Saturday, May 17, 2008

Albany's Wasteful 'Investments'

George Marlin is the author/editor of ten books including Squandered Opportunities: New York’s Pataki Years (2006), The American Catholic Voter: Two Hundred Years of Political Impact (2004) and Fighting the Good Fight: A History of the New York Conservative Party (2002).

In 1993, Mr. Marlin was the Conservative Party nominee for mayor of the City of New York, and in 1994 he served on Governor-elect Pataki’s transition team. He served two terms as Executive Director and CEO of the Port Authority of New York and New Jersey. In that capacity he managed thirty-five facilities including the World Trade Center, LaGuardia, JFK, and Newark Airports, PATH Subway and the four bridges and two tunnels that connect New York and New Jersey.

With this background, he is well-positioned to cast a wary eye on corporate welfare, something we at Albany Catholic have done, and for which we have been criticized as anti-American socialists by some of our more irate readers. Perhaps Mr. Marlin, because of his experience, can present the argument without facing such criticism.

He did so most recently in the pages of the New York Post, with an article entitled Albany's Wasteful 'Investments':
With New York's five- year cumulative deficit now projected to hit an astounding $27 billion, Gov. Paterson has no choice but to cut state spending.

Ripe for the chopping block: company-specific economic-development projects run by the executive branch that contribute little to the state economy compared to their cost. Here are two candidates, one each from the Pataki and Spitzer teams:

In 2006, Gov. Pataki and Senate Majority Leader Joe Bruno awarded the mother of all economic-development subsidies to an also-ran computer-chip maker, Advanced Micro Devices. The state agreed to deliver the breathtaking sum of about $1.2 billion to AMD - $750 million in cold, hard state-taxpayer cash and over $450 million in Empire Zone tax waivers, should the company decide (AMD still isn't obligated to proceed) to build a chip-manufacturing facility in Saratoga County, coincidentally the heart of Bruno's district.

In return for that shocking subsidy, AMD agreed to create about 1,200 jobs. Do the math: That's a cost to the state of more than $1 million a job.

Now it turns out that, despite its apparent skills in wheedling record sums out of state elected officials, AMD isn't capable of making money making chips. Pair that with a botched acquisition and miscues in rolling out its new super chip, and its stock has headed steadily downward. At about $7 a share, it's off about 83 percent since the New York deal was announced. AMD is now in the process of firing 5,000 employees.

The taxpayers' potential loss is even more shocking, however. While Saratoga County may benefit, on a statewide basis, the size of the AMD subsidy makes it impossible for the state to come close to breaking even.

Advocates for the project, many of whom stand to benefit financially from it, argue that the AMD factory would create spin-off jobs benefiting the state. That's true to a limited extent, but the project simply couldn't create enough spin-off jobs ever to make the state whole on its more than $1 billion outlay.

Another sham "investment," this one by the Spitzer administration, was the relatively modest $1.5 million for Corning Inc.'s new R&D facility in the southern tier. The state aid provided was so modest that it undoubtedly did little more than ensure government officials a speaking role at the press conference announcing the new R&D center.

You can read the rest of this article here.