May Wisconsin's Foxconn Debacle Force National Policy Change

Newly elected Wisconsin Gov. Tony Evers says he wants to renegotiate the state’s deal with Foxconn. “Clearly, the deal that was struck is no longer in play.”

Under the agreement, Foxconn stands to reap $4 billion from Wisconsin taxpayers. President Trump once actually called the Foxconn deal the “eighth wonder of the world.” But the only wonder is why public officials entered into the deal in the first place. They are learning that any deal a political jurisdiction makes with Foxconn is likely to change before its eyes.

Foxconn has broken a string of promises it made to entice former Governor Scott Walker into promising billions.

Foxconn promise: 13,000 jobs.
Reality: “Difficult to imagine right now.”

Foxconn promise: To build a massive “Gen 10.5” flat-screen plant.
Reality: Foxconn will actually build a smaller, less costly, “Gen 6” facility.

Foxconn promise: The plant would mostly provide jobs for semi-skilled workers.
Reality: It will now mostly provide jobs for engineers, who are already in demand, and few for factory workers.

But let’s look at the other side of the ledger? What promises did the state make to Foxconn - promises Republican state legislative leaders say it is duty-bound to stick to?

The state promised Foxconn up to $2.85 billion in “refundable” tax credits - which Foxconn would receive even if it paid no taxes in Wisconsin. Government incentives usually see a company getting less than 10 percent of salaries back in tax concessions and cash. Foxconn would get almost 20 percent from Wisconsin. It’s unusual to see a company receive more than 10 percent of its capital investment back from government. Foxconn would get 15 percent.

These are promises for the future, promises that have fortunately not been kept. But the local governments, Racine County and the Village of Mount Pleasant, have already been spending money upfront to buy land and infrastructure for Foxconn’s proposed factory site; in total, local spending is expected to come to almost a billion dollars.

The local governments have thus far borrowed a cumulative $350 million through three bond issues - debt that prompted Moody’s Investment Service to lower Mt. Pleasant’s credit rating.

Even if Foxconn continues to build in Wisconsin, and keeps increasing its job quotient for 15 years, how do we know the company won’t dump its workers, and shift entirely to robots? Once Foxconn has bled every last nickel out of Wisconsin, what’s to keep it from breaking free?

Walker once called the deal “transformational.” Hopefully, he was right, but not in the way he intended. Maybe politicians’ attitudes about corporate welfare are transforming. Maybe they are starting to realize it isn’t worth the cost.