Subsidizing While Texting

October 1, 2009

Federal and state transportation officials met in Washington yesterday to discuss the latest threat to highway safety: driving while texting.

Those of us watchdogging job subsidies see an equally reckless practice: states and cities subsidizing large corporations without any public accounting of each deal’s costs and benefits. The phrase “flying blind” also comes to mind.

The public officials are dusting off a terrific remedy to fix the highway problem: withholding federal money from states that fail to embrace safety. Remember how Uncle Sam got the states to raise their drinking ages to 21? By withholding 10 percent of federal highway trust funds until a state complied. (This was ruled constitutional by the U.S. Supreme Court in South Dakota v. Dole in 1987.)

The state highway commissioners and four U.S. senators are upping the ante: they say withhold 25 percent of a state’s highway money until it

prohibits texting while driving

. Great idea!

I propose a similar solution to the runaway “

economic war among the states

,” that ruinous zero-sum race to the bottom that

benefits only footloose corporations

while undermining state and local budgets, especially schools and infrastructure.

Let’s say a state (with all of its cities) will lose 25 percent of its annual HUD Community Development Block Grant allocation until it enacts annual, online, company-specific disclosure of all state economic development subsidy deals worth $50,000 or more. All the costs and all the benefits, including jobs created and their wage and benefit levels, including health care. We know they can because we

documented two years ago

that half the states already disclose to some degree online.

We also need responsible budgeting. Let’s also require each state to enact a Unified Development Budget: an annual report to the legislature itemizing all forms of spending for jobs—both appropriations and tax expenditures. Tax breaks typically dwarf appropriations by ratios of 4 to 1, 6 to 1, 8 to 1 or more, so we need the whole iceberg up on the table for an annual check-up.

That will increase the likelihood that legislators trim tax breaks with the same vigor they cut appropriations in tough budget years. As I recently


, state revenues are plummeting faster now than at any time in post-war records.

It’s time for states and cities to put down their iPhones, clean the windshield, recruit taxpayers as co-pilots, and question everything about where job subsidies are taking the economy.