NYT investigates when corporations get incentives from governments

>>> every year local governments across the nation fight to bring big business on to their communities with attractive incentives. in a ten-month-long investigation, "the new york times" found that cities, counties and states are giving out more than $80 billion worth of incentives annually to companies, all for the promise of new jobs. but some are now asking if the payoff is really worth it. here with us now is investigative reporter for "the new york times," louise story. and before we begin the interrogation of you about this piece, i would just say that for anyone out there who is worried or agonizing over the future of newspapers and their role in our culture, this particular series, along with many other series in many other papers, you have reason for hope. this is what newspapers are all about. so it's really shocking when you begin the series. yesterday was the first installment. today, obviously the second. to look at what states are expending, tax revenues , potential tax revenues , companies take them into a state to build a factory or a plant that often don't work.

>> well, it was amazing, you know, earlier this year i started this in february. and i was talking with my editors. everyone knows about that deal in their town or in their state , but they're usually only covered locally. and so we said, well, what does this add up to? and i looked at data all over the federal government like with the census where they do collect information on local budgets, but they do not collect information on these incentives. so there really weren't, you know, government, federal figures that you could look at a national picture. and so i started calling around, going to all these different agencies' websites. and what was so interesting is that a lot of governments did know for different programs, and i recorded their figures, but also a lot of governments had no idea what certain programs are costing them and aren't even trying to find out.

>> it's an incredible story, louise . how long did you work on it?

>> i started in february.

>> so all year, basically.

>> yeah, a while. it was a lot of data digging.

>> i can imagine. there's a great line in there about the twitter employee who tweets that he's sitting on the roof, and he says something like oh, is this real? i'm sitting on the roof. someone's searching me smoothie shots. is this real life ?

>> san francisco twitter was thinking about leaving. so san francisco gave them this deal that might be worth up to $22 million. and so they stayed. and they built this new building, and they moved in on the rooftop. san francisco has been having its park budget cut. so san francisco citizens are seeing their parks get worse. and so here was a twitter employee in the park on their rooftop saying i'm drinking smoothie shots. is this real life ?

>> can i ask you, have you -- has this gotten worse in the past couple years? because one of the things we've seen, of course, in the economy is companies are trying to extract every drop of revenue from any kind of nonsales-driven source they can because sales demand isn't there anymore. that's why they're extracting from profits, cost conducting, productivity. has this been enhanced in the past two, three years as companies increasingly look for other ways to, you know, goose their balance sheets?

>> there certainly is sort of a desperation when you talk to -- i talked to all kinds of mayors and economic development officials and governors for jobs. and they say, we need jobs. and that makes, you know, when they're the negotiating power table, they don't have the power the companies have because they want these jobs. is it more than a few years ago? because there is not national data collection , i cannot definitively tell you what it was five years ago. what i can tell you, because i talked to people who have been in this space, watched this going back to the early '80s is that this is more commonplace. this is more widespread. this is expected in business today , and it was not to this degree back in the 1980s . we've had a transformation. this is the way of doing business now for every company.

>> louise , one of the things that's fascinating, because we have a federal system , we have 50 states . and the states can compete against each other for jobs. and that's what's happened. it's been going on, as you say, for a long time. it's intensifying now. i'm looking at "the times." i always like to see governor perry back on the front page for any reasons. governor perry ran very much on the texas jobs story. and people pointed out at the time that texas had produced a lot of jobs, but they were low-wage jobs and that there was at the same time public services in texas . so talk about the texas story and to what extent there's a link between states that give out a lot of handouts to businesses having then to be forced to cut public services to pay for those handouts to businesses.

>> i took a very close look at texas in today's paper. and texas has had job growth . in fact, half of all private sector job creation in the last ten years is in texas . but here's the question. is that job creation really net new jobs, you know, or are some of those jobs that were essentially stolen from other states? governor perry makes no bones. he travels to california, new york , all these places and says bring those jobs to texas . i looked at the quality of jobs there. for instance, i looked at amazon.com which has distribution facilities. they had one in texas . they're bringing more into texas now. and i talked to a bunch of workers in these facilities. and they describe these as really rough jobs. and in fact, the workers were surprised to learn that their jobs had been subsidized. and they said, well, look, if we're getting these incentives, hire a few more people so the quotas aren't so intense and these warehouse distribution jobs, you have to haul this thing, haul that thing, scurry around, and you don't meet your quota in many cases, you lose your job and they're very intensive. there are a lot of questions. of course these incentives do -- are tied to some jobs. there are jobs. but are these good jobs? are we paying too much for them? there's no way to know until you start bringing the costs together.

>> that question about whether creating jobs or whether you're shifting jobs from state to state is really relevant.

>> as a former state official who dealt with these issues, bob erlich and i had to come in and try to create incentives within our economy, the $2 million deficit. you find completive ways to keep businesses that you have, but expand that base. so this idea these incentives were somehow bad for the economy or bad for the local market, to me, just don't add up necessarily because every state is different. you do compete -- we compete with virginia and delaware and pennsylvania and west virginia in our region. we want the jobs that we can get for our technical and other infrastructure with the state . how does all of that work out in the wash ultimately? who is the bad guy here? is it the governor goes out and gives the incentives with the legislature or is it the employer who keeps -- takes those incentives and want to stay in the state or come to the state ?

>> this not really about who is the bad guy but do we have a system that works? there is no national thinking. zero today on what are we spending on all this? is it coordinated? why, for instance, in kansas do you have kansas and missouri outbidding each other to have companies literally move five miles, create no new jobs and we all were talking earlier about the federal budget discussion, the states get more than 20% of their budgets from the federal government . we do not have tons of extra money in this country. so it's the time to look at you've got to compete globally, do all these state programs.

>> we should point out that if you go to nytimes.com you can take a look at what your state is doing interactively on the website. it's really instructive to take a look at it. i was looking at the listing in massachusetts and new york last night.

>> it's fascinating.

>> of dole projects.

>> do you want to figure out a good reason to get angry today, lack at that chart.

>> i have a good reason to get angry with you sitting next to me. the final installment will appear in tomorrow's "new york times." still ahead, ford president and ceo alan mullaly joins the table.