Bass Pro. Geico. Free Lunch by David Cay Johnson is a MUST READ

Buffalo & Erie County Public Library Staff Review by Carol Ann Strahl:

I must preface this review with the caveat,  “If you suffer from hypertension, please take your meds before you commence to read this book. YOU WILL NEED THEM.”

As of this date, America has a $14.3 trillion government debt compounded yearly by $400 billion in interest. These facts seem to mean naught as Washington continues to dole out subsidies to friends and political allies.

We learn that the Cayman Islands are home to more bank deposits than the financial capital of the world, New York City.  By conducting business offshore, hedge funds are kept secret from the American tax authorities.  The top 25 hedge fund managers made an average of $570 million each in 2006.  We learn how these funds work and how the investors are strictly restricted to the already wealthy.  Northwest Airlines’ bankruptcy emergence is explored as well as the actions of infamous Jack Abramoff.


The Bass Pro situation in Buffalo is briefly discussed as well as the creation of the Geico Call Center in Amherst.  Warren Buffett received $100 million in government incentives to open the call center.  It cost $40 million, so Buffett’s empire is $60 million dollars richer.  Much more is revealed.  There is apparently only one party in Washington –the MONEY Party.  No one is going to initiate reform for us.  It starts with you and me. 

An interesting aside: the Federal Government spends about $5 million dollars a minute.


A must read for every taxpayer.

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About the author  ⁄ buffalorising

24 comments
The Kettle
The Kettle

Whatever> "If utilities force urban customers to fund sprawl area installations as you claim, I'd be surprised the NYS PSC in an urban-dominated state never made them stop. "

Urban dominated is not the same as city dominated. True a large percentage of NYers live in metropolitan areas but the bulk of those people live in the burbs of NYC-Roc-Buff etc. That's a large percentage of registered voters that perceive their interests to be aligned with the status quo.

Dated, 19th century home rule laws also limit what the state can do to control the sprawl machine. The most they can do is to deny funding for sprawl enhancers which is what I believe was proposed last summer. Even then, sprawl interests will still have the county and feds to go for to get funding.

The Kettle
The Kettle

Whatever> "It's been pointed out (1) mortgage tax deductions for 'bigger homes' are available to non-sprawled residents as well,"

That program drives new construction towards the higher end of the market resulting in large homes on large lots. With a few exceptions, these houses are built in sprawl country in proximity to free roads, services etc.

Whatever> "Regarding utils/roads, I'm not convinced sprawlers aren't 'subsidizing' themselves via local taxes for most spending on sewers & residential streets, higher payments in gasoline taxes when they drive between spread out stuff, etc."

I guess you can convince yourself of anything. Objectively though, it's hard to make the claim that sprawl subsidizes itself when payment for infrastructure and various levels of government services are paid for from county, state, and federal funding. As you are aware, this can be verified on any sprawl town's budget posted online.

The rest of us have to pay their own way. The Town of Tonawanda, for example, is on the hook for installing a multi million dollar utility line on Parker Blvd. Based on what goes on east of Transit, if the town had acres of open space with developers ready to build homes, the sewer line would be paid for by the feds and the region at large.

On Gas taxes: It is well documented that the federal trust fund has been running a multi billion dollar deficit for the past several years. Those who drive around more are being subsidized the most.

Whatever> "Even if true, it doesn't even come close to excusing the corp welfare such as listed by Peter, Daniel, & me. I'm almost surprised if you're trying to imply that it does."

So paying developers to build roads and utilities in places where they are not need so other developers can have access to customers to their subsidized homes are not examples of taxpayer handouts?

I guess that brand of "fair minded" uses selective subsidy outrage as a way to advocate for one's preference of development and living environment.

whatever
whatever

Sorry if I was wrong about which part of the city of Lockport First Niagara's HQ moved from.

Armchair>"...tax dollars to pay individuals to buy bigger homes or installing utilities and roads in farmland so connected home builders can have easy access"

It's been pointed out (1) mortgage tax deductions for 'bigger homes' are available to non-sprawled residents as well, and (2) I do favor ending that as well as other deductions & tax credits.

Regarding utils/roads, I'm not convinced sprawlers aren't 'subsidizing' themselves via local taxes for most spending on sewers & residential streets, higher payments in gasoline taxes when they drive between spread out stuff, etc.

And I'm sure I'm not the only urbanite who sometimes drives on regional assets in sprawl country such as NF Blvd, Transit, 190, 290, 400, 219, etc.

If I thought NYS govt was subsidizing our region's sprawled-Americans disproportionately compared to those in more urban areas, I'd say so. But I'm too fair minded to pretend I think that just to be politically correct.

Either way, publicly owned roads are very different from the book's corporate aid topic.

If utilities force urban customers to fund sprawl area installations as you claim, I'd be surprised the NYS PSC in an urban-dominated state never made them stop.

(Btw, Arm, why haven't state legislators from Buffalo/Roch/NYC pushed for laws against that - if it really happens as you say? They find time to give all those taxpayer $ to multi-millionaire Paul Snyder's Hyatt, but too busy to even try outlawing that unjust utility installation subsidy to sprawlers? Sean Ryan - there's your Day One task!)

Even if true, it doesn't even come close to excusing the corp welfare such as listed by Peter, Daniel, & me. I'm almost surprised if you're trying to imply that it does.

whatever
whatever

Arm>"interesting that the list was also limited to city and high-density suburban projects"

Well, Arm, as the saying goes bank robbers rob banks because that's where so much of the money is.

If it wasn't a geographically diverse enough set of examples for your taste, well you could have had a similar critique of Peter_Parkdale's a few comments below mine:

Peter>"HSBC Arena, HSBC Center, M&T, Fountain Plaza, Key Center, New Era Headquarters, Main Place Tower, Labbat's HQ, Market Arcade, American Axle, Capital Management Services, Sycamore Village, Theater Apartments, Rich Products, Citi Group, and many others."

Looks like 14 of his 15 are in the city (all except Citi).

Interesting there's no criticism of him for it, just me. So much for consistency!

By the way, didn't I heavily criticize on this blog the Yahoo data center public subsidy back when that was discussed? That's pretty sprawled, no?

The Kettle
The Kettle

Whatever> "Yes, some personally favor urban, old, small, local, little parking-as-possible, etc. That's all fine but subjective."

What isn't subjective is the fact that "urban, old, (and in some cases) small local and little parking" don't enjoy the same financial and legal government incentives as big, monotonous, large lawn, auto dependent, corporate, sprawl etc. The areas where the latter group typically set up shop enjoy free roads, utilities, police, buy big mortgage incentives, while the other parts of town do not.

Incentives to encourage the former type of development looks bad when the spin doctors make it out to be some coup for the rich and trendy. But at least they counter the publicly funded advantages that sprawl country receives.

The Kettle
The Kettle

Speaking of consistency, I see you left various sprawl subsidies and other government giveaways that you see value in off your list. It's also interesting that the list was also limited to city and high-density suburban projects.

I guess that demonstrates that subsidy programs an individual supports would depend on what that person values. Some don't mind granting across the board incentive to reuse obsolete buildings and promote compact development. Others have no problem using tax dollars to pay individuals to buy bigger homes or installing utilities and roads in farmland so connected home builders can have easy access for their customers.

The former, such as your First Niagara example, encourages businesses and residents to settle in areas better accessed by non-auto transit, reduces the need for infrastructure spending, and, in the case of reuse, saves the public a large demo bill for the previously dated building.

For the record, FN moved to the Buffalo from a sprawling office complex several miles from the City of Lockport and its downtown. Technically, the census bureau would classify the Town of Lockport as urban (there is no sub-urban distinction) but claiming they moved from "Lockport's urban downtown" is flat out wrong.

whatever
whatever

"If paying companies to hire more folks works..."

That's a big if, and it isn't met for the kinds of corp welfare that just shift consumer spending from one business (store, hotel, restaurant, apartment building, etc.) to another. Moving around the same level of consumer spending won't grow the pie of total # employed long term.

And in the end, all publicly spent $ have to eventually be pulled back by taxes into government coffers out of the economy (with interest paid to often-foreign lenders) to fund any subsidy/stimulus.

whatever
whatever

JS, I agree with your last paragraph but not the rest.

The difficulty of 'public good' justifications is widely varying definitions among the public of what's publicly good enough to justify corporate welfare.

Many in the public won't feel the ends justify means of handouts and special deals such as to wealthy residents/guests at buildings owned by the wealthy (Uniland, Paladino. Croce, etc.), or even to middle class owners of a store or restaurant just because it's in an old building or an urban neighborhood.

Regarding small/big and local/national - public $ targeted to a few selected small local businesses is often politically motivated and dumb-wasteful-corrupt every bit as much as for larger businesses. (*cough* One Sunset)

Even if politics could somehow be removed, it still favors a few at the expense of many other businesses and makes bets with public $.

And not everybody even favors the same ends some of you may prefer (urban/non-urban, local/national, small/big, without-vs.-with many parking spaces, old/new, and so on).

Yes, some personally favor urban, old, small, local, little parking-as-possible, etc. That's all fine but subjective.

On the other hand, some luvers of upscale retail who comment on BR might see 'public good' if big national corp H&M had been given public $ to locate in a new build at Canalside instead of in Galleria.

Getting back to your last paragraph, yes it should be reduced as much as possible. A good thing Gov. Paterson did was fully eliminate Empire Zones which had helped to subsidize Paladino's condos, the Avant, and many other examples. Hopefully Cuomo's people won't try to undo that change.

skybox
skybox

Some say the jobless rate is really over 20% and close to 25% based on the folks who've stopped looking or gone to work parttime because they couldn't find a job in more than a year.

Promote policies that create jobs for the 2 out of 10 Americans who unemployed and then those folks will contribute taxes again. When the gov't no longer gets the taxes from the 20% of Americans and has to pay them instead, then we know that is going to result in less money for the gov't to use for other things. If paying companies to hire more folks works then I'm for it, as long as they are bringing in folks to work.

whatever
whatever

Peter_P, to what are you referring about Labatt HQ? I could be mistaken, but I thought Labatt didn't ask for handouts or even consult local politicians about their move to Buffalo.

I also don't know if the M&T building or Main Place were given special aid. Maybe they were, but I don't assume every building did (although no doubt M&T as a corporation has benefited from various corporate welfare).

I agree with most of your points in that list, however.

Jimbuffalo
Jimbuffalo

I like the comment about the MONEY party.

Click on this URL and you can vomit while your hypertension increases

http://www.usdebtclock.org/

With their lifetime benefits and health coverage, our elected proletariat scratches each others itch and whip the unsuspecting masses into a frenzy of us vs. them, red vs. blue, msnbc vs. Fox news political ideology and soundbites.

Sadly, the fix is in and you are not even in the game.

nyc
nyc

if we made smart public investment then then the temptation to offer "handouts" diminish. Bass Pro was a misguided attempt to revive a downtown core - bring people and activity to a downtown embarrassingly empty...empty sidewalks, empty buildings, no energy or vitality. Public leadership was ready to hand out 30 million dollars to a sporting good store with no guarantee of success. However when the opportunity arises to invest the same amount (money spent regardless of location) into a public institution (ecc) that will have lasting beneficial impact on downtown, public leadership turns its back. We need to make smart public investment, yes that means re-energizing the regional core, then we will get less of these desperate hail-mary, silver bullet grandiose hand out schemes from public leaders that are destined to disappoint.

Jesse
Jesse

No... corporate welfare is inherently bad, period.

Peter_Parkdale
Peter_Parkdale

Also include HSBC Arena, HSBC Center, M&T, Fountain Plaza, Key Center, New Era Headquarters, Main Place Tower, Labbat's HQ, Market Arcade, American Axle, Capital Management Services, Sycamore Village, Theater Apartments, Rich Products, Citi Group, and many others.

JSmith
JSmith

Public subsidies are supposed to serve the public good. So with that idea in mind, just a couple thoughts:

It's worth making a distinction between subsidies that directly aid in the renovation and reactivation of historic buildings, which is definitely in the public interest, and direct giveaways to companies. A few of the ones you mentioned fall into that category.

Since small businesses are much more invested in their communities and create more jobs than large corporations, it makes sense that such subsidies that are offered are given to smaller locally-owned businesses rather than giant corporations with no local ties or commitment.

That said, I would prefer municipal governments to spend public money on infrastructure and public amenities that benefit everyone and create a place that is attractive and desirable to businesses, rather than hand out direct grants to individual cherry-picked businesses.

davidcayjohnston
davidcayjohnston

@ whatever,

thanks for that list of moves.

I would love to hear more from you about that for my new column for Reuters.

I can be reached at 585-473-8704 or david.cay.johnston@thomsonreuters.com

TheRealBuffaloBill
TheRealBuffaloBill

Its not that corporate welfare is inherently bad, it that political system are just that, political. And business system are there to make money, when you mix the too, it tends to get really broken. There are plenty of bad examples. Extending unemployment is an easy one, politically that makes allot of sense, your buying 12 million votes. If you look at the money its nuts, your increasing the burden on those that are still working, giving more incentive for that company to move overseas. The business solution for high unemployment is lower wages and cut benefits, again politically no one is going to say that, in NYS few are willing to look at the massive pension problem.(At least not yet). We see the political fall out for the actions in Wisconsin, when any company would have had to do very similar actions or go under.

Of course the biggest problem is as soon as one place dose it you force everyone else in the US to do it too.

whatever
whatever

As this article's headline does, it's easy to deservedly criticize the corporate welfare that was offered to Bass Pro.

I wonder how many who do that are consistent enough to also oppose corporate welfare that's been given for -

to name just a few -

Chef's, Empire Grill, Gigi's, First Niagara's HQ move from Lockport's urban downtown to Buffalo's 'Larkin' area, Uniland's Avant condos & upscale hotel, Mark Croce's upscale boutique hotel to be built on Franklin, Carl Paladino's waterfront condos, Iskalo's to-the-sidewalk new commercial building in Kenmore, Coffee Culture's cafe on Main St in Williamsville, Paul Snyder's Hyatt downtown as Daniel mentioned, and handouts to GM and Chrysler?

I'd guess quite a few who criticized Bass Pro and praise David Cay Johnston's book also favored some or most of the above.

Daniel Sack
Daniel Sack

Makes me think of the recent letter to the Bflo News from Paul Snyder complaining about the sad shape of the buildings on Main Street near his Hyatt Hotel A few years ago he received $14 million from us to renovate his hotel. We are so generous!

TheRealBuffaloBill
TheRealBuffaloBill

The austerity measures will happen here too, since the only way to avoid these kind of things is to limit the money the government has for incentives and get it back to its purpose. I'm still shocked every time I hear someone say 'the government needs to make jobs'. All the government can do is move jobs, not make them. Warren Buffet always cracks me up, the guy stomps for Obama and higher taxes, while sucking the system dry. All and all its not a terrible book, and easy to read.

grad94
grad94

i read it after bruce fisher recommended it in artvoice. as johnson amply demonstrates, corporate welfare dwarfs the other kinds.

teapartygrassroots
teapartygrassroots

Shame on BR for shining a light on our hard "earned" incomes. The only way we will succeed in dismantling the working class is by manufacturing a crisis so large that they think austerity is the only solution. The fewer scraps of the economic pie we afford them, the more they will fight each other. If we divide the working class into those with decent paying jobs and pensions and those without a decent wage they will engage in the crab-basket mentality until they have nothing left...all the while our incomes rise at obscene rates. Billionaires must not let masses catch on to our scheme as we have too much at stake. Who else will keep the luxury yacht industry booming during the crisis?

john.straubinger
john.straubinger

Watching the movies "The Smartest Guys In The Room" (Enron) and "Inside Job" (Wall St Meltdown, Fall 2008) wont't do your blood pressure any favors either. Did you know that hedge fund earning are not subject to capital gains taxes? How come? Why should mutual fund portfolios or stock or bond funds be subject to capital gains but not hedge funds? There are a couple other hundred "Why" questions that could be asked but by then, many may have stroked out.

RaChaCha
RaChaCha

Strongly agree this is a must-read -- David Cay Johnston is great. A friend in RaChaCha (and smart growth advocate) has worked with him as a researcher.

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