Corporate Welfare Proposal is a Bad Deal for Taxpayers

MIDLAND, Mich. – The Michigan Economic Development Corporation this morning demonstrated that its proposed subsidy for General Motors is a bad deal for taxpayers. While meeting with the House Appropriations Committee to discuss details of the $666 million corporate welfare deal with GM, MEDC representatives revealed that the deal creates fewer jobs and demands less from the auto giant than taxpayers were led to believe.

Despite headline claims from Governor Whitmer and the agency that the deal would create 4,000 jobs and attract $6.5 billion in permanent investment, the actual agreement brought before lawmakers falls short of what has been publicly promoted. The deal would allow GM to create 20% fewer jobs, invest less than half the dollar amount and get out of the agreement six months after it hits the reduced targets.

Combining all the company-specific benefits the government has given GM in this deal, Michigan taxpayers will underwrite almost 30% of GM’s minimum capital investment in the Lansing and Lake Orion facilities. This is an exorbitantly higher rate than agreements other states have struck with automakers and large-scale manufacturers. It also underscores the high price Michigan pays for our state’s long-term inattention to its mediocre business climate.

“It is outrageous that the MEDC sat before the House Appropriations Committee this morning and demanded the members write them a $666 million check to pass through to GM before the contract details are even finalized,” said Michael LaFaive, senior director of fiscal policy at the Mackinac Center for Public Policy. “The Legislature and the public deserve a greater level of visibility into how MEDC handles its business. Yet the MEDC wants to go back to the bad old days of blank checks and backroom deals where the public only found out the details after it was too late.”