Op-ed: New Mexico Betting on Losers

The following opinion piece appeared at KRWG and in several other publications.

Left, right, or center, economists tend to agree that “corporate welfare” is not good public policy or good economics. A recent Rasmussen poll found that approximately 65% of Americans (regardless or political philosophy or affiliation) oppose corporate welfare. Definitions of what constitutes such “welfare” vary, but generally relate to policies that involve politicians picking winners and losers in the economy.

Sadly, New Mexico has a long history of picking “losers” and one of those losers appears to be in its death throes. Specifically, New Mexicans have spent hundreds-of-millions to construct, expand, staff, and maintain Spaceport America in Southern New Mexico.

While the facility has been used for other space-related purposes, it was expressly built to house Richard Branson’s Virgin Galactic for its space tourism business. Few examples of corporate welfare in American history have been more speculative. Sadly, after having been open for nearly 15 years and with just a handful of space tourism launches under its belt, Virgin Galactic laid off 185 workers and ceased tourism launches in November of 2023 pending development of a new fleet of vehicles that will (hopefully) help the company turn a profit.

Wall Street is not optimistic about the company’s prospects and the share price (SPCE) which at one time hit the $60 mark per share has plummeted to below $1 per share. An extended period at below $1 could get Virgin Galactic’s stock delisted. In the absence of Virgin Galactic at the facility Spaceport America takes on all the trappings of a costly “white elephant” in the New Mexico desert.

Sadly, there is not much that can be done regarding the “world’s first purpose-built commercial spaceport.” Viable uses for the facility which (by design) is far from New Mexico’s population centers are limited.

While this is an example of past corporate welfare gone bust, it is not alone. Under then-Gov. Bill Richardson New Mexico spent $100 million on Eclipse Aviation only to see it go bankrupt. New Mexicans must work to prevent future losses from future corporate welfare schemes.

The next big “loser” in the making is Maxeon Solar. The Singapore-based solar cell manufacturing company is in line to receive a mind-blowing $2.4 billion industrial revenue bond and $20 million in LEDA funding for the facility (courtesy of New Mexico taxpayers). This is in addition to myriad federal subsidies and state/local mandates that favor the solar industry.

Even with Joe Biden in the White House shoveling billions of dollars at the “renewable” industry, Maxeon Solar’s stock price (MAXN) has plummeted. In early 2021 the company touted a stock price of nearly $58 per share. Maxeon’s share price as of early May 2024 is about $2.00.

It is hard to imagine the “renewable energy” gravy train getting any more generous in a second Biden term and it will likely be reduced if Donald Trump makes it back to the White House. Is New Mexico setting itself up for yet another costly corporate welfare failure? It certainly seems like it.

Sadly, corporate welfare is attractive to politicians of both parties. But in Democrat-dominated New Mexico it seems that Democrats will not call their own out on these unpopular giveaways. Recently, the New Mexico Environment Department announced it was giving United Parcel Service (UPS) nearly $500,000 for the company to buy “clean” delivery trucks.

UPS is one of the world’s largest and most profitable companies. They can certainly afford to buy their own delivery trucks without the help of New Mexico’s taxpayers. Sadly, our politicians are busy spending our money on their priorities rather than working to improve our State.

New Mexico is the third-poorest state in the Union. Our politicians’ propensity to support corporations with our money (instead of returning it to us and improving our state’s business climate) is one of many reasons for this. Only the voters can force change in New Mexico that brings wealth and prosperity.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.