Keep in mind that this GE plant primarily makes parts for defense contracts—these jobs are provided by a guaranteed contract:
General Electric Co. has made an unusual offer to the state: Give us $25 million in tax credits, and we won’t cut any more than 150 positions at our aircraft engine plant in Lynn.
The conglomerate has already cut the Lynn plant’s workforce by 600 jobs and could cut 150 more. But General Electric said that if it receives the state aid to help fund a $75 million retooling of the plant, it would maintain the remaining 3,000 jobs for six years.
If you’re thinking this sounds odd–don’t states give tax breaks to lure jobs in, not keep them (a dubious proposition in the long term)–you would be right:
Typically the state grants tax breaks to companies that create — not cut — jobs, making the General Electric request unusual. State officials said they cannot recall another case of a company asking for tax subsidies while warning it will continue to reduce employment.
“We’re now having to pay companies not to fire people,” said Deirdre Cummings, legislative director of the Massachusetts Public Interest Research Group, a consumer group. “This is throwing economic development subsidies on its head.”
Personally, I think GE is bluffing because the $25 million is a paltry sum:
General Electric receives billions of dollars in taxpayer funds annually in the form of government contracts, including $1.8 billion in military work at the Lynn plant in fiscal 2009….
But some policy analysts said that given the size of GE and the contracts awarded to its Lynn plant, the $25 million subsidy is too insignificant to matter.
“If the market is not working for them in their current location, I don’t see how the state incentive is going to change that fundamental reality,” said Benjamin Forman, research director for the MassINC, a Boston public policy research firm. “I don’t think there’s an economic case for that.”
Meanwhile, look at the underlying finances that are driving this:
Last year the company reported $11 billion in profits on $157 billion in revenue.
Yet its federal income tax bill for 2009 was $0. The global conglomerate reported losses on its US operations, largely because of difficulties its GE Capital unit faced from the financial crisis, according to GE’s annual financial report.
Yes, workers could lose their jobs thanks to the ineptitude of the banksters. Seems to be a lot of that going around. Go ‘free markets’!
Isn’t the whole point of military Keynesianism to provide jobs? Of course, will either Senator Kerry or Brown do anything? Probably not.
An aside: It’s not even clear we need this engine–it sounds as if we don’t need it. But if we’re going to build one, then why are we having to pay even more (the $25 million subsidy) for it?
Update: More here.