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Opinion | It’s time to abandon corporate welfare in Michigan
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Michigan’s approach to economic development is broken.
The state relies on corporate welfare with giveaways so costly that taxpayers will never see an adequate return on their investment. Plus, despite a willingness to overpay, some projects never materialize.
Meanwhile, some state-administered grants are so problematic that even Attorney General Dana Nessel has suggested possibly withholding funds from the Michigan Economic Development Corporation until oversight improves.
Problems like these prompted me to introduce legislation that would eliminate the Strategic Outreach and Attraction Reserve Fund, a major piece of the state’s misguided economic development platform. I am also working on future legislation that would responsibly dismantle the MEDC.
In addition to SOAR, several other programs could be eliminated through this upcoming legislation — including the Michigan Film and Digital Media Office and an early-stage venture capital program. Worthwhile programs such as brownfield redevelopment and broadband development could be preserved. Programs that aren’t eliminated would be reassigned to a new, more accountable office within the Department of Labor and Economic Opportunity.
The bottom line: Our state misuses billions of dollars that would be better spent improving roads and infrastructure in communities statewide or lowering taxes for everyone to make Michigan more attractive to all job providers.
I supported SOAR when it was created in 2021. But the program does not operate as intended, and I have consistently opposed it since late 2022.
SOAR is a textbook example of how Big Government centralized planning doesn’t work. Just look at what happened recently in Genesee County.
Michigan was reportedly prepared to offer roughly $20 billion in overall direct and indirect incentives — more than $2 million per job — to develop a Sandisk semiconductor complex. Counting federal and local subsidies, overall incentives could have approached $40 billion. But the company pulled the plug — after the state approved more than $250 million connected to the site. Perfectly good homes were bought and demolished, uprooting a neighborhood for no reason.
It’s not SOAR’s only failure, but it may be the biggest.
Meanwhile, grants affiliated with the MEDC raise troubling questions. The attorney general’s office raided MEDC headquarters in June as it investigates a $20 million grant awarded to a project affiliated with Fay Beydoun, a political donor who had been a member of the MEDC’s executive committee. The grant is infamously associated with a $4,500 coffee maker, exorbitant salaries and other questionable spending.
Again, not the only problematic state grant, but a glaring example of a failed system.
MEDC is a quasi-government agency. The downside of its unique structure feeds secretive, faulty decision-making with insufficient accountability and oversight for taxpayers. We should do a top-to-bottom review of MEDC’s functions, but my guess is we can do without much of what MEDC does.
MEDC is not solely responsible for these failures. Legislatures and governors — past and present — approved these systems and sometimes the grants themselves. Accordingly, they share the blame. It’s been a problem for years, but we have plenty of evidence now that the system has failed and is getting worse.
A Bridge Michigan analysis published in April found that since Gov. Gretchen Whitmer took office in 2019, the state had paid nearly $1 billion in subsidies to firms that created about 13,000 jobs. That’s just roughly one-fifth of the jobs that were promised.
There is a better way forward for economic development in Michigan — and that is restoring our faith in free enterprise. Let people keep more of their own money and trust they will invest it more efficiently than government planners in Lansing.
Eliminating SOAR and disbanding MEDC are essential first steps to return to our roots and build a brighter economic future for Michigan.
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