare the lies behind the myth of government "economic development" programs.

Chapter 313 is scheduled to expire in 2022. Proponents, like Rep. Jim Murphy, had intended to renew and expand it this session. However, Murphy's bill got shot down in the Texas House, while a simple two year extension failed to make it out of the Texas Senate. However, 313 abatements are not dead yet. Governor Greg Abbott has already promised to call a special session in the Fall. If he decides to put it on the call, Chapter 313 may still have a chance. Let's pray Abbott is somehow persuaded not to do this.

Makems and Takems

Do Takems Have the Upper Hand?
The people of Sunderland in England have been building, or making, ships on the River Wear as far back as the 14th century. Since that time, their neighbors to the north in Newcastle upon Tyne have been taking the ships from Sunderland and using them to ship goods from the Port of Tyne.

Somewhere along the way the relationship between these good-natured rivals was captured by the term of mackems and tackems, or makems and takems. Each sees their role as superior; but the key point is that these roles take place voluntarily in a free market. When we look at these terms, however, in the context of what is happening in the United States today, they take on a much darker meaning.

What has set the United States apart from every other nation in the history of mankind is that the liberty afforded Americans created a country of makems. The Pilgrims overcame near starvation on their way to making a new life in cold, hostile environment. Later, other pioneers made their way into the wilderness to expand the boundaries of the colonies. The work ethic empowered by liberty kept on for over two centuries as America made itself the world’s greatest economic power.

By Savannah Howe (this article was originally published in the Lone Star Standard)

The future of Texas' electric grid remains up in the air as controllers, legislators and advocacy groups battle over whether the competitive market should continue.

While the state has been operating on a competitive market – where consumers are offered an array of different electricity retailers, rates and plans – since 2002, recent blackouts have fostered concern that something in the current system isn't working. State Rep. Chris Paddie (R-Marshall) introduced House Bill 4378, calling for the state to give up the current market approach and adopt a capacity market, where Texans pay for their grid's capacity to produce electricity rather than their actual electricity use.

Others argue, however, that the alternative to the current market, a capacity market, is far from a solution. Energy Alliance Policy Director Bill Peacock argues that a capacity market will skyrocket electricity bills across Texas.

"It is basically an electricity tax of about $4 billion to $8 billion a year," Peacock told Lone Star Standard. "The reason for this is that a capacity market would tax Texans to pay for plants they already have and for future plants they may not need."

The feud between Lt. Gov. Dan Patrick and Gov. Greg Abbott has a new participant; Speaker of the Texas House Dade Phelan.

On Monday, the Texas Senate did what few have ever witnessed: introducing, referring, hearing, and passing a bill on the same day. The bill requires the Public Utility Commission of Texas (PUC) to reverse its decision to raise the price of electricity to $9,000 per MWh during the Texas freeze.

Behind the whirlwind action is the conflict between Texas Gov. Greg Abbott and Lt. Gov. Dan Patrick over who should address the $16 billion (or more) electric bill imposed on Texans by the PUC through its price increase.

Though Patrick and others have urged the PUC to reverse its decision, the Senate was forced to take action because Abbott and the previous PUC Chairman Arthur D’Andrea, claimed that the PUC cannot do so on its own.

Now Phelan has joined in. He indicated that the House has no intention of passing the hurried Senate bill, claiming “the decisions made on pricing were made based on ensuring the reliability of the grid.”

The truth, however, is that the PUC can reverse its decision because it did not have the authority to hike electricity prices in the first place. And rather than improving the reliability of the grid, the decision simply put billions of dollars into the bank accounts of generators and the natural gas industry, much of which will come out of the pockets of Texas consumers.

The Bible may not have been the first place you turned to over the last couple of weeks to look for information about the Texas blackouts.

This may be in part because some in the church today teach us that the Bible and Christianity are not really appropriate for the public square, that if we go much beyond "Thou shall not kill" the Bible doesn't inform us very much when it comes to public policy.

Yet I believe this perspective sells the Bible short. And leaves the culture in great danger of God's judgment.

Wind has dominated Texas’ renewable energy landscape for the last 20 years. However, solar is making a concerted effort to catch up. Utility-scale solar capacity almost doubled in 2020, topping 8,000 gigawatt hours.

Texas, which already leads the nation in wind capacity, is moving up the ranks of U.S. states in terms in solar capacity. According to the Solar Energy Industries Association, Texas ranked third in 2019, with enough generation installed on solar farms to power 642,199 homes (abstracting from solar’s intermittency).

Favorable press releases are one thing. The loss to real-world homeowners, consumers, and state appropriators in this substitution of dilute, intermittent generation is quite another.

Economic development means a lot of things to different people.

One fairly common definition comes from the International Economic Development Council: “Typically economic development can be described in terms of objectives. These are most commonly described as the creation of jobs and wealth, and the improvement of quality of life.”

What it really is, though, is a way to line the pockets of big government and big business at the expense of the liberty of average Texans. A bill recently filed in the Texas Legislature will help ensure the pillage continues.

It was not that long ago that economic development was in the domain of the private sector. The government’s job was to ensure a level playing field for all market participants through efficient civil and criminal justice systems and limited regulation.

Recently filed legislation by highlights Texas’ effort to lead the way on expanding corporate cronyism. This partnership between big government and big business is becoming the greatest threat to liberty we face. On Episode 30 of the Liberty Café, we examine how bad this problem is and where it might take us.

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For the last few decades, the claim from the renewable energy industry was that renewables needed subsidies to catch up to traditional sources of energy such as coal, nuclear, natural gas, and oil. Now the headlines are telling us that wind and solar are cost competitive with traditional sources:

Solar and Wind Power So Cheap They’re Outgrowing Subsidies;

Falling prices are making renewable more competitive with fossil fuel-driven electricity;

Renewable Energy Is Now The Cheapest Option - Even Without Subsidies.

So if that is the case, why did Congress just extend subsidies for wind and solar generation in the COVID "relief" package?

On taxes, the deal would delay the phaseout schedule for the renewable and investment tax credits, with the PTC extended for one year and the ITC extended for two. The discrepancy between the two crucial incentives stems from the fact the PTC received a one-year extension under a 2019 tax deal that did not include the ITC. Additionally, the deal would make waste-heat-to-power technology eligible for the ITC. It would extend key efficiency breaks through 2021, while making permanent the 179D commercial building tax deduction for efficiency improvements. It would provide five years for offshore wind, and two additional years for the Section 45Q carbon capture incentive. While direct payments were widely sought for many incentives to account for frozen tax equity markets, they did not make the cut.

Well, according to one renewables advocate, it is because renewables are not quite as competitive as they seem. He doesn't put it that way, of course. He says that while they can be as cheap as--or cheaper than--fossil fuels, renewables intermittency means they may receive less income in the competitive market:

"Where coal and gas generators can ramp up production easily to accommodate peaks in demand and pull back when there’s a dip, wind and solar energy cannot. There’s solar when the sun shines and wind power when there are strong winds. That often prevents renewable energy producers from benefiting from attractive prices that accompany peaks. Sometimes they even find themselves producing when there is an oversupply, selling power for cut-rate or even negative prices — essentially paying customers to take their energy."

In other words, because renewables are unreliable and inefficient they can't compete without subsidies. Despite claims to the contrary by the industry. And despite the fact that they have been receiving federal, state, and local subsidies for 30 years now. Not to mention the fact that renewables are a far more mature industry than fossil fuels, having been used for power for millennia before oil and natural gas came onto the market 20 years ago.

What is really going on here is that there is a massive effort on the part of the industry and many people in government to use government to take money from one group of people and give it to others--others who are much more well to do than their beneficiaries. In the Bible, God calls such activity theft. Yet in today's corrupt world it is called saving the planet.

Executive Summary

Federal, state, and local subsidies for renewable energy are undermining the reliability of the Texas electricity market. And Texans are paying a high price for the privilege of a less reliable market. Since 2006, wind and solar generators in Texas have received about $19.4 billion from taxpayers and consumers. It is estimated they will receive another $15.9 billion over the next decade. Texas policymakers should eliminate subsidies for renewable energy in order to ensure an energy abundant future for Texas.

Policymakers' Guide to Corporate Welfare

Conservatives have long questioned whether welfare is the best way to help the least fortunate among us. More recently, the debate has shifted to a different type of welfare. Conservatives today are challenging whether "corporate welfare" achieves its stated goal of boosting economic growth. And, as in the case of traditional welfare, the debate extends beyond the effectiveness of corporate welfare to the effect it has on the principles on which this country was founded--particularly that of liberty. The Texas Public Policy Foundation's Policymakers' Guide to Corporate Welfare examines numerous examples of corporate welfare in Texas in light of liberty and the Texas Model that has made Texas the nation's economic leader. It is available on Amazon from the Texas Public Policy Foundation for 99 cents.

What Do I Mean by Energy Efficiency? Let Me 'splain it to You

I liked "I Love Lucy." One of my favorite things in the show was when Lucy would get in trouble and Ricky would tell her that she had some "'splaining to do."

A friend and I had a brief discussion on Facebook about energy efficiency. And it reminded me how twisted the definition of 'efficiency' is these days when it comes to natural resources.

The entire idea of efficiency in this area has been turned upside down by the left whose agenda is to control just about everything we do. If they can control how much energy, water, air, land, etc. we use, then they can pretty much control everything.

So they have redefined efficiency to mean using less of everything. The sad thing is that evangelicals have bought into much of this and so have decided that biblical stewardship of the earth that God gave us means using less of something in the future that we have in the past.

In my discussion on Facebook, I first noted that renewable energy is very inefficient. My friend replied: "Not sure how you’re defining 'efficient,' but combustion is about the least efficient way to generate electricity."

Actually, nothing could be farther from the truth.

Bilking Americans out of Billions for the False Promise of Renewable Energy

Just in case you are interested, the chart above shows how much money wind generators have bilked from American taxpayers through the federal production tax credit. Fifteen of the largest companies--and their Wall Street investment bankers--have received $19.4 billion. Those companies have a combined market cap of more than $500 billion.

Bringing Sanity to Fallen World: Idaho Health Care Edition

Idaho appears the national leader now in bringing sanity to our health care system. Not that you would know it from the many complaints about what they are doing, as seen in the article in The New York Times:

Some groups representing patients, including the American Heart Association, the American Diabetes Association and the lobbying arm of the American Cancer Society, have denounced Idaho’s plans, saying they fear that some people will actually end up paying more. The new, cheaper plans would appeal to the healthiest people, they said, leaving less healthy people in a shrinking pool of people seeking coverage that meets the Affordable Care Act standards.

“A.C.A. premiums would increase, and options for individuals with pre-existing conditions would narrow,” the American Academy of Actuaries, a nonpartisan professional group in Washington warned in a letter to the Idaho Department of Insurance.

Sanity, of course, is exactly what these folks are objecting to. Because if people could actually see the world through a scriptural, i.e., accurate, perspective of reality, they would instantly see the folly of having the government provide health care to anybody. More on that later.

Whose Better for the Texas Economy: Hollywood Filmmakers or Texas Entrepreneurs?

Filmmakers and government economic development types are bemoaning the fact that Texas doesn't offer as much as other states when it comes to film subsidies.

"Texas is losing jobs because we cannot compete," said Janis Burklund, director of the Dallas Film Commission.

It may, or may not, be the case that Texas is losing jobs in the film industry. But even if that is true, what is missing from that equation is what Texans would be doing in the private sector if the money for subsidies had not been taken from them.

My bet is that George Mitchell and Glenn McCarthy, Gerald Hines and Trammell Crow, Michael Dell and Bob Rowling, etc., could do a lot more for the Texas economy with that money in their pockets than a Hollywood filmmaker. Especially when we consider the cut taken by the state to run the Division of Film Subsidies and the rest of the Texas State Office for Government-created Economic Development, or whatever they are called.

Harry Reid's Cronyist UFO Hunt Cost Taxpayers $20 Million

A recent program in the Defense Department for the purpose of understanding "unidentified aerial phenomena" cost taxpayers at least $20 million.

The program was initiated by Harry Reid, at the behest of a campaign contributor, when he was still Senate majority leader. Politico reports:

Reid initiated the program, which ultimately spent more than $20 million, through an earmark after he was persuaded in part by aerospace titan and hotel chain founder Bob Bigelow, a friend and fellow Nevadan who owns Bigelow Aerospace, a space technology company and government contractor. Bigelow, whose company received some of the research contracts, was also a regular contributor to Reid’s re-election campaigns, campaign finance records show, at least $10,000 between 1998 and 2008.

Corporate cronyism takes many forms today, much of it driven by liberals who are supposed to be for the little people. However, this has to be one of the craziest.

Alexander Hamilton: Father of Modern Corporate Welfare?

Corporate welfare, the use of government to enrich corporate executives and shareholders with profits they can't earn in the market, is rampant today. Title insurers, alcoholic beverage distributors, and renewable energy companies are just a few who rake in ill-gotten profits at the expense of taxpayers and consumers.

Though cronyism today may be at its highest level in American history, it is nothing new. Here is Alexander Hamilton promoting it over 200 years ago in his 1791 Report on Manufactures:

Capital is wayward and timid in leading itself to new undertakings, and the state ought to excite the confidence of capitalists, who are ever cautious and sagacious, by aiding them to overcome the obstacles that lie in the way of all experiment.

Short Memories

We have such short memories.

Relating to today's debate about fossil fuels versus renewable fuels, here is what The Times of London said about a similar debate over coal versus renewables:

Coal is everything to us. Without coal, our factories will become idle, our foundries and workshops be still as the grave; the locomotive will rust in the shed, and the rail be buried in the weeds. Our streets will be dark, our houses uninhabitable. Our rivers will forget the paddlewheel, and we shall again be separated by days from France, by months for the United States. The post will lengthen its periods and protract its dates. A thousand special arts and manufacturers, one by one, then in a crowd, will fly the empty soil, as boon companions are said to disappear when the cask is dry.

People forget that the world was powered entirely by renewable energy until fossil fuels and later nuclear fuel came along. The truth is that today's attacks on fossil fuels and the push for subsidies for renewable fuels are tantamount to asking for a return to the days described by The Times.

Image result for gomer pyle — Even Gomer Pyle might be surprised by the GOP's tactics on SwampCare

Few things in politics surprise me anymore; I expect to see the unexpected, the absurd, the mind blowing, etc. Still, the fact that the Republicans can’t see that with SwampCare (or RyanCare, or ObamaCare Light, etc.) they are doing the exact same thing that the Democrats did—“we have to pass the bill so that you can find out what is in it”—is almost enough to take one’s breath away. And, of course, they are doing it for the exact same reason the Democrats did it--they don't want the people to know what is in the bill.

See the press release below from the Texas Public Policy Foundation to see the latest on the mess going on in D.C. today. In the meantime, the good news is that the House Republican leadership still doesn't have the votes to pass this bill, "I'm confident that we have still enough concerns that a vote of 216 votes in the House would not happen today," House Freedom Caucus Charmain Mark Meadows said yesterday.

Restoring Liberty through the States—and the People

Liberty has afforded all Americans the opportunity to live prosperous lives through hard work and civic cooperation. Unfortunately, the immense growth of the federal government has, in the words of Milton Friedman, made it more likely “that its actions will reflect special interests rather than the general interest.” Instead of government being the means for the preservation of Americans’ “Life, Liberty and … pursuit of Happiness,” it has become the instrument through which others seek to appropriate their liberty and wealth.

The American people have made it clear that they are fed up with this federal assault on liberty. Restoring Liberty through the States—and the People is a road map for America rooted in the U.S. Constitution that re-centers federal governance on only constitutionally enumerated powers which very intentionally maximize liberty and prosperity by leaving all other governing authority with the states, or the people.

See the full agenda here.

Good News and Not So Good News on Corporate and Constituent Pork

Good news from Florida on the corporate welfare front as reported by the News Service of Florida:

The talks on [budget] allocations had largely centered on Gov. Rick Scott's call for a $1 billion tax-cut package and a "Florida Enterprise Fund" of $250 million in business incentives. … In the end, lawmakers agreed to $400 million in tax cuts in the current year and no money for the Florida Enterprise Fund. Scott's office blasted lawmakers late Friday for the decision on the incentives package.

"With the Legislature's action today, there will no longer be incentive funding for major projects to come to Florida ... and we are beginning the process of notifying cities across the state that there would be no funding available to help them recruit businesses if the Legislature does not take immediate action to reverse course," Scott spokeswoman Jackie Schutz said.

On the other hand, the Washington Post reports that the establishment in D.C. is still using pork for constituents to draw support:

Richard Shelby has been in Congress since the 1970s and faced no significant challenge since getting elected to the Senate in 1986. Yet the 81-year-old has spent millions of dollars in an effort to receive more than 50 percent of the vote tomorrow so that he can avoid a runoff with an unknown, 33-year-old challenger.

Shelby told the crowd [at the Calhoun County Republican Party’s annual dinner] that he currently chairs the Banking Committee but opened up about his grander ambition. “If things go right, maybe I’ll chair the Appropriations Committee. And I’ll tell you: Calhoun County would know it! And Alabama would know it,” Shelby added, drawing a standing ovation. “I’m about one step from that!”

Corporate Welfare

Constitutional Amendments: Big Business Wants Billions of Taxpayer Dollars

Rule by Experts: Two Approaches to Economic Development

Big Business Pushes for More Tax Breaks at Taxpayer Expense

Opportunity to Tell the Texas Legislature to Abolish Chapter 313

Chapter 312 and 313 Tax Abatements are Theft

Two Approaches to Economic Development

Texans are Ready to End Corporate Property Tax Breaks

The Houston Chronicle Takes on Chapter 313

Makems and Takems

Energy Alliance analyst: A capacity market for electricity comes with 'high costs'

The Texas Legislature Should Give Texans Their Money Back

What the Bible Can Tell Us About the Texas Blackouts

Will the Texas Renewable Energy Gravy Train Ever Stop?

Texans’ Liberty is at Risk Through Corporate Cronyism

The Liberty Café 30: Texas Leading the Way in Surrendering to Big Business

The Renewable Energy Industry is Stealing Your Money

The High Cost of Renewable Energy