Tuesday, September 16, 2008

Miracles of the "Private" Sector

"The council under my leadership subsiduzed [sic] this safeway with over 10 million dollars in tax breaks. This was done to bring a first class store to the neighborhood. Ok. Let the snide comment fly." 9/13/08 e-mail from Jack Evans

Well, I'm delighted to have the new Safeway here, so there won't be any snideness from me about this. I'm probably like most residents in less-favored areas of DC who are so desperate to see positive development in our neighborhoods that we'll endorse pretty much anything to get it. A panic went through the community briefly just this morning because of word that DC council member Phil Mendelson had pulled his support for the "Tax Increment Funding Debt (TIF)" amounting to $46 million in subsidies to Roadside, the developers of the O Street Market project. We want this so bad, we don't care what it takes.

Still, the skeptic in me can't help wondering about a system where the taxpayers have to bribe private developers with public subsidies and tax breaks to induce them to build projects for the developers' profit. Are these projects intrinsically so unprofitable that they can only be workable with taxpayer subsidies? Is DC really such an undesirable market that this is the only way to get development? Do we really need to build a stadium for a losing baseball team's private investors, who then turn around and stiff us for the rent? I know the argument that such subsidies stimulate further development that more than compensates for the foregone tax revenue, but I do wonder if the reality bears out such assumptions.

Actually, the truth is that the "private sector" that the Republicans (in particular) so love to extol almost doesn't exist anymore. What we have instead is government-subsidized capitalism (a variant of what was once called National Socialism). It pervades the entire economy, from agriculture to manufacturing to construction to the huge contracting companies that have taken over government functions so extensively that the federal government can't operate without them.

Even though the Bush regime has gutted the country's regulatory system and progressive tax structure,
the Republicans still aren't satisfied and continue to bitch about government regulation and taxes. But the minute it hits the fan, Bear Stearns, Freddie, Fanny, and all the rest come blubbering to Uncle Sugar to bail them out. Maybe Lehmann Bros. will prove the exception--maybe--but I'll bet some kind of parachute appears to soften the fall. (By the way, have you checked out the value of your 401k in the last couple of days? Still want to privatize social security?)

Alas, we've all sipped the Kool-Aid and there's no escaping it now. So I'll just enjoy our shiny new Safeway and hope Roadside really does replace the rotten tooth at O Street market and try not to think too much about how it all came about. Just please spare me the hypocritical right-wing cant about the wonders of the uninhibited free market place.



At 9/16/2008 1:18 PM, Blogger si said...

TIF gets very confusing to me and I kinda get annoyed when the powers that be try to sell it as free money or some magic thing. Its not. But i think it can be a good tool when there is some sort of public benefit involved. city vista had the grocery store and the (mixed) affordable housing. O street market has the grocery and the senior housing. so there is a public benefit for sure. but projects like marriott? baseball stadium? stinks to high heaven. perhaps it might make more sense to streamline the process for getting these big projects done in areas of permitting, zoning etc...penalize land/slumbankers...make the process more efficient.

I'm not sure why Jack Evans had that little email hissy fit, it was response to a neighbor thanking a couple other neighbors for their community work with regard to city vista. Out of the blue and totally uncalled for. I wouldn't brag so much about City Vista if i were him. Didnt it take 25 YEARS? Talk about government hinderance. Its epic when DC owns the land.


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