Looking back on Chicago's great 2001 Boeing tax giveaway

Chicago Theater welcomed Boeing in 2001. 

It's been nearly 20 years since Boeing Corp. pulled one of the great hustles on the people of Chicago with help from then-Mayor Richard Daley and Gov. George Ryan. While many of us protested the deal that brought Boeing's headquarters from Seattle to Chicago, we couldn't stop the huge corporate tax giveaway that would become the norm for cities and states competing with each other for corporate investments.

Families of Boeing 737 MAX crash victims protest. 

Boeing promised to bring 500 high-paying jobs to Chicago and claimed that the combined executive pay would trickle down and create even more jobs and small businesses. This in exchange for $60 million in tax breaks for the huge military defense contractor. Their promise wasn't worth the paper it was written on.

Gov. Ryan even claimed at the time that the move would bring Illinois more than prestige. "It will pay huge dividends, producing a 100-to-1 return on the state's investment", he said.

It didn't. 

Boeing's former CEO Tom Condit explained in 2001 and later, the headquarters move was made to create psychological distance between the corporate leadership and the manufacturing sites on the ground.

There also was a suspicion that the corporate and political climate of Chicago — its more conservative, business-friendly bent; its expensive steakhouses where macho titans of industry could talk over cigars and scotch — would better suit the taste and personality of men like Boeing’s then-president, Harry Stonecipher.

From their airy perch in Chicago, Boeing’s leaders could — and did — make steely decisions about where to locate work or where to make layoffs at a safe remove from the people affected on the ground.

 The BGA's Alejandra Cancino, writes this week in Crain's, that the Boeing deal,

...laid down a marker for megadeals to come that opened the public purse in the name of economic development. Since then, states and cities have engaged in an escalating bidding war for jobs and bragging rights, with the promise of future economic riches as bait. 

A new massive $2 trillion coronavirus stimulus package signed by Trump includes billions of dollars in loan guarantees for Boeing, in financial peril before the pandemic because of the grounding of its faulty 737 Max aircraft. By that and other incentive measures, the price tag for the 2001 Boeing deal might seem puny. 

As would the failed offer of $2 billion in tax incentives then-Mayor Emanuel and Gov. Rauner made to Amazon in exchange for a promised "50,000 new high-paying jobs." That deal fell through but it's one that Gov. Pritzker appeared ready to pursue again in 2019 when Rahm was still mayor.

With Rahm and Rauner gone and more important things for Mayor Lightfoot to focus on, I doubt he'll pursue it now.

Side Note -- I would call the two Boeing 737 Max crashes, which killed 346 men, women and children, a case of criminal neglect and malfeasance and wonder why none of those top execs have been dragged from their "airy perch" in Chicago and carted off to prison?

Texas' school-to-prison pipeline

 "...the single most important predictor [of incarceration] is a history ofdisciplinary referrals at school."

Mainly minority students in Dallas and other urban school districts in Texas are increasingly being charged with Class C misdemeanors for less-serious infractions that used to be handled with a trip to the principal's office, according to a new study.

The report from the nonprofit advocacy group Texas Appleseed, a nonprofit social justice advocacy group, is titled "Texas' School-to-Prison Pipeline."The report examined student disciplinary data on 22 of the largest school districts in the state. It found that most have sharply increased the number of campus police officers - resulting in far more misdemeanor tickets being handed out to students.

"Disrupting class, using profanity, misbehaving on a school bus, student fights and truancy once meant a trip to the principal's office. Today, such misbehavior results in a Class C misdemeanor ticket and a trip to court for thousands of Texas students and their families each year," the group said in the report, Texas' School-to-Prison Pipeline. (Dallas News)

According to the report;

• More than 80 percent of Texas prison inmates are dropouts.

• More than a third of Texas public school students dropped out in 2005-06 [What ever happened to the "Texas Miracle"?-m.k.].

• Among the “risk factors” commonly associated with future involvement in the juvenile justice system, the single most important predictor is a history of disciplinary referrals at school.

• African American students—and to a lesser extent Hispanic students—are significantly over-represented in Texas schools' discretionary disciplinary actions.

J.P Morgan bailout brings a gift for charter operators

Conservative think-tanks like Fordham and AEI are pouring out their hearts to the poor for-profit school reformers who they claim, are being squeezed out of Duncan's i3 funding opportunities. They also claim that privately-managed charter schools are  "terribly underfunded." Debra Viadero at Edweek, gives the claim some credence in this blog post although she can't help but "wonder whether this report takes into account the dollars that many charter schools get from foundations and other private donors." Wonder indeed, Deb.

Meanwhile, back in the real world, J.P. Morgan Chase took out full-page ads in the nation's news papers to announce a gift of $325 million to privately-run charter school organizations. I know the money is funneled through J.P.'s private tax-sheltered foundation, but I wonder if it comes from the pot of $50 billion in bailout money they received from us taxpayers? It's also questionable how much of that money will ever reach a classroom once the partner institutions and management companies like The Reinvestment Fund of Philadelphia, The Low Income Investment Fund of San Francisco, and NCB Capital Impact of Arlington, Virginia each take their cuts and pay their own salaries. Some charter managers make hundreds of thousands each year in salaries and benefits.

Interesting side note--the Midwest chairman of J.P. Morgan Chase is none other than Bill Daley, brother of Chicago's mayor, Richie, who currently controls the schools in our fair city.

Philanthropy watch

The two biggest philanthro-capitalists pushing the top-down “business model” of public school reform, are both in trouble. Their model, it seems, doesn’t even work very well for business.

Back in 2007, billionaire philanthropist Eli Broad boasted to the New York Times:

"What smart, entrepreneurial philanthropists and their foundations do is get greater value for how they invest their money than if the government were doing it."

Broad then, was on the board of AIG which lost $62 billion in the last quarter alone and went begging for another gigantic government bailout. To put that in context, AIG lost more in just 92 days than the total spent on the federal relief effort following Hurricane Katrina. I guess Broad and his partners at AIG must have had an attitude adjustment.

******

The Gates Foundation’s investments have also taken a beating during the current market crash. But no need to pass the hat just yet. The $30 billion fund (not counting Buffet’s additional $30 billion) invests 95% of its holdings in mainly blue chip stocks. Can’t go wrong there—right?

Well a big chunk of that dough was put into the failed Washington Mutual and AIG stocks. But Gates was somehow able to pull his money back out of AIG just before it bottomed out. Whew! Just lucky, I guess.

Now the foundation is heavily into (non-green) companies like Caterpillar, Exxon, Coca Cola and McDonald’s. Hope they do better. Schools and malaria victims are (unfortunately) depending on it.

Ownership Society quotables

Competition?

Upon hearing that N.Y. Mayor Bloomberg will bail out his failed Brooklyn Catholic schools by allowing them to become publicly financed charters:

Bishop DiMarzio said he was eager to support the proposal, saying he believed competition was the best way to improve schools. (NYT)

Students and teachers could still be selected by the church and church-hired teachers given short-cut certification.

The “rebuilding” of Iraq-- bribes in pizza boxes

Business associates of Dale Stoffel, an American arms dealer and contractor who was killed in Iraq in late 2004:

“Fifty thousand dollars delivered in pizza boxes to secure contracts,” said the former associate, a consultant in the arms business with whom Mr. Stoffel sometimes worked in the former Eastern bloc. “Of course, it just looked like a pizza delivery.” (NYT)

Frank Rich on the Limbaugh Party’s self-denial

This G.O.P., a largely white Southern male party with talking points instead of ideas and talking heads instead of leaders, is not unlike those “zombie banks” that we’re being asked to bail out. It is in too much denial to acknowledge its own insolvency and toxic assets. Given the mess the country is in, it would be helpful to have an adult opposition that could pull its weight, but that’s not the hand America has been dealt. (NYT)

Head of the GOP says, “don’t trust us…”

RNC Chairman Michael Steele on FOX tells voters, “"You have absolutely no reason, none, to trust our word or our actions at this point." (Huffington)