Real Clear Policy: #WasteOfTheDay Week 118 59_Week_118

May 15, 2023 12:50 PM



Georgia Subsidized Electric Vehicle Company With $1.5B

May 15, 2023


When electric vehicle manufacturer Rivian announced a new factory was coming to Georgia in December 2021, Georgia state officials rushed to offer the auto maker $1.5 billion in tax credits and subsidies. Now, Rivian is struggling and taxpayers are left with the bill, according to Reason Magazine

Rivian wooed Georgia lawmakers with a massive $5 billion investment in a new factory “three times larger than Disneyland” in Social Circle, GA. Local officials soon delivered what was likely the largest incentive package in state history in May of 2022, complete with billions in tax credits and subsidies.

Investors had high hopes for Rivian, betting it would do for trucks what Tesla did for sedans. Fortune 500 companies like Amazon and Ford each invested billions, while retail investors lined up to invest in its initial public offering. Georgia was hoping to ride the wave of excitement by offering substantial subsidies in hopes of future tax revenue and jobs.

Unfortunately, the company once lauded as being on the cutting edge of the electric vehicle revolution has seen its economic outlook dampen in recent months. Securities and Exchange Commission filings revealed Rivian only produced 56 R1T trucks in 2021, and has since struggled to meet production and revenue targets.

Georgia used its taxpayers’ money to make a speculative investment in a hyped-up company that is now showing signs of faltering. While there may be a place for local governments to offer incentives to bring jobs and future revenue to rural areas, making a multi-billion dollar bet on an unproven company may turn out to be a foolish investment for Georgia.



$15M Study to Have IRS File Your Taxes

May 16, 2023


The Inflation Reduction Act of 2022 included $15 million to study the creation of a government-run tax e-filing system — a study that has been marred by partisan researchers, and with many of the questions in the study already answered.

Progressives like Sen. Elizabeth Warren have advocated for a “free direct efile tax return system” which would fundamentally change the tax system in the U.S. according to The Wall Street Journal Editorial Board. Instead of taxpayers determining how much they owe subject to audit, as they do now, this new system would see the government calculate each citizens’ taxes.

The IRS hired New America as one of its investigators, whose top officials worked for Barack Obama and Hillary Clinton. New American is already on the record as endorsing this plan. Other hires include Ariel Jurow Kleiman, a Loyola Law School professor who has written a paper endorsing the plan.

“Why bother with the ruse of an ‘independent’ study?” The Journal wrote.

While the results are unlikely to be surprising, the IRS already commissioned a study by MITRE on public attitudes regarding a system like this. It found only 37% of filers would use an IRS service like this, and only 29% of filers would use it if it didn’t have a state tax filing feature. About 50% of respondents want to stick with their current third party software.

“Among the nearly 50% of respondents who say they want to stick with their current commercial software, among their reasons was, ‘I don’t think it’s the IRS’s role to prepare taxes.’ Sensible thinking,” The Journal wrote.

This new costly study is partisan and duplicative, and the IRS should put its money to better use to serve taxpayers.



IL to Spend $1B on Medicaid for Undocumented Seniors

May 17, 2023


Illinois is forecasting that its program to provide healthcare to undocumented immigrants will cost the state $1 billion in 2024 – far more than the $2 million that Illinoisans were promised it would cost at the program’s inception, according to Wirepoints.  

In May 2020, Illinois became the first state to offer Medicaid for undocumented immigrants over the age of 65. Now-Congresswoman Delia Ramirez, then an Illinois state representative, sponsored the bill, and claimed the program would cost just $2 million per year. Unfortunately, this estimate was completely uninformed, with the program exceeding that in its first month.

At the time, she said the coverage will save the state money in the long run, and the cost of $2 million, “is nothing to a $2 billion Medicaid bill,” The State Journal-Register reported.

Since then, the program has grown to include people as young as 42, causing enrollment and costs to balloon. A closed door presentation to IL lawmakers (that has since been made public) reveals that the total cost of this program in 2024 is projected to be $990 million. Enrollments have far exceeded expectations — 51,914 compared to the estimated 33,500 in 2023, or 55% more.

“No portion of that cost is reimbursable by the federal government,” Wirepoints reported.

Illinois is being crushed by fleeing citizens and an ever-growing mountain of debt, which stands at more than $154 billion. This program would be an expensive investment for even the most fiscally sound states, but in Illinois, it’s unaffordable and pushes the state closer to the brink of economic ruin.



Throwback Thursday: Public Relations Budgets Increased By $60M

May 18, 2023


Throwback Thursday! 

Between 1983 and 1985, the Office of Management and Budget let public relations budgets across federal agencies increase by $60.5 million – a 16% increase, and worth over $166 million in 2023 dollars.

Sen. William Proxmire, a Democrat from Wisconsin, awarded the OMB his Golden Fleece Award in 1986 for this ridiculous spending.

According to Proxmire, a study he commissioned found that the spending on public relations from federal agencies jumped from $376.2 million to $436.7 million. Proxmire attributes the increased PR budget to increases in “the number of unfavorable stories and congressional oversight hearings” regarding the executive branch.

This study may have underestimated the increase, with marginally related PR activities like the Department of Defense’s special teams and ceremonial bands being excluded from the final figures. The General Accounting Office, which conducted this study, used a strict definition of PR expenditures, only including what was unquestionably a PR expense, Proxmire found.

Executive agencies spending taxpayers’ money on PR and advertising is nothing new. Agencies will often conduct PR campaigns to advertise new programs or initiatives to show taxpayers where their money is going.

Unfortunately, massive PR expenditures continue to this day. In 2015, Open The Books updated Proxmire’s study, and found $4.34 billion in public relations spending from 2007 to 2014. It also found that based on the number of employees, the U.S. government would be the second largest PR firm in the world.


Nashville Left With Bad Options, Builds $2.1B New Stadium

May 19, 2023


Metro Nashville will build an enclosed stadium in downtown Nashville to host the Tennessee Titans football team. Unfortunately, years of mismanagement put the city between a rock and a hard place, leaving the city with either billions in refurbishment costs at their old stadium, or leaving the state with billions in investments in a new stadium. 

Nashville opted for the latter. It will build a brand new, state-of-the-art stadium at a cost of $2.1 billion, with $1.26 billion from taxpayers. This is the preferable alternative, Mayor John Cooper claims, to the $1.75 to $1.95 billion it would cost the city to maintain its old stadium lease.

Tourists and visitors will also fund the stadium through a new 1% hotel/motel tax.

While Nashville officials bragged that Metro would save big by not tapping into its general fund, those savings are coming on the back of state taxpayers. While $840 million in funding will come from the NFL, the rest is financed by Tennessee taxpayers. The state is issuing $500 million in bonds, and Nashville’s Sports Authority is issuing $760 million worth of bonds to cover the rest.

This also isn’t the end of the story, as Nashville plans to develop 66 acres of land, including the existing Nissan Stadium site, with a large park, greenways, affordable housing, a multi-modal boulevard, local businesses, and more. That’s going to cost taxpayers plenty.

“It's unclear if the Metropolitan Council ever considered getting out of the stadium business and simply asking the billionaire owner of the Titans to pay for the team's own upgrade,” Reason wrote. “This is not an impossible task: SoFi Stadium outside Los Angeles is the most expensive stadium ever built and reportedly had no direct government subsidies. It's probably the finest stadium in the world and routinely hosts special events.”

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