From The New Yorker Magazine
Did Scott Walker and Donald Trump Deal Away the
Wisconsin Governor’s Race to Foxconn?
As the
public has become aware of the spiralling costs associated with building a new
Foxconn plant in Wisconsin, the deal has become something of a political
liability for the governor.
By
Dan Kaufman
November 3, 2018
In September of 2017, Governor Scott
Walker, Republican of Wisconsin, signed a contract that would make his state
the home of the first U.S. factory of Foxconn, the world’s largest contract
electronics manufacturer. The company, which is based in Taiwan and makes
products for Apple, Sony, Microsoft, and Nintendo, among others, would build a
21.5-million-square-foot manufacturing campus, invest up to ten billion dollars
in Wisconsin, and hire as many as thirteen thousand workers at an average wage
of fifty-four thousand dollars a year. For Walker, whose approval had fallen to
the mid-thirties after his aborted Presidential run, the deal was seen as a
crucial boost to his reëlection prospects. “The Foxconn initiative looked like
something that could be a hallmark of Walker’s reëlection campaign,” Charles
Franklin, a professor and pollster at Marquette University Law School, told me.
“He could claim a major new manufacturing presence, one that would also employ
blue-collar workers in a region where blue-collar jobs are more scarce than
they used to be.”
The idea of putting the plant in southeastern Wisconsin originated
in April of 2017, during a helicopter ride President Donald
Trump took with Reince Priebus, a Wisconsin native and Trump’s chief
of staff at the time. Flying over Kenosha, Priebus’s home town, they passed the
empty lot that once held the American Motors Corporation plant. “Why is all
that land vacant?” Trump asked, according to an account Priebus gave to a
Milwaukee television station. “That land should be used.” When Terry Gou,
Foxconn’s chairman, came to the White House to discuss Foxconn’s desire to
build a U.S. factory, Trump suggested the site in Kenosha. It wasn’t big
enough, but the town of Mt. Pleasant, fifteen miles north, pursued the company
aggressively, and was ultimately selected by Foxconn in October of 2017.
The project moved quickly. Last June, a groundbreaking ceremony was held in Mt.
Pleasant to celebrate a political triumph for Trump and Walker. After depositing
a couple scoops of earth with a gold-plated shovel, Trump called Foxconn’s
future campus “the eighth wonder of the world” and hinted that its promise of
well-paying manufacturing jobs could be a model for other states in the
Midwest, which were, like Wisconsin, crucial to Trump’s narrow Electoral
College victory in the 2016 election. “I recommended Wisconsin, in this case,”
Trump said. “And I’ll be recommending Ohio, and I’ll be recommending
Pennsylvania, and I’ll be recommending Iowa.”
But as the public has become aware of the spiralling costs for
these jobs, the Foxconn deal has become something of a political liability for
Walker, particularly among voters outside of southeastern Wisconsin. Those
costs include taxpayer subsidies to the company totalling more than $4.5
billion, the largest subsidy for a foreign corporation in American history.
Since Wisconsin already exempts manufacturing companies from paying taxes,
Foxconn, which generated a hundred and fifty-eight billion dollars in revenue
last year, will receive much of this subsidy in direct cash payments from
taxpayers. Depending on how many jobs are actually created, taxpayers will be
paying between two hundred and twenty
thousand dollars and more than a million dollars per job. According to the
Legislative Fiscal Bureau, a nonpartisan agency that provides economic analysis
to the Wisconsin state legislature, the earliest citizens might see a return on
their Foxconn investment is in 2042.
There are other costs that have contributed to public skepticism over the Foxconn deal. At Walker’s request, Scott Pruitt, then the head of the Environmental Protection Agency, overruled the objections of his staff to grant most of southeastern Wisconsin an exemption from limits on smog pollution. (Walker declined to respond to interview requests for this article.) The Wisconsin state legislature passed a bill granting Foxconn special court privileges; unlike other litigants, the company can make multiple appeals of unfavorable rulings in a single case, and can even appeal an unfavorable ruling directly to the conservative-controlled Wisconsin Supreme Court. But few costs have caused more outrage than the manner in which Mt. Pleasant’s Village Board of Trustees secured the twenty-eight hundred acres of land, roughly four square miles, necessary to build the Foxconn campus.
To make space for Foxconn’s development, which will also
necessitate many miles of new roads, the Village Board has been buying
properties, sometimes using the threat of eminent domain to force reluctant
homeowners to sell at a price determined by the village. Several weeks before
the groundbreaking, the seven-member board went further. By a 6–1 vote, the
board designated the entire twenty-eight-hundred-acre area “blighted,” which
will allow Mt. Pleasant to issue bonds that are exempt from both federal and
state taxes, and may also grant the village a more expansive use of eminent
domain to seize the property of the few remaining holdouts, a small if highly
visible group, whose property-rights fight embodies a wider sense of
disenchantment with the Foxconn deal.
The agreement’s high cost, estimated at nearly eighteen hundred dollars per household, has created a heavy burden for taxpayers, and a political risk for Walker. After the terms were announced, last year, Governor John Kasich, Republican of Ohio, said, “I’ll tell you one thing, it’s not going to take us forty years to make back the investment we make. We don’t buy deals.” A majority of Wisconsin voters have never believed the state was getting its money’s worth, according to polls conducted by Franklin at Marquette. His polling has also consistently shown a majority of voters believe that Foxconn will not help businesses in their area. “The governor’s fortunes are so tied up with his backing of Foxconn,” Franklin said. “When it was first announced it was, in the short term, perceived as this major victory for Walker, the thing that might solidify its hold on the election.” Now, Foxconn is one of the main reasons Walker has trailed his Democratic opponent, Tony Evers, the state superintendent of schools, in nearly every poll since the August primaries.
There are other costs that have contributed to public skepticism
over the Foxconn deal. At Walker’s request, Scott Pruitt, then the head of the
Environmental Protection Agency, overruled the objections of his staff to grant
most of southeastern Wisconsin an exemption from limits on smog pollution.
(Walker declined to respond to interview requests for this article.) The
Wisconsin state legislature passed a bill granting Foxconn special court
privileges; unlike other litigants, the company can make multiple appeals of
unfavorable rulings in a single case, and can even appeal an unfavorable ruling
directly to the conservative-controlled Wisconsin Supreme Court. But few costs
have caused more outrage than the manner in which Mt. Pleasant’s Village Board
of Trustees secured the twenty-eight hundred acres of land, roughly four square
miles, necessary to build the Foxconn campus.
To make space for Foxconn’s development, which will also necessitate
many miles of new roads, the Village Board has been buying properties,
sometimes using the threat of eminent domain to force reluctant homeowners to
sell at a price determined by the village. Several weeks before the
groundbreaking, the seven-member board went further. By a 6–1 vote, the board
designated the entire twenty-eight-hundred-acre area “