by James Bovard
Tough on unions, but professional sports teams and ethanol producers? Not so much.
Governor Scott Walker has soared to the front of Republican presidential candidates thanks largely to his reputation for fighting wasteful government spending in Wisconsin. Republican faithful across the nation envision Walker as the great hope to finally end Washington budget shenanigans. But a tangled, tawdry stadium subsidy deal Walker is championing raises questions about whether the Wisconsin governor is ready to play in the Big League.
Gov. Walker last month asked the Wisconsin legislature to provide $220 million in funding for a new stadium for the Milwaukee Bucks basketball team. Walker claims that his proposal relies on a “common-sense, fiscally conservative approach” that is carefully structured to avoid gouging Wisconsinites: “There’s absolute security for the taxpayers. No new taxes, no drawing on existing revenues, no exposure to the future.”
But the stadium subsidy, which Walker labels “Pay Your Way,” relies on an accounting gimmick — pretending to earmark the future tax payments of NBA players to cover the costs of the tax-free bonds to finance the stadium. Republican Wisconsin Rep. Chris Kapenga said, “The governor’s proposal would divert these increased tax dollars, which are included in future revenue projections… to the owners of the Bucks to help fund the Milwaukee arena.” Nor is there any reason to presume that government outlays will not soar in the following years. As the Manhattan Institute’s Steven Malanga warns about stadium subsidies: “If you build it for them, they will fleece you.”
Walker claims that bankrolling a new arena “will preserve and potentially expand jobs and economic growth related to the facility.” (The Bucks owners have threatened to pull out of Milwaukee unless they get receive the stadium equivalent of a king’s ransom.) But a government injection of capital into a basketball venue will not magically revive Milwaukee’s prosperity. Economist Dennis Coates, in a study for the conservative American Enterprise Institute, warns that the presence of professional sports teams “may actually reduce local incomes… Wages and employment in the retail and services sectors have dropped [in many local economies] because of professional sports.” Howard Gleckman of the liberal Urban Institute also concludes that “there is no evidence that professional sports stadiums do anything to increase economic development.”
Walker’s stadium pitch is strongly opposed by the liberal group One Wisconsin Now and by the Wisconsin Conservative Digest, whose editor, Bob Dohnal scoffs: “All these claims about development and improving the economy are all just baloney.”
Stadium socialism is crony capitalism at its worst. A Bloomberg News analysis concluded that subsidies for sports structures have cost taxpayers $4 billion in recent decades. Professional sports team owners tend to be the among the richest 1% of the richest 1%.
There’s no way it doesn’t look bad when at the same time Walker is hustling his stadium sweetheart deal, he is also pushing $300 million in cuts for the University of Wisconsin.
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While Walker is bartering his credibility for a basketball stadium, President Obama is outfoxing Walker and other Republicans with a budget proposal to abolish the vast majority of tax-exempt funding for professional sports teams. Obama’s proposal would end the “Super Bowl of tax breaks,” according to former congressman Dennis Kucinich. Though Obama’s measure could reduce tax credits by more than half a billion dollars in the coming decade, there is little chance that the Republican-controlled Congress will enact this reform.
Stadium subsidies are not the only folly that Walker — whose campaign is stressing his “bold, fresh and new ideas” — is embracing. In 2006, Walker distinguished himself as one of the few Midwest Republicans to vigorously oppose federal ethanol policy as “central planning” and a “big government mandate.”
Compelling Americans to use ethanol is bad for auto engines and the environment, and by driving up corn prices, ravages both livestock producers and the Third World poor. But when Walker visited Iowa this March, he flip-flopped and endorsed perpetuating the federal mandate requiring ethanol use. While ethanol is holy water for Iowa farmers, it symbolizes political treachery for much of the rest of the nation.
Walker has done a stalwart job of fighting government unions: Will he show the same toughness resisting special interests favored by Republicans? It doesn’t look good.
James Bovard is the author of Public Policy Hooligan.