Let them eat bedbugs

Via ql at Eschaton, a fine example of modern conservatism from the great state of Michigan:

Under a new budget proposal from State Sen. Bruce Casswell, children in the state’s foster care system would be allowed to purchase clothing only in used clothing stores.

Casswell, a Republican representing Branch, Hillsdale, Lenawee and St. Joseph counties, made the proposal this week, reports Michigan Public Radio.

His explanation?

“I never had anything new,” Caswell says. “I got all the hand-me-downs. And my dad, he did a lot of shopping at the Salvation Army, and his comment was — and quite frankly it’s true — once you’re out of the store and you walk down the street, nobody knows where you bought your clothes.”

Under his plan, foster children would receive gift cards that could only be used at places like the Salvation Army, Goodwill and other second hand clothing stores.

I think that speaks for itself, but given my comments below I thought it would be interesting to see whether he fit the pattern of also using tax revenue as a slush fund for corporate interests. That took about three seconds:

Rep. [sic] Bruce Caswell recently announced that the Michigan Economic Growth Authority (MEGA) approved a rural MEGA tax credit today for the Metalloid Corporation for its planned facility in Sturgis.

Metalloid will receive $227,898 in tax credits over a five-year period.  The company plans to establish a new manufacturing operation in Sturgis, generating an estimated 30 new jobs in the area.

That sounds potentially promising, but a look at the data says otherwise. First some assumptions. From the US Census ACS, median Michigan income for the past few years:

2009  $45,255
2008  $48,591
2007  $47,950

Michigan is hardly growing, so let’s be generous and estimate income at $46,000 per worker for the next five years. That means 30 new jobs, at the state income tax rate of 4.35%, will yield $60,030 to the state annually. Assuming the state credits Metalloid in even annual increments, that’s an annual tax credit of $45,579.60, for a net annual gain to Michigan of $14,450 (huge assumptions here, but I don’t know how they discounted the tax credit). The final assumption is that Michigan put in place some sort of minimum requirement of jobs created vs. jobs promised, which in a recent Massachusetts project was 70%, so we’ll assume that Metalloid must create at least 21 jobs to get the money. Based on discount rate of 4.59%, the current average corporate bond yield, the payoffs are:

30 jobs 21 jobs
Michigan $63,278.14 ($15,583.07)
MEGA $199,592.55 $199,592.55

Under these assumptions there is no incentive for Metalloid to create all 30 jobs, which means that Michigan will likely lose money on the deal, while Metalloid will make out quite nicely and Caswell will get to announce his “jobs creating” tax credit while making sure wards of the state are forced to have bedbugs.

Modern conservatism – a peculiarly sour mix of corruption and an obsessive desire to punish the poor for failing to be rich.

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