Also in today’s New York Times: An examination by columnist Joe Nocera of the Big River Steel deal in Arkansas — the state’s largest foray into corporate welfare yet and a deal in which the billionaire Koch family, nominally opponents of corporate welfare, will benefit handsomely.
It needs to be read completely to be fully appreciated.
It recounts how Arkansas promised a $125 million bond issue and $200 million in tax credits on recycling equipment to put the deal together (not to mention investment of public money from the state teachers retirement fund). It shows, too, how the deal couldn’t have been done without an $800 million German loan from an institution that functions like the Export-Import Bank, an institution the Kochs are trying to kill. The news that the Kochs were players was critical to Arkansas approval of the deal, Nocera says.
The Kochs, you see, had decided to take a 40 percent equity stake, making them the project’s biggest investor. In doing so, of course, the Kochs were taking advantage of the same “corporate welfare” they had long condemned — while relying on the kind of government credit agency they are trying to dismantle in America.
When I asked a Koch Industries spokesman about the company’s willingness to take advantage of tax incentives and other government goodies, he gave me the standard response to such queries. “Koch Industries has consistently opposed and actively lobbied against all forms of corporate welfare, including those we currently benefit from,” read an emailed statement. “With that said, we will not put ourselves and our employees at a competitive disadvantage in the current marketplace.” In other words, the Kochs believe there is nothing hypocritical about employing government subsidies they oppose.
But I’m not so sure. The Arkansas incentive package ultimately passed, the German government-insured loan was completed and the plant should be up and running next year. And thanks to the recycling tax credits, the Kochs will recoup a significant portion of their investment even if the mill never makes a penny in profit.
Bottom line is that Nocera argues Big River Steel makes the case for the Ex-Im bank. Without such lenders, many big projects with lots of beneficial jobs (German workers will be supplying equipment to the Arkansas mill) would be lost. Nocera, by the way, is somewhat pessimistic about the overall impact of Big River.
As for American workers, Big River Steel likes to brag that the mill will provide 525 well-paying jobs. But with the steel industry in a terrible slump, it will surely result in layoffs for other American steelworkers. Those nearby Nucor plants are operating at less than 75 percent capacity; other American steel mills are faring no better. Nucor, in fact, has tried to block Big River Steel, largely because it fears the effect the new mill will have on the steel industry over all. Thus are the Koch brothers helping German workers while hurting Americans.
Bell, the editor who covers export credit agencies, sounded appalled at the fight over the Export-Import Bank. “A lot of U.S. companies are going to lose business,” he said. Then he added, “Those Tea Party idiots have no idea how business is done in the real world.”
But the Koch brothers sure do.
Did he just call us idiots?