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The Great Recession catalyzed a number of crony deals. From bank bailouts, automaker bailouts, several stimulus packages, to many other government benefits to businesses such as expanding the roles of Fannie Mae and Freddie Mac or extending the wind energy tax credit. Just how bad was the recession? The unemployment rate is one way to measure it, and the map above shows a huge spike from 2008-2010 – followed by a very slow recovery. Despite the huge increase in cronyism.
All data comes from the Bureau of Labor Statistics, January, 2007 through January, 2014. (seasonally adjusted data not available at the county level).
*The first GIF didn’t include December, 2013, or January, 2014. The GIF has been updated to include those months. Further updates were made to fix a GEOID coding error that replaced some county unemployment rates with city unemployment rates.
Fortune magazine announced its annual list of Business people of the Year. Elon Musk came in at number one on the list. The magazine noted him for his cultural impact, his first place rank as “revenue gainer”, and his second place rank as “stock price gainer.” However, the magazine failed to note that a lot of the revenue his companies generate comes from the federal government.
Musk is perhaps most famous for starting the electric car company Tesla. The company’s 2010 stock IPO was hailed as a great success. But a lot of the company’s car sales come from a mandate for electric vehicles in California known as the zero emission vehicle program. Car companies either have to produce electric vehicles or buy electric vehicle credits from companies that do, such as Tesla. Buyers of Tesla’s luxury electric vehicles also receive a $7,500 tax credit from the federal government upon purchase. Musk’s two other companies, SolarCity and SpaceX, both heavily depending upon government contracts and financing.
SolarCity develops solar power projects and has several government clients in its portfolio. It also has benefited from hundreds of millions of dollars in a government subsidy program known as 1603. The Department of the Treasury is responsible for administrating the program and currently the Treasury Inspector General is investigating whether SolarCity overstated the fair-market value of its solar projects in order to receive more in subsidies. Musk is the chairman of SolarCity and his cousin is its founder and CEO.
Musk also founded and runs SpaceX, which officially goes by the name Space Exploration Technologies. SpaceX builds rockets and spacecraft that help launch satellites and other cargo into space. According to USASpending.gov, SpaceX has received over $1 billion in contracts from NASA and $243 million in contracts from the Air Force. SpaceX also benefited from $105 million in financing from the Export-Import Bank that supported the launch of a commercial satellite.
Did you know the ExIm Bank received more than 60% of the Export-Import Bank’s long-term loan guarantees in 2008 and 2009? That amounts to nearly $10 billion.
Crony Chronicles has five posts lined up starring North-eastern state corporate welfare queens. Watch out for the contestants and be sure to read their bios! Here’s our first contestant.
Ladies and gentlemen, meet Madame Maine. Set sail off her jagged coastline, dine on her fabulous lobsters and join her as she strolls through Vacationland. Her favorite activities include napping by the fire in one of her many snow dusted cabins, moose watching and picking Maine’s very own wild blueberries. You can also find her trying out her business savvy with Maine’s BETR program. 20% of your state budget to business subsidies anyone? Lads and gals, Miss “Maine stay” Corporate Welfare!
(View all the states in our subsidy pageant here.)