Once again in the battery rupture – Mackinac Center – Mackinac Center for Public Policy | CarTailz

Did Michigan administrators and legislators learn anything from the incredible public spending subsidizing battery manufacturers in the 2000s? It doesn’t seem so. Administrators have recommended handing out nearly $400 million in taxpayer dollars to new battery factories.

In 2008, Gov. Jennifer Granholm and the legislature couldn’t agree on much other than handing out more business subsidies. Michigan’s economy was struggling, but they responded to deep and far-reaching economic troubles by channeling taxpayers’ money to select corporations.

One proposed system was to give battery manufacturers refundable credits based on engineering, design and production rather than employment. The program passed with only three dissenting votes. Lawmakers increased the program fivefold over the next few years, approving $1.3 billion in subsidies for battery manufacturers.

Policy makers were excited at the prospect of adding more battery plants. “Through our diversification and education initiatives, we have laid a foundation for Michigan’s new economy,” said Granholm.

Administrators announced contracts with five companies to manufacture batteries. This was helped by President Obama’s stimulus packages, which provided at least $805.6 million for battery makers in Michigan. Electric car battery subsidies are an attractive technology for politicians, who can sell the effort as both green energy and jobs.

The problem is that there was no market for it. Two of the plants were never started. None of the others lived up to inflated expectations or changed the state. In fact, the legislature had not created a basis for the New Economy. Even today, with more electric vehicles sold than ever before, there are fewer battery manufacturing jobs in Michigan than rehab counseling jobs.

While there were no economic benefits, the costs were real. Lawmakers gave the companies $1.1 billion, on top of what the federal government lost in its efforts.

All in all it was a lot of money for little result.

The latest effort involves the battery plants of Gotion and Our Next Energy, with $375 million in cash for the two deals. Governor Whitmer is no less excited about what this means for the state than Granholm was.

“This is another historic day for Michigan this year,” Whitmer said in October, “as we continue to secure generational opportunities in our manufacturing and engineering work, build a sustainable economy and make key infrastructure improvements to support the state’s robust agricultural industry.” “

It doesn’t seem like the state’s failures will affect the latest deals. The companies get most of the money without having to hire employees. A shortage of jobs could mean the state getting some money back, but unless the company actually moves jobs out of state or closes its facility, Michigan taxpayers will have to wait until 2030 to get their money back. Last time, projects under-delivered to jobs but still cost taxpayers. This time, the state’s conditions prepare taxpayers for the same experience.

There’s a simple way to ensure that projects like this deliver the economic benefits promised by legislation and to avoid taxpayers being penalized when they don’t deliver. Projects should be judged by the economic standards of the state, not by those of the companies. If politicians want to boost state economic growth with subsidies, then success or failure should be measured by the state’s performance.

Economists use clever methods to tease out the effects of government subsidies. Some of them find positive results, most find negative results. None of them find great effects. But lawmakers say their deals matter to the state’s economic future.

If elected officials believe what they say, they would include their expected economic outcomes in the contracts. Taxpayers would not have to pay unless the projects did what the legislature required. They have a record for not delivering on job promises, so they should be clear about what they’re trying to achieve.


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