Missouri’s Republicans Are Self-Destructing
While states like Indiana, Ohio, Wisconsin and New Jersey are founding and creating the way forward for excellent Republican government, Missouri’s Republican Party has decided that state government centralized planning for special interest groups is the way to go.
Not that long ago, St. Louis’ extremely well-located airport, Lambert International, constructed a third parallel 10,000 foot runway for future growth. Since the 9/11 attacks and the demise of TWA through its merger withAmerican Airlines, the new runway has become a giant parking lot of disuse.
Now come some dreamers who say that we can overcome the underused status of Lambert International Airport by creating an “Aerotropolis.” What is an Aerotropolis, you might ask?
The word Aerotropolis was first coined by author Dr. John D. Kasarda. He basically describes modern airports as the core of new development, including manufacturing, distributing, hotels, retail, entertainment, residences and services. The airport will eventually transform itself into an Airport City with access through the air, rail, road and/or water, with tens of thousands working at or around the core. These effects around the core can extend as far as fifty miles from the airport.
In the period just before the 9/11 attacks, TWA and Lambert International Field had more than reached a regional, if not national ascendancy, as the best Midwestern hub outside of Chicago and Dallas. And, so all of the Aerotropolis effects had occurred to the extent they were going to occur before TWA’s demise. Lambert International had already become the Aerotropolis of the St. Louis region. At its zenith in 2000, TWA had over 500 flights a day out of St. Louis.
So, politicians, being what they are, have concocted a theory to construct a Chinese cargo hub to restore economic vitality to Lambert International:
Today, some 130 million of a total of 150 million pounds of freight from China is flown in and out of O’Hare Airport in Chicago with a total of 25-30 weekly flights. O’Hare is a very congested airport and frequently deals with weather issues. The Chinese like St. Louis’ central location and weather, the fact that our airport is underused and that it has plenty of capacity to grow their operations.
If this is true, why don’t they start flying here immediately? We already have plenty of cargo facilities that are under-employed from the TWA era. But, why does anyone in Missouri want to help facilitate the Chinese export their currency-subsidized exports back into our Missouri? This will only result in the loss of more Missouri-based jobs in manufacturing. And, as a matter of fact, there are St. Louis-based companies that are very near Lambert International that have moved production facilities to China. Why should they benefit by having Missouri taxpayers subsidize their shipping operations to make production in China even more attractive and ship more jobs to China?
And now we find out why the Chinese are definitely not yet using Lambert International at all:
For Lambert to become attractive to freight forwarders (shippers) a minimum number of flights per week are required. Air freight is very costly so it is used exclusively for higher-priced and time-sensitive goods. If Lambert had only two flights a week and an airplane would break down it would be three days before the next flight would be available and that’s just too long for perishables and other time-sensitive cargo. We could simply not compete.
A 5-7 days a week flight schedule would have to be offered to raise serious interest and expanding operations to around 20 flights a week would be necessary for a long-term sustainable and profitable proposition.
The goal of the Aerotropolis bill is to give freight forwarders, manufacturers, distribution and shipping centers an incentive to move to or start operations in the St. Louis metro area to facilitate export to China on China Cargo Airlines.
It offers freight forwarders tax incentives per pound of freight exported (only outbound flights are subsidized!) as well as tax breaks on building construction loans and employee income tax. What the bill tries to accomplish is to help offset the first years of money-losing operations and thereby mitigate the initial risks.
If the Chinese are so motivated to get here, there shouldn’t be “years” of money-losing operations. This is why business people should make investment decisions—not politicians.
Other taxpayers have not bought into the argument that tax credits will equate to economic growth:
Supporters of the legislation made wildly optimistic claims. They talked about how this was a can’t-miss proposition that would create “thousands of jobs” and “jump-start” economic activity.
But where was the credible evidence to support the giddy optimism? Short answer: There was none.
Legislators of both parties were prepared to overlook the absence of serious economic analysis. Still more, they were prepared to ignore the absence of any firm statement from the government of China or leading international carriers that they would send more flights to Saint Louis if granted substantial tax credits.
An eight-page “study” by the Regional Commerce and Growth Association (RCGA) was indicative of the slipshod thinking behind the so-called “Big Idea.” The RCGA paper did not attempt to show any real link between the tax credits and increased flights. It somehow assumed that those flights would magically appear.
In response to an information request, the Show-Me Institute obtained a review from the Midwest-China Hub Commission that revealed internal doubts and inconsistencies.
This is the same type of irresponsible government spending that has been eliminated in states with strong Republican governors like in Indiana and Wisconsin, but, for some reason, not in Missouri with its almost veto-proof Republican majorities in the General Assembly. So, what is really going on here?
Chief among them is the Aerotropolis tax credit, which supporters say is key to efforts to turn Lambert into a global cargo player. The $360 million package would subsidize overseas cargo flights from Lambert and facilities to handle their contents.
“This compromise brings us a big step toward realizing the vision of Lambert as the international cargo hub we all know it can be,” said St. Louis Mayor Francis Slay.
The bill also would create several new programs long prized by local businesses, among them tax breaks for centers that house large banks of computers, a stream of state funding to help launch technology startups and a $3 million-a-year credit to bring amateur sports events such as the NCAA Final Four to Missouri. It could even open a window to return control of the St. Louis Police Department to the mayor’s office — something Mayer and House Speaker Steven Tilley, R-Perryville, said Wednesday that they would support.
It’s the same old story. Taxpayer money used for the benefit of private people and entities elaborately disguised and under the guise of hope that the greater public might benefit. It is the kinky world of special interest groups that are always raiding the public treasury by making payoffs to office holders. Unfortunately in Missouri, political contributions to state and local candidates or office holders are unlimited in size, so opportunities for special interest groups to go after taxpayer funds are also unlimited.
To give you an idea of how kinky these things can be to facilitate the funding of special interests, one doesn’t need to look far from the Aerotropolis negotiating table:
Through a mix of professional and personal connections, along with a healthy dose of political savvy, the veteran Clayton real estate lawyer sits at the center of the region’s three-year bid to turn Lambert-St. Louis International Airport into a hub for Chinese air cargo.
A partner in the firm Stone, Leyton and Gershman, he has long held close ties to Paul McKee, who controls about 700 acres around Lambert. Several years ago, they hatched the plan to bring the Chinese to St. Louis.
Since then, Stone’s deep knowledge of the project has helped him add most of the effort’s other key players to his client list. His firm now works for the Midwest China Hub Commission, and he is registered to lobby on the hub for the Regional Chamber and Growth Association. In February, he signed on with the city of St. Louis to draft the Aerotropolis legislation, which contains the $360 million tax credit package Stone and others now say is essential to the effort.
So he represents nearly every side of the deal in St. Louis — and he sits at the negotiating table with the Chinese.
In any other world, this nest of outright conflicts of interest would have collapsed the whole deal because of the obvious exposure to corruption. But, not here in the part of Missouri where such conflicts are celebrated for their capacity to implement successful raids of the state treasury. Additional special interest money will be made available by including in the Aerotropolis legislative package that also contains the Aerotropolis bill, the Missouri Science and Information Act (MOSIRA).
MOSIRA is designed to fund life science special interests. The beneficiaries of MOSIRA’s largess will be private investors in companies selected by employees of the Missouri Technology Corporation (MTC), a quasi-state agency. MOSIRA will be overseen and administered by the state funded MTC. And here is a particularly nasty feature of this trash pile of government spending that is going unnoticed:
The Missouri Technology Corporation (MTC), a partner of the Missouri Department of Economic Development, began working with Katalyst Surgical, LLC, to grow its operations earlier this year. The MTC provided the company a $500,000 loan, which must be paid back by Katalyst, to initially leverage $3 million in private investments in Katalyst from around the globe.
‘The State of Missouri’s and MTC’s support of Katalyst Surgical proved to be the tipping point that helped us raise the private capital we need to grow the company and put more Missourians back to work in an exciting, high-growth industry,’ said Gregg Scheller, founder and CEO of Katalyst Surgical, LLC.
It is unbelievable that a successful inventor who attracted three million dollars in venture capital from around the world would need to crawl on his knees to get the final $500,000 from the taxpayers of Missouri through the Missouri Technology Corporation. And, even if he did, if M.T.C. was absolutely necessary to complete the venture’s funding, they should have at least demanded the option to convert the loan into stock to have the chance to capture any upside since they facilitated the last funding for the company.
But, this begs the question: why is a state funded entity, the Missouri Technology Corporation and MOSIRA, in the venture capital business? If the people there are any good at their jobs, they should go into the private venture capital business and make some real money. But, MOSIRA presents an even greater danger to the citizens of Missouri. In 2003, Missouri legislators created a vehicle to fund life science interests, the so-called Life Science Trust Fund, but they were careful to include language in the bill to protect taxpayer dollars from going to abortion, human cloning and embryo-destructive research. Ever since then, special interests have been looking for a way around this restriction. And lo and behold, Missouri legislators struck this protective language from the MOSIRA bill in a backroom deal. Now, should MOSIRA pass as is, Missouri taxpayers will be threatened with having to pay for life-killing experimentation.
It was good fortune for the taxpayers of Missouri that on or about May 13th, this cesspool of special interest money, the Aerotropolis and MOSIRA bills, failed to pass in the final legislative session.
The terrible news is that Republican legislators are now cooperating with Democratic Governor Jay Nixon to call the General Assembly into special session in September to reconsider these already defeated special interest money bills. But, they have deceptively reinvigorated the whole package by calling it “Made in Missouri Jobs” legislation.
How can the Republican Party in Missouri associate itself in any way with such a poorly disguised gifting of special interest money?
These Republicans are being subjected to one of the most sophisticated rope a dopes in Missouri history. While other state governments are electing Republican Governors to lead them to fiscal responsibility, Missouri Republicans are about to commit political suicide.
If they help resurrect this nonsensical abomination and help pass it into law, they will create mortal enemies out of two of their largest support groups: fiscal conservatives and faith-based voters who have spent years fighting against Missouri funding of embryonic stem cell research and cloning.
Any Republicans voting for this special interest legislation will likely be defeated in 2012. And they will so discredit the Republican Party, that Democrat Governor Jay Nixon will be re-elected Governor in 2012. And, thus, Missouri will miss an historic opportunity to bring the new world of Republican government as it is being delivered in Wisconsin, New Jersey, Indiana and Ohio. What is needed is for Missouri Republican legislators to act like Republicans so that there is a chance for the voters to elect a great Republican governor.