President Joe Biden and his administration are celebrating as companies construct factories across the country – the same corporations that he has demanded pay their fair share. But why did businesses – domestic and foreign – suddenly start building facilities in America? The White House is incentivizing the private sector to invest in new manufacturing plants by showering firms with lavish corporate welfare subsidies. Free money? Even China wants a piece of the financial action.
China and US Corporate Welfare
Gotion Inc. is a Silicon Valley-based energy solutions firm that produces the next generation of battery technology, including cells, packs, and storage systems. The company plans to create a battery plant in Manteno, Illinois, after receiving $7 billion in federal tax credits and approximately $500 million from the state. Many public officials have questions regarding why the private firm was given nearly $8 billion in incentives for constructing a plant that costs $2 billion. Proponents will say it is all about the job creation, which critics say will cost taxpayers about $3 million for every new position at the facility. It is estimated that there will be 2,600 vacancies and that the facility will be completed by 2024.
Gotion plans to make a similar factory in Michigan – also on the taxpayer’s dime.
But this is not the end of the story. Gotion’s parent company, Gotion High-Tech, is linked to the Chinese Communist Party. US lawmakers assert that Beijing maintains “effective control” of the organization through various individual shareholders. So, not only will the CCP have access to US taxpayer resources, but public officials warn the investment threatens national security.
“It is not in the interest of the United States to allow the CCP to control facilities estimated to produce thousands of those batteries, much less to provide it with hundreds of millions of dollars in taxpayer funded subsidies to do so,” wrote Sen. Marco Rubio (R-FL) and GOP representatives from Illinois and Michigan in a September 2023 letter to Treasury Secretary Janet Yellen, urging her to have the Committee on Foreign Investment in the United States (CFIUS) launch a probe into the matter.
Former GOP Congressman Pete Hoekstra, one of the prominent individuals opposing the Michigan plant, had a simple message: “History lesson number one, China is our enemy, they are not a competitor. They seek to destroy us and our communities.” But Illinois Gov. J.B. Pritzker (D) accused Republicans of grandstanding and thinks anyone who opposes this deal is “xenophobic.”
The fact that China is obtaining finite American resources is unsurprising. In April, Liberty Nation reported on a Joint Committee on Taxation (JCT) study that discovered wealthy corporations would mostly benefit from the special interest green energy subsidies found inside the Inflation Reduction Act. Additionally, the report revealed that Chinese firms and other foreign outfits are partnering with US businesses to take advantage of the corporate welfare.
For example, Ford Motor Co. is collaborating with CATL, a company with close ties to the CCP, to construct a battery factory in Michigan, letting the two parties receive advanced manufacturing tax credits. In another instance, Chinese energy entity JA Solar recently announced that it will make a solar assembly facility in Arizona to tap into President Biden’s tax credits.
Meanwhile, a recent analysis by the nonprofit Coalition for a Prosperous America warned that Chinese manufacturers could earn up to $125 billion in US renewable energy tax credits. The group wrote in the April 2023 report:
“An even worse thought is that if renewable energy serves as a model for the EV and battery industry, industries where Chinese companies already lead the world, Chinese companies could lay claim to those U.S. tax credits. The tax credits for EVs and batteries are some eight to ten times as large as those for renewable energy.
“We counted six Chinese solar equipment makers who have already announced U.S. investment plans to take advantage of the IRA tax credits. Chinese solar equipment makers have easy access to capital, since the Chinese Communist government backs solar industry expansion with plentiful loans.”
While there are legislative efforts to prohibit Chinese companies from accessing the Inflation Reduction Act bag of corporate goodies, it is unlikely anything substantive will materialize.
Corporate Welfare for All
The Inflation Reduction Act and the CHIPS and Science Act provide the private sector with hundreds of billions of dollars in free cash if companies claim they are going green. Many of these entities’ pursuits, from establishing green-energy plants to hiring workers, are being paid for by US taxpayers. Economics teaches us that when specific goods and services need to be heavily subsidized, as solar and wind power and electric automobiles are right now, they might not be worthwhile since they drain and misallocate capital from the private sector.
Despite all the shouting about Corporate America paying its fair share, President Biden and the Democrats are keen on giving exorbitant taxpayer-funded handouts to multinational titans.