Talks of a bailout for the Three Mile Island Generating Station are heating up after the money-losing nuclear power plant announced plans to wind down operations. Now, the plant’s owners are looking to you, the taxpayer, for help.
Outrageous? Unfortunately, it’s business as usual: Business bailouts — and handouts — are nothing new in Pennsylvania. In fact, we lead the nation in such corporate welfare spending.
Just this year, state taxpayers will subsidize businesses to the tune of more than $800 million. That tab may grow if TMI’s owners get their way.
But should they? Fairness, business sense and history all confirm that Pennsylvania should say “no” to nuclear bailouts.
It’s unfair to force other power generators, which may use natural gas or coal, to prop up their nuclear competitors. Consumer preferences — not lobbying prowess — should determine a business’s success or failure.
What’s more, bailouts undermine the incentive for businesses to make prudent financial decisions. After all, if a taxpayer bailout is available when a high-profile business falters, why sweat the consequences of any decision?
Certainly, risk-taking is a necessary part of any economy, but it should not be encouraged by a political class deciding what companies are important enough to save.
In the case of TMI, a bailout would unfairly boost an industry that has struggled to compete with cheaper energy sources — a point made recently in a Daily News editorial opposing a bailout. As the editorial board wrote, “subsidies given today could end up becoming permanent price supports – for the industry’s bottom line.”
This type of economic meddling hurts taxpayers and consumers who pay in the form of higher energy prices.
If these reasons for opposing subsidies aren’t sufficient, corporate welfare’s history of failure in Pennsylvania should convince anyone.
Since 2007, the Keystone State has spent more than $6 billion in the form of tax credits, loans and subsidies to boost “economic development.” Over that time, Pennsylvania’s economy has been subpar at best.
From 2005-2015, the commonwealth ranked 35th in job growth, 31st in personal income growth, and 38th in population growth. In fact, the 10 states spending the most on corporate welfare from 2007-2015 — Pennsylvania first among them — saw less job growth than the 10 lowest spenders.
Philadelphia businesses have certainly received their share of tax dollars. Companies such as Five Below and Aramark have hit the taxpayer lottery, collecting $1.3 million and $20.6 million, respectively. And Harrisburg hands out these types of favors even as the state struggles with monumental fiscal challenges, including a $1.1 billion revenue shortfall.
The horse racing industry is another corporate welfare beneficiary, receiving approximately $250 million each year from the Race Horse Development Fund. About 80 percent of this finances prize money, nearly 30 percent of which is spent outside of Pennsylvania. It’s safe to say most Philadelphia residents have not benefited from this largesse.
What’s more, a 2016 Pennsylvania Gaming Control Board report found attendance and wagering on horse racing dropped since 2011. Despite the perks, the industry is losing ground.
Given its failures, why is corporate welfare so prevalent? Optics is one explanation. Headlines and ribbon cutting ceremonies suggest growth. But this artificial economic development concentrates power, promotes cronyism and siphons money from working Pennsylvanians.
Instead of handing out selective subsidies, lawmakers should cut corporate welfare and use the savings to reduce the overall tax burden on families and businesses.
Policymakers can also repeal unfair regulations that give advantages to specific industries. One example is Pennsylvania’s Alternative Energy Portfolio Standards, which mandates 18 percent of all electricity be generated by renewable sources. According to one study, the mandate will raise energy costs by $700 million and eliminate more than 11,400 jobs by 2025.
TMI isn’t the first to request a bailout, and it won’t be the last. But forcing taxpayers to subsidize businesses has proved to be a poor way to foster job growth. Instead of showering politically favored businesses with corporate welfare, lawmakers should ensure a fair economic playing field that empowers all Pennsylvanians to pursue their dreams and earn success.
Bob Dick is a senior policy analyst with the Commonwealth Foundation