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In 2018, when Amazon went through its much ballyhooed public search for a “second headquarters,” states and cities across the country pledged billions of public dollars to the retail giant if it placed its “HQ2” within their borders. Amazon aggressively used nondisclosure agreements to keep the details of those bids under wraps, requiring that they be signed by elected leaders, economic development officials, and even servers at restaurants where political elites and corporate rent-seekers went to discuss potential deals.

Those nondisclosure agreements, or NDAs for short, prevented public officials (and bartenders, I guess) from divulging what sort of public resources, in the form of tax breaks, regulatory relief, or other freebies, were being offered to one of the most profitable private businesses in all of human history, in exchange for a new office building.

In the wake of that economic development debacle — which ended with HQ2 being chased out of New York and never really materializing in Virginia either — there was a brief moment during which it looked like some states might eliminate the use of NDAs in corporate subsidy deals. New York even passed a ban through the State Senate multiple times.

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Alas, none of the proposed bans ever got over the finish line, allowing their use to continue, unabated, in subsidy deals for everything from new auto manufacturing plants to retail warehouses to chip foundries.

But what wasn’t accomplished then is starting to be accomplished now, thanks to the proliferation of one thing: Data centers. Not only have some governors already used their executive power to ban NDAs in data center deals, but the political environment is such that there is an opportunity to make some of those bans permanent.

To date, four Democratic governors — Virginia’s Abigail Spanberger, Pennsylvania’s Josh Shapiro, Massachusetts’ Maura Healey, and Maryland’s Wes Moore — have banned executive agencies from signing NDAs with data center developers, while Illinois Gov. JB Pritzker has called for legislation to do the same. Delaware Gov. Matt Mayer signed a ban on NDAs for “large scale” data center projects into law just a couple of weeks ago.

A bipartisan group of gubernatorial candidates has also made banning data center NDAs a campaign pledge, such as Wisconsin Republican Tom Tiffany, New Mexico Democrat Deb Haaland, and Ohio Democrat Amy Acton. (I’m sure I missed some, so flag them in the comments and I’ll update the list!) And state legislators in a wide array of states proposed to ban their use legislatively, including in Minnesota, New Jersey, Oklahoma, and Maryland.

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Data center NDAs have also become a campaign issue in local and federal races across the country, with incumbents rushing to try to justify or excuse their use and challengers making a stink about them, resulting in some sitting elected leaders losing their jobs (with surely more to follow in November).

The critics of NDAs, to be clear, are correct in two important ways: First, nondisclosure agreements in economic development deals are corrupt, meant to explicitly exclude community members from key decisions until it is too late to make a difference. They’re employed by dominant corporations against overwhelmed and under-resourced state and local officials to keep key decision-making moments out of the public light and to turn unpopular projects into a fait accompli.

Second, these NDAs are being employed in service of one of the worst “economic development” tools out there in the form of data centers, which create few permanent jobs, no broader economic development effects, and come with significant, visible downsides in the form of higher potential utility costs and environmental degradation.

So why did this set of economic development projects trigger a backlash when so many before it — benefitting large, venal corporate executives — failed to do so? My theory is that data centers, in addition to the concrete negative effects they specifically cause, have also come to symbolize broader anxieties around the effects of artificial intelligence and the power and hubris of dominant tech firms, creating a public policy toxicity that focused voters and community members not just on the project at hand, but on the entire, corrupt economic development process as it currently exists.

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Data centers bring into residents’ backyards, in a very visceral way, the engine powering the tools that are meant to eliminate their jobs, raise their prices, addict their kids, and bury them in deepfake slop. The sentiment against NDAs flows from the obvious distaste for the end result — a noisy, ugly box on your street that’s meant to put you out of work — to the process that led to that outcome, a process that is obviously, blatantly corrupt, since elected leaders are literally signing away their ability and responsibility to communicate with their constituents.

One of the supposed maxims of politics is that talking about process means you’re losing. But in this case, normal people understand why specific process points lead to results they despise. Their anger at data centers has achieved the dream of people like me who want to change the way economic development is practiced in the U.S.: It flipped the political incentive such that being against the project, and excoriating the process, is more politically beneficial than being for it. Politicians are concluding that there are more votes in being anti-data center than in being pro-.

The media, broadly anyway, has also seized on NDAs around data centers as an issue in a way it hasn’t with any other project. I’m not quite sure why this occurred, but it’s definitely helped bolster the narrative that tech firms are deliberately hiding projects from local residents.

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My one quibble with all this promising action is that it’s solely focused on data centers, when NDAs in other projects are just as harmful. In a perfect policy world, bans would be applied to the tactic, period. After all, if it’s harmful to block a community from knowing about a data center project, it’s equally harmful to block them from knowing about any large-scale proposed economic development project that involves public resources and broad, downstream effects for residents.

And before a bunch of folks complain and call me a NIMBY sympathizer (the shorthand for “not in my backyard” that gets applied pejoratively to those who seek to block a host of different projects, from affordable housing to road construction), what I’m asking for here is clear lines of communication between government and the public, not additional veto points. If a project can’t be justified in an open, transparent process, then it’s not deserving of public support or elite approval, whatever it is.

So I’m thrilled that NDAs are being banned in data center deals, but I hope some elected leaders have the intellectual honesty to take that move to its correct conclusion and push to ban them across economic development projects writ large. The opportunity is there for anyone willing to grab it.

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SHAMELESS SELF-PROMOTION: I spoke to the Rochester Democrat and Chronicle about all the issues surrounding the new, taxpayer-subsidized Buffalo Bills stadium. Read it here.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• State legislators are preparing a “fresh wave” of AI safety bills, in anticipation of federal inaction.

• Bass Pro Shops’ taxpayer-funded grift just keeps on grifting. (Background on this issue here.)

• 12 state attorneys general, led by California’s Rob Bonta, agreed to a “devastating” settlement that will allow Paramount and Warner Bros. to merge.

• Syracuse auditor Alexander Marion released an analysis showing how Syracuse University’s tax-exempt status is undermining city services.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Last week, a researcher at Anthropic — the artificial intelligence developer behind the Claude AI tool — resigned, and posted a viral message saying that Anthropic and its competitor Open AI are “racing straight to self-improving superintelligence and gambling with our lives.” Another Anthropic researcher chimed in to predict that there’s a greater than 10 percent chance that AI destroys humanity within the next decade. CEOs of the major AI developers are all supposedly joining hands and saying they need to collectively slow down their work, lest doomsday commence.

These claims, not surprisingly, jumpstarted a cycle of recriminations in Washington, D.C., with various political leaders calling for emergency legislation, blaming others for not taking the harms of AI seriously enough, or fretting about what new rules might mean vis-a-vis our relationship with other nations. An “AI safety” debate on Capitol Hill that had been a bit moribund was suddenly kickstarted, like lightning hitting Frankenstein’s monster.

This doom cycle also provided renewed vigor to an effort to preempt state laws related to AI. If successful, that effort would be a severe setback to the very cause all the talking heads at the moment purport to care about. Whether or not you believe AI will destroy us all or is just a fancier search engine, you should want state legislators and enforcers to do the work of setting public rules around its use and abuse, rather than letting the federal government be the sole arbiter of AI safety.

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Before we get to that, I do want to acknowledge that, while I am not a tech developer (far from it!), there’s a good case to be made that these doom predictions have ulterior motives, such as allowing the leading AI firms to throttle down profit expectations (since they don’t make much money!) or negotiate an exemption to federal antitrust law and entrench an oligopoly.

Legal experts such as former Federal Trade Commission Chair Lina Khan and former FTC Commissioner Alvaro Bedoya also point out that there are plenty of current authorities against unsafe and deceptive products that could be levied against these firms, today, in order to safeguard the public if these doom scenarios are real.

And in many ways, that work is already happening in the states, which, in the absence of any meaningful federal regulation of AI specifically or big tech in general, have been at the forefront of attempting to prevent harm from these technologies, whether by requiring AI models be tested for safety, restricting children’s access to chatbots, preventing the use of AI in consequential financial and health decisions, or blocking the algorithms social media firms use to addict kids.

Just last month, Florida Attorney General James Uthmeier filed a lawsuit against Open AI for being a “public nuisance” under the state’s unfair and deceptive trade practices law, while California Attorney General Rob Bonta warned about harms to children as part of an investigation into a proposed restructuring by Open AI.

State-level legislators and enforcers are closer to the existing harms of AI, and have been attempting to do something about them. To be sure, not all of those laws or cases I cited above are perfect or are going to be effective, but these political actors are trying to find a legal regime that accounts for the harms of AI and holds the creators of those harms accountable.

Not only would preemption nix the laws these firms hate, but it would allow them to focus future lobbying efforts on a singular entity — Congress — rather than the panoply of states trying different things. Preempting state law would also nix private lawsuits filed under state law, such as a California case alleging Open AI’s negligence and product design led to a teen’s suicide.

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There’s no question that preempting current state laws — and those new laws that are inevitably coming when state legislative sessions start up again in 2027 — has been on the wish list of not just the major AI developers such as Open AI or Anthropic, but legacy tech firms such as Meta and Google, as well. They’ve pushed for it in various forms and forums (as I’ve covered here), under the guise that a “patchwork” of state laws will quash innovation in ways that will supposedly disadvantage the U.S.

No sooner did the current AI doom cycle start than some of the chief congressional proponents of preemption tried to take advantage. For example, Democratic Rep. Lori Trahan used it to promote her Frontier Act, which includes preemption of state law. A current draft of legislation being worked on by “Senate negotiators,” per Reuters, would create a “duty of care” for AI firms that would similarly gazump any state law that covers the same ground.

Congressional negotiators have proposed various forms of this preemption — one version had it leaving in places state laws regarding AI and kids safety, for example — but every one, at its core, is a giant vacuuming of authority from state governments into D.C.

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History should be a warning here to any congressional members thinking of acceding to the preemption demand. In 1996, Congress approved Sec. 230 of the Communications Decency Act, which has provided tech firms with broad immunity for a host of abusive practices, and prevents states from adopting any rule or regulation that might conflict with it, allowing for the creation of and host of business models based on surveillance and algorithmic targeting that we’re still trying to dig out from under.

In another sector, state regulators attempted to rein in the predatory mortgage lending practices that precipitated the financial crisis of 2008, but were preempted by federal bank regulators under the George W. Bush administration, eventually unleashing a generational economic catastrophe.

In that latter case, preemption was certainly allowable under the law, but had disastrous consequences. Legislators today should avoid giving federal regulators similar power to short-circuit the massive amount of work happening in other venues to enforce existing law around AI and tech and to create new laws where there are gaps.

As law professor Zephyr Teachout put it, “If we take the threats to human health and wellbeing seriously, the last thing we should do is remove [the AI firms] from the normal domain of law.”

Indeed, in many ways, the exact form of the technology in question doesn’t matter if its end result is to harm someone. You can’t sell a toaster that is likely to explode or a car that won’t stop, so you similarly can’t sell an AI model that will hack everything in sight or attempt to convince kids to harm themselves. Preemption would make it that much harder to enforce those common sense rules of commerce that we’ve come to expect in various other industries, but which the AI firms seem to think don’t apply to them.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Arizona Attorney General Kris Mayes announced an investigation into anticompetitive practices among firetruck manufacturers.

• Florida Attorney General James Uthmeier sued Netflix, alleging it misled customers about its data collection practices.

• Inside a zoning battle between Ohio farmers and a major weapons manufacturer.

• The Connecticut consumer protection division sent 40 subpoenas and cease and desist orders to prediction market operators and other firms, alleging they are violating state law. (Background on this issue here.)

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Last week (and, honestly, in a lot of pieces around here), I lamented that misguided economic development policies favor dominant corporations over local small businesses, showering the former in public funds and regulatory relief such that they’re able to bury their smaller competitors.

But that does beg a question: What exactly is a “small” business and what differentiates it from a large one? The technical answer is more complicated than you might think.

That question also took on an added importance recently, because the Trump administration proposed changing many of the thresholds that determine what defines a small business for purposes of accessing federal loans, contracts, and assistance programs. In some instances, those new thresholds would dramatically increase.

Because many of those standards are also adopted and applied at the state and local level, the trickle-down effect will be many larger firms accessing public program and contracting dollars than had been able to previously, in ways that will likely be bad for competition and local economic development.

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Backing up, Americans tend to have a very positive association with small businesses, with significant amounts of polling showing that they view small businesses as beneficial to their communities, as opposed to large corporations, which they tend to associate with greed and profit.

Small businesses as an entity, according to Gallup polling, consistently receive approval ratings above 90 percent, and voters always say they want leaders to do more to promote them. Framing issues, and even individual bills, as positive for small business makes them more politically palatable, as I’ve explained before.

But what kind of businesses are people thinking of when they give those responses? A 2024 survey showed that 90 percent of the public thinks a small business has under 100 employees, while the median response was 20 employees. About 80 percent of Americans set the annual revenue of a small business at below $1 million, while a majority said it should be below $100,000. The top words Americans associate with small businesses are “mom and pop,” “family-owned,” “local,” and “entrepreneur.”

These perceptions are utterly detached from the reality embedded in government policy. While it’s popularly claimed on the internet that the official federal Small Business Administration definition of “small business” is fewer than 500 employees (which itself would be a wild departure from what Americans believe), the real policy is even more nuanced than that: Every industry has its own revenue and/or employment levels below which a firm can qualify as a small business.

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For many industries, those revenue thresholds currently reach tens of millions of dollars, topping out at about $50 million (to be clear, that’s revenue, not profits), while the employee thresholds can climb as high as 1,500. For example, a commercial bakery can have 1,000 employees and still be “small,” while a “small” poultry processing plant can have 1,250 employees, and a “small” courier/express delivery service can have 1,500.

A title insurance firm, car rental agency, or parking garage that makes $47 million in revenue annually is “small,” as is a residential remodeling firm that makes $45 million or an air conditioning supply firm that makes $30 million. (You can see the whole current SBA threshold list here.)

Back during the COVID pandemic, I noted that a lot of the outrage — both real and politically manufactured — regarding alleged abuse of small business relief programs stemmed from this chasm between the popular perception of what a small business is and what the government generally defines as a small business. Firms that don’t look at all like what the vast majority of Americans think of when they picture a small, local business — which is akin to a small restaurant or a hardware store, not a meat processing plant with more than 1,000 workers — are nonetheless easily eligible for a vast array of public resources.

The Trump administration’s proposed changes would make this chasm into an abyss. For example, if adopted, many farms and agricultural producers with 2,500-3,500 employees would be redefined into small businesses, as would housing contractors with up to 600 workers. Employee thresholds across the manufacturing sector would double or triple, while for merchant and food wholesalers they would in many instances septuple or more, rising from 100-150 to 750-1,800.

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Car and tire dealers would switch from about $40 million in annual receipts to 500 employees, while caterers would move from $9 million annually to 700 employees. Taxi services would jump from $19 million in revenue to $53 million, car rental agencies from the aforementioned $47 million to $84 million, and casinos from $40 million to more than $744 million. Bed and breakfast inns would jump from $9 million to $503 million. The threshold for direct mail advertising would go from a current threshold of $28.5 million to $543 million.

You can view the full list of proposed changes here, and I bet I missed some wild ones, so feel free to flag any others in the comments.

The stated rationale for these changes is that businesses should be able to receive support as they’re growing, not just when they’re starting up. And sure, some of these changes on an individual level may be defensible,. Encouraging more domestic manufacturing is also a worthwhile goal, so opening up more resources to those firms, which are capital and labor intensive, may make sense on a case by case basis. And any line is going to, in some way, be arbitrary and could justifiably be drawn somewhere else.

But in the aggregate, I fear these changes are going to supercharge consolidation, empowering more dominant businesses to bury their smaller competitors, with the help of the federal government, and by extension any states or localities that adopt those same standards and thus direct funding toward those same larger firms. The result will be fewer startups, more local development money flowing out of communities, and more leverage for big business concerns over government policy.

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And for sure, these changes are going to cause more confusion and misunderstanding among the general populace, further widening the gap between what’s sold to people as a small, local business worthy of financial support, and to whom and what government money actually flows.

The SBA changes are still just at the proposal stage and have to go through a formal comment and review period before they become law. But if they are enacted, I would highly recommend that states and localities comb their own programs, laws, ordinances, and regulations, and disconnect from the new thresholds where it makes sense, lest they end up inadvertently driving a bunch of money to a bunch of larger businesses that don’t need the help. They should focus on ensuring public resources go to truly locally owned businesses, with a low cap on the number of employees and/or revenue, alongside guarantees that the money stays in the community, whether via local workers or local supply chains.

And as an added bonus: State policy then might conform, at least a little bit more, to the notion most constituents have in their minds when the words “small business” are uttered by political leaders.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Kentucky Gov. Andy Beshear is the latest to call for an end to data center subsidies. (More on this here.)

• 31 Louisiana public officials signed nondisclosure agreements with SpaceX regarding development of a spaceport.

• Amazon is challenging the valuation of some of its Mississippi data centers, potentially lowering its tax bill by millions of dollars.

• The California legislature approved a bill to ban restrictive land contracts large grocers use to block competition. If signed by Gov. Gavin Newsom, California would be the third state with such a ban, after Washington and Rhode Island approved them earlier this year. (More on this issue here.)

• Several PC-based video game companies have been accused of price fixing.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Recent coverage here has examined both the connection between corporate subsidies and lobbying and the political science behind why politicians love a corporate subsidy deal. Today, to finish out the trilogy of sorts, I’m going to break down how corporate consolidation — one of the defining problems of our current economy — warps, distorts, and generally ruins efforts at good, local economic development.

Again, when I write “corporate subsidy” I mean public funds given to a specific corporation to locate a facility somewhere, or programs that are meant to encourage a certain form of economic activity, such as a film/TV tax credit program. States and localities annually spend tens of billions of dollars on these efforts, with little to nothing to show for it.

By “corporate consolidation,” I mean the shrinking of nearly every sector that has occurred in recent decades thanks to mergers, acquisitions, buyouts, and other sundry forms of contraction. A study released in 2015 found that 75 percent of industries had consolidated in the preceding two decades, a trend that has surely not reversed since.

The connection between the broad failures of corporate subsidies and corporate consolidation came to mind recently as I was reading more about California, where there’s a high-profile debate occurring about a proposed merger between entertainment giants Paramount and Warner Brothers.

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Putting aside the other massive problems with the merger I couldn’t help but think about this through the lens of economic development, as the film and TV industry has historically been a major focus for tax subsidies (much to my chagrin).

A recent piece from the Media and Consolidation Research and Organization Lab at the University of California San Diego confirmed by concerns, arguing that should the merger go through it would give the newly formed “Paramount-Warner Bros.”massive power to extract tax subsidies from the many states that offer them for film production, as well as “weaken public bargaining power, [and] intensify interstate and international subsidy competition.”

Indeed, by eliminating a major competitor, consolidating business into certain regions, reducing the number of productions, and playing jurisdictions against each other for the remaining productions, the new company would increase its ability to extract public funds. This likely would occur through two avenues: Via it literally siphoning up more of the available dollars under existing programs, and then using its political influence to lobby for changes to these programs that would benefit itself.

This isn’t only a California problem. In New York, for example, Paramount and Warner Bros. collected a combined $330 million in tax credits from the fourth quarter of 2024 to the third quarter of 2025 — from a program that totals about $1 billion annually.

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It makes sense that, all else being equal, fewer available players in an industry would tip the scales toward the few reigning corporations and away from the public officials attempting to engage in local economic development efforts. Fewer competitors gives each individual player more leverage and makes the public officials or economic development bureaucrats on the opposite side of the table more desperate to claim their share of the shrinking pie, and thus more willing to attempt to outbid each other.

Consolidation also makes threats to leave a jurisdiction (a form of what’s known as a “capital strike”) carry more heft, as there are fewer potential replacements for lost facilities or economic activity. Large corporations have been effectively using such threats to gin up huge subsidy packages for decades, including Boeing, Amazon, and others. (Paramount, to return to our main character here, has claimed it will leave California if it can’t merge with Warner Bros.)

We already know that large corporations dominate economic development programs. A 2015 study of corporate subsidies in 14 states by Good Jobs First found that 90 percent of the money went to large corporations, while a 2020 survey found that “more than 30 percent of all establishments with over 1,000 employees receive discretionary subsidies, while the percentage is less than 0.2 percent for establishments with under 250 employees.”

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The mechanics, though, are laid out in a 2024 study, which found that when the threshold for what constitutes a “small” business within a subsidy program increases, the money immediately starts to flow to those larger firms. As we can imagine, when larger competitors have their efforts paid for at public expense the small firms struggle to even compete. It’s in many ways a positive feedback loop. The small firms die out, while public funds help the big companies grow even bigger.

Both in writing my book and working on economic development reforms in recent years, I heard time and again that this was an issue. Leaders felt compelled to engage in a race to the bottom on economic development because the options were so few, the projects that were being proposed by large firms so theoretically transformative (think Amazon’s HQ2 or Foxconn’s Wisconsin plant, though neither turned out to be worthwhile in reality), and the political cost of being perceived as missing out on an opportunity was so potentially devastating.

More competitors, and more startups and entrepreneurs would alleviate the desperation to win any one particular project, reducing the leverage that the few large players hold and lessening their ability to act as if they are raining economic manna down from the corporate heavens with their every move.

None of which is to say that reversing our economy’s consolidation trends will fix our economic development struggles by itself — which is most definitely not the case — but it will help by making any individual corporate actor weaker within the overall system and making any single corporate investment decision less politically valuable.

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SHAMELESS SELF-PROMOTION: I went on MS NOW (formerly MSNBC) this week to talk about the political backlash against data centers and why data center tax breaks should be eliminated. You can watch it here.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Meta (which owns Facebook and Instagram) agreed to an $18 billion settlement with more than 50 states and territories over claims that it exposed children to mental health harms and misled the public about the safety of its platforms.

• Several states are offering tax penalty amnesties in an effort to collect unpaid back taxes.

• A Nashville racing track is at the center of an intense local debate over economic development and public money.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Regular readers will know that corporate subsidies — defined broadly as public funds given to a specific corporation to locate a facility somewhere, or programs that are meant to encourage a certain form of economic activity — fail at their most basic goals. Think Foxconn’s disastrous deal with Wisconsin, a sports stadium subsidy package for an NFL team, or a film/TV tax credit program.

There are reams of evidence, whole books even, showing that these “incentives” provided in the name of economic development don’t meaningfully increase GDP, create jobs, reduce poverty, or fulfill any of their other promises.

Why then, do they not only persist as a policy tool, but suck up a substantial and growing percentage of state and local budgets? The short answer: Politics.

More specifically, there’s a heap of political science — which I’m going to run through quickly today — showing that elected officials reap political rewards from their corporate incentive dealing, and not just in the corruption-worthy form of campaign donations and endorsements, but literal votes on Election Day. So while the economic incentive for these political actors may be to stop engaging in likely-to-fail policy actions, the political incentives push them to keep the corporate handouts flowing.

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Let’s start here: A 2014 study from Nathan M Jensen, Edmund Malesky, Mariana Medina, and Ugur Ozdemir found a meaningful vote bonus for governors who engage in corporate subsidy dealmaking. In general, they receive a vote uptick for securing new business investment in their state, which goes up by an additional 1.4 percent if they offered a corporate subsidy. And the vote bonus is 5.6 percent with independent voters.

Interestingly, the vote boost is even higher if the project ultimately lands somewhere else, so long as the governor in question tried to make it happen:

More strikingly, however, the use of incentives protects against downside risk. The vote bonus for the use of incentives is actually higher for a governor whose states lost the project (about 3.5% from all respondents, 11.2% from independents). Thus, whether or not the policy was effective, the tax incentive allows the governor to take credit for investment attraction that may be only loosely tied to her actions; and, if need be, deflect blame for a loss by claiming that she was engaged in the negotiation and actively working on behalf of citizens. No other policy action by a governor can play this immediate role.

The authors add, “even if tax incentives have no impact on investment decisions and firms have already decided on their location, governors in states ‘winning’ or ‘losing’ the new investment can maximize their chances of winning reelection by offering tax incentives.”

In a separate study, Jensen and Malesky found that directly elected mayors offered larger incentives and engaged in weaker oversight of corporate subsidies than did appointed city managers, furthering the notion that it’s political benefits, rather than economic ones, driving these decisions — otherwise, appointed officials would engage in the same actions, as they would improve the local economy, rather than making them look incompetent when they spent a lot of money and got nothing for it.

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Another 2022 study (from the same researchers who found the connections between corporate subsidies and lobbying that we recently highlighted here) also found that “large development incentives create substantial benefits for incumbent politicians in the form of both higher campaign contributions (particularly from business, labor, and construction sectors) and higher margins of victory at election time.” Meanwhile, a 2020 study found that one of the most predictive factors for whether a state will increase its corporate subsidy spending in a given year is whether or not the incumbent governor is up for re-election.

The mechanism behind these results is all the politicking that surrounds a corporate subsidy deal: A press release announcing purported job creation, glowing write-ups in the media, getting to attend a ribbon-cutting and having your photo taken holding a golden shovel and wearing a hard hat, and then running that footage in a campaign ad. All of those are worth something in the political realm, providing the impression that the politician in question is taking positive steps for his or her constituents.

Corporate consultants have also gotten very good at ensuring they give due credit to all the political actors in and around one of their deals, ensuring that these effects take place. (And the campaign contributions that follow surely help, too.)

Not that all of the evidence weighs in this direction, mind you. Another study by Jensen and two other researchers across 3,000 municipalities found “no greater tendency to offer incentives for investment anticipated prior to than after elections — a null result that is estimated with high precision.” But it’s clear politicians believe there is political value in everything I’ve described above. If they didn’t, they wouldn’t spend so much time on it.

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This all may make it seem like voters are to blame for the faults and failures of U.S. economic development, but that’s not what I’m arguing. Busy working people shouldn’t have to plumb the depths of academic journals and auditor reports to discover if the things their leaders are saying and doing actually comport with best economic policy practices, especially when the effects of any economic development effort usually takes years to develop. This is a problem driven my media, elites, and the policymaking blob of corporate consultants, construction unions, and on-the-take NGOs that surround them.

In fact, it’s voters and community members who are responsible for those rare instances when things swing the other way. Indeed, the contrast that helps prove the rule I’ve described above is the current political debate surrounding data center subsidies. Those, clearly, have become deeply unpopular with voters across the country, and the political calculation many pols are making is that going to bat for the data center industry is not worth it anymore, even if doing so provides some of the traditional upside associated with economic development projects — the press release, the photos, etc.

A similar dynamic occurred in the 2010s with film/TV production tax credits, when being associated with spending public money on Hollywood vanity projects and random celebrity perks became a political liability, and states began cutting back. (Unfortunately, that trend has reversed in recent years.)

Occasionally, then, a particular project or genre of development effort becomes politically toxic enough that it tips the scales away from the traditional benefits politicians reap from their dealmaking. The trick, then — which is much easier typed than done, to be clear — is applying that toxicity to a greater range of projects, or even more hopefully, to the whole way in which economic development is currently practiced in the U.S.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• The chairman of JobsOhio, a privatized economic development agency, also allegedly lobbied for Intel, which received JobsOhio funding.

• Maryland’s first-in-the-nation digital ad tax was struck down for violating the federal Internet Tax Freedom Act.

• Louisiana’s utility regulator blocked the release of information about a major Meta data center project.

• Seattle unanimously adopted an ordinance banning junk fees in rental housing.

• As it always goes: “Tennessee’s lottery-funded scholarship program faces revenue shortfalls” (Background on this issue here.)

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Today’s post was written by Maxine Adelson, an intern at the American Economic Liberties Project.

The promise of corporate “economic development” subsidies is that they will create new jobs. Indeed, elected officials, government agencies, and the corporate executives that receive them all defend these public dollars flowing to private interests in the same way: As investments in local job creation and economic growth.

Research shows that this promise routinely isn’t kept. But a new study suggests that one industry does, in fact, see meaningful job creation from such subsidies: The lobbying industry.

Researchers Russell Sobel, Gary Wagner, and Peter Calcagno tracked data from more than 40,000 lobbying firms, covering all 50 states from 1997 to 2019. They examined what happened in a state before and after it handed out an “extraordinarily large” incentive — defined as a subsidy thousands of times bigger than that state had ever given before — and compared that to states that never awarded such an extraordinarily large incentive.

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The study found that in the years after a state hands out its first extraordinarily large incentive, lobbyist employment in that state rises 3.6 percent on average. The effect is sharper in the state capital: In the five years following the incentive, lobbying firms in the capital county see employment gains of 4.5 percent relative to capital counties in comparison states. Additionally, lobbying’s share of the capital county’s private-sector workforce grew by 5.8 percent.

“Rather than accomplishing their stated goal of promoting productive economic activity, extraordinarily large incentives lead to the allocation of resources toward a path of unproductive activity,” the authors wrote. I.e., instead of creating new, sustainable economic activity that actually helps a locality, incentives just stimulate more political horse trading and dealmaking.

The researchers checked whether this result occurred due to some fluke regarding how they drew the line — maybe a handful of extreme cases were driving the whole result. However, the effect holds whether the threshold for “extraordinarily large” is set at 2,000 times a state’s historical median or 5,000 times. It also holds up when neighboring states are removed from the comparison, ruling out the possibility that one state’s mega-incentive was triggering a copycat incentive war nearby that would throw off the results.

Even then, the study managed to simultaneously undercut the normal economic development argument, as the researchers found no evidence of new lobbying firms opening. Instead, all of the gains are captured by existing lobbying firms expanding their businesses.

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This is likely not what proponents of these deals intended, but it tracks with what other research on economic development deals has revealed. Sobel, Wagner, and Calcagno looked at this from another angle in 2022, and found that states offering extraordinarily large incentives saw a spike in campaign contributions and in the reelection odds of the politicians who approved them. Interpreted together, the two studies show a pattern: When a state awards a company an outsized incentive, the gains tend to flow to the recipient firms’ lobbying, to their shareholders, and to the incumbent politicians who approved the deal.

Separate research has found that firms that put more resources into the political process are more likely to land these incentives in the first place, suggesting the lobbying isn’t just a side effect of winning a deal, but a key part of obtaining it in the first place.

All of this sits on top of decades of research showing that these incentive programs generally fail to produce the job growth, income gains, or tax revenue they promise. Yet, that has not stopped states from handing out more of them: State governments now spend more than $40 billion a year on these incentives — three times what they spent in 1990.

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The non-monetary costs of these giant corporate giveaways — the lobbying, the corruption risk, the talent and resources diverted away from actually building something new and innovative — are real, but they are notoriously hard to quantify, so tend to get left out of the political conversation. And in most states, no one is even checking to see what sort of economic activity public dollars are buying, as state agencies rarely follow up and assess their incentive programs.

Of course, lawmakers should reconsider handing out incentives at this scale in the first place. But there are other fixes worth pursuing, too.

For example, states could require extra legislative review for any extraordinarily large incentive, instead of letting them get waived through under existing program authority. States could also mandate the kind of follow-up assessment that, as the study notes, almost never happens. And to make the reality of the situation abundantly clear, they could require anyone who is paid to help a company pursue one of these subsidy deals to register as a lobbyist.

No voter ever asked for a job creation program focused on lobbying firms in and around their state capitol, but it turns out that’s what they’re receiving instead of programs that focus on local workers, businesses, and their actual needs.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• New Jersey Gov. Mikie Sherrill signed a law banning the use of surveillance pricing in the grocery industry. (Background on this issue here.)

• A Philadelphia tenant filed the first case under the city’s recent law against algorithmic collusion in rental housing.

• A federal judge blocked Minnesota’s first-in-the-nation law to ban prediction markets. (Background on this issue here.)

• “How Meta Got Everything It Wanted in a Secret Louisiana Data Center Deal”

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If you don’t subscribe already and you’d like to sign up, just click below.

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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It’s not often that political developments in Nebraska and New York converge, but they did this week, with Nebraska Gov. Jim Pillen signing an executive order to block tax breaks for any new data center development a day before New York Gov. Kathy Hochul said that her budget proposal next year will do the same.

“There should not be any tax breaks. These are very successful, very profitable companies. New York is very attractive. They will still come without getting $1 million per temporary job,” Hochul said.

These two states are not alone in taking a tougher stance against tax subsidies for data centers, the increasingly controversial facilities where online data is stored and processed: Arizona’s budget this year includes a three-year freeze on data center tax breaks at the behest of Gov. Katie Hobbs; Ohio Gov. Mike DeWine paused new data center tax break applications, as did Illinois Gov. J.B. Pritzker and Massachusetts Gov. Maura Healey; and Oregon’s government approved a new law blocking data center developers from claiming tax incentives under one of its main economic development programs. At least nine state legislatures considered legislation to fully repeal their state’s data center tax subsidies this year, while 24 considered reforms or reductions.

That’s states red, blue, and purple, all united in the same policy goal. (Did I miss one? Let me know!)

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This is, to put it mildly, long overdue. While a nationwide total is not possible to ascertain — because 14 states that subsidize data center construction do not disclose their total losses — we know that four states are losing at least $1 billion annually to data center tax subsidies, while another six are losing at least $100 million annually, and dozens more have losses totaling millions of dollars every year.

So that’s billions of dollars on an annual basis, at least, to subsidize the necessary business infrastructure of an industry that is one of the most profitable not just in the country, but in the history of the world.

As I’ve written several times before, the case for subsidizing data center construction is weak at the best of times: Data centers don’t need many permanent workers, they create no knock-on economic development effects, they are often a net negative for their neighbors because of noise and aesthetics, and they have the potential to increase costs for water and electricity across entire states and regions if not managed correctly.

Yes, new data centers generate revenue for many communities, but so would other economic development projects that do a better job of promoting the needs of local businesses or workers. While the tech industry for a while successfully promoted data center development as an extension of Silicon Valley, that tactic has clearly run out of gas (due to it being false) and communities are now more likely to battle an impending data center project than welcome it.

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A recent Politico poll, in fact, showed that 41 percent of Americans would oppose a data center being built within three miles of their home, while just 24 percent — less than a quarter — would be in support. With those kinds of numbers, politicians swinging against the direct subsidization of the industry makes perfect sense.

But there’s also a broader argument about the goals of economic development to be made here: The case for publicly subsidizing an industry — any industry — is that it provides something worth having in a particular place, something that is in the state’s, county’s, or municipality’s interest to incubate because it adds long-term economic value. That support should, in theory, be temporary, existing only long enough for the industry in question to build enough of a foundation that it can stand on its own and provide local benefits without being a permanent ward of the state.

That, quite obviously, has not happened with data centers (nor with most industries subsidized in the name of economic development). Even if you make the argument that the data center industry was worth supporting in its early days due to the high revenue potential, those days were many years, if not decades, ago. Virginia, the undisputed data center capital of the Earth, is still subsidizing data center construction through tax exemptions that were first enacted in 2008, and legislators in this year’s budget chose to continue that support.

If the industry can’t stand without subsidies in Virginia, which has a higher concentration of data centers than anywhere else on the planet, then where can it? What’s the point of fostering an industry that needs to be subsidized in perpetuity, other than lining the pockets of executives and lobbyists? And if the argument is that the industry is so transient that failure to continue subsidizing it will result in its departure, was it even worth fostering in the first place? No! It was not!

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To be clear, most of the “pauses” and “bans” being implemented at the state level don’t get at the full extent of the problem, either because they don’t cover all of the various avenues through which data center developers or operators can claim tax breaks, including property tax abatements or other local exemptions, or because they don’t cover other ways in which the public subsidizes data centers, such as through discounted power or water. Many pauses also are not retroactive, so projects that were rushed into the application process before they took effect will still be able to claim money.

I’m also under no illusion that these governors and legislators are genuinely rethinking their stance on the effectiveness of corporate-focused economic development subsidies: They’re reacting to the political pressure they’re feeling from constituents. Industry-specific subsidies tend to go in waves, so even if a bunch of data center subsidies get washed away today, they can always come back in with the tide tomorrow.

Even with those caveats though, the momentum to eliminate data center subsidies is encouraging, as is the effort to slow down data center development more broadly in order to build out a broader regulatory framework for data centers and artificial intelligence. Data centers should be located where they provide tangible benefits to the community, not where they can engage in the most extraction, and eliminating the ability of the tech industry to claim tax handouts for building them is step one toward achieving that dynamic.

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SHAMELESS SELF-PROMOTION: I was on NPR’s 1A last week, discussing subscription traps and junk fees. Listen here.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Gov. Mikie Sherrill signed a law making New Jersey the second state with a statewide restriction on the use of algorithmic rent-setting platforms.

• CalPrivacy, California’s privacy-focused agency, “launched its first-ever audit, looking into delivery and transportation apps’ compliance with state law.”

• Your local Home Depot likely has a data file on you, and it may be riddled with errors.

• In the last two decades, the re-election rate for incumbent governors has hit 95 percent.

• The federal Government Accountability Office put out a misguided report on airlines.

• A court ruling in Maryland will make it easier for monopoly utilities to claim state-based tax breaks.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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A group of 400 local newspaper publishers recently sued OpenAI and Microsoft, alleging that their artificial intelligence-powered chat programs are the product of (among many other things) widespread, rampant theft from the news industry.

In order to train their flagship products — ChatGPT and Copilot, respectively — to ably answer users’ queries, OpenAI and Microsoft broadly scraped the internet and used all the content they grabbed as training material, without paying any of the people who created that content. Of course, a meaningful percentage of that content was news articles produced by working journalists, which was then baked into the answers AI programs provide to users, with most of the attribution and, more importantly, all of the payments stripped out, in violation of U.S. copyright law.

As the complaint notes, “By covertly scraping, copying, adapting, and using the Publishers’ content to train and deploy their GenAI products, Defendants have diverted traffic from the Publishers’ news sites, thereby causing a reduction in the Publishers’ advertising and subscription revenue while denying the Publishers the licensing fees the Defendants should have been required to pay to use the Publishers’ protected works.”

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Indeed, ChatGPT and programs like it only function because of mass theft from journalists (and authors, and musicians, etc.). OpenAI’s founder testified before the British House of Lords that it is “impossible to train today’s leading AI models without using copyrighted materials,” so that’s exactly what they did, only later making some limited payments to copyright holders that haven’t made most journalists (or authors or musicians or whoever else) whole.

The suit, led by former New Jersey Attorney General Matt Platkin, covers small news publishers across the country, from New York to Iowa to Arkansas to Texas. It’s also not the first lawsuit filed against these AI behemoths for massive copyright infringement: The New York Times, as well as a coalition of eight midsize newspapers, including the New York Daily News, Chicago Tribune, and Denver Post, each filed earlier cases on substantively similar grounds. The New York Times this week asked a court to sanction OpenAI for allegedly hiding key evidence that would show the extent to which OpenAI knew its program was regurgitating whole news articles without attribution or compensation.

These cases are important in the specifics, of course, because journalists should be compensated for the use of their work. But they’re also pulling back the curtain on the latest step in a long, ongoing annihilation of the local press by Big Tech that is harming local communities and democracy, and which policymakers have done next to nothing to prevent.

The original sinners here are not OpenAI and Microsoft, but Google and Facebook, who honed their business models to run ads against content they stole from journalists.

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Google, in particular, went from a supposed partner to journalists, sending out clicks to news outlets in response to queries from users, to a malicious thief of content, posting its own generated answers to queries based on stolen journalism content, with the goal of preventing users from clicking out to another source. This enabled Google to keep them within its ecosystem and show them more ads, earning it more profits. Combined with its monopoly over the digital advertising industry, this allowed Google to redirect a substantial portion of the money that used to support a healthy journalism ecosystem into its own coffers.

A study in 2023 found that under a fair compensation system, Google would owe news publishers something like $10 billion per year for ads sold against news content, while Facebook would owe another nearly $2 billion annually. And that was before the full rollout of Google’s AI-generated answers to search queries via its Gemini program, which didn’t occur until 2024.

Not surprisingly, traffic referrals to news sites from Google have plummeted in recent years, so much so that some publishers, including large ones such as USA Today, are considering what was once unthinkable: Delisting themselves in Google search entirely, denying Google the opportunity to scrape their content to feed its AI machine, since the tradeoff of traffic for data is no longer worth it.

OpenAI and Microsoft lifting news content to train their AI models is just the next step in this ongoing theft, which will make it even more difficult for local papers to survive.

We’ve already experienced what the drop in local news coverage, to this point, has wrought: When local newspapers close, election turnout decreases, fewer candidates run for office, and incumbents win more often. Residents are less likely to know the name of their member of Congress, and those members aren’t as responsive to their districts, while voters become more politically polarized, focusing on national issues they see on social media and cable news, rather than local ones.

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According to a 2018 study, municipalities that experience a newspaper closure have higher borrowing costs in the following years, with the average bond issue costing an extra $650,000. This is because the lack of local journalists led to the belief that officials would be more profligate or corrupt with public monies, so investors demanded higher interest rates.

The local news vacuum is also increasingly filled by hyper-partisan websites pretending to be legitimate news sites, many of which are explicitly pay-for-coverage — meaning politicians and corporations literally fund “news” stories about themselves, making real the “fake news” paranoia so many pols have successfully leveraged in recent years.

Lawsuits to rectify particular injustices here are all well and good, but a policy makeover is really necessary to fully ensure journalists are compensated for the past and future profits Big Tech firms make off their work. Reforms could include required bargaining to share ad revenue, stronger enforcement of copyright protections, and other measures. Absent that, the tech pilfering of the hard work of journalists is going to continue apace in new and ever more devastating ways.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• The Mamdani administration in New York City announced a new final rule banning subscription traps and a proposed rule to eliminate mandatory junk fees.

• The New Jersey legislature voted to eliminate $250 million in tax credits for AI data centers.

• Everyday users have lost half a billion dollars gambling on the “prediction market” platform Kalshi. (Background on this issue here.)

• “Kaiser Permanente nurses who answer advice and triage calls say their duty of care for patients is being increasingly threatened by workplace surveillance.”

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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One of the main research findings regarding the effectiveness of state and local corporate subsidies is that they don’t create much in the way of positive economic outputs — job creation, GDP increases, poverty reduction, etc. — but they do increase votes for incumbent politicians. In fact, one of the most reliable ways to predict if a state is going to increase its corporate subsidy spending in a given year is to simply check and see if the incumbent governor is up for reelection.

(As a refresher, when I write “corporate subsidy,” I mean public money given to a specific corporation in return for opening a specific facility in a specific area, usually via a program authorized by a state legislature and overseen either by a state economic development agency or a governor.)

These facts were in my head as I read a new report from the Mackinac Center, a conservative think tank based in Michigan, about the record of current Michigan Democratic Gov. Gretchen Whitmer. According to the analysis by James Hohman, Mackinac’s director of fiscal policy, the Whitmer administration has pledged $2.7 billion to eight “generational” corporate subsidy mega-deals, which were supposed to create nearly 21,000 jobs in the state.

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The actual record, though, is $1.8 billion spent for just 602 jobs, or about $3 million per new job. And even that understates the true failure. As Hohman wrote:

None of these deals have delivered what was originally announced. Two created only vacant fields. Two were canceled altogether. One deal has only a largely unused facility to show for it. Two others merely supported ongoing operations at existing auto plants that did not expand their operations. The most promising developments resulting from these deals are two battery plants that are still under construction but have already reduced their job targets from original expectations.

(Yes, this is a conservative think tank criticizing a liberal governor, but I know Hohman and he wouldn’t say anything different if Whitmer had an R after her name. He was, in fact, quite critical of a Republican administration that engaged in similar dealings.)

But these results will not likely hurt Whitmer or anyone associated with her administration. And while she may or may not have presidential or vice-presidential aspirations, she almost certainly benefitted in her current office from the impression that her corporate subsidy dealings were resulting in tens of thousands of new jobs.

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Why? Announcing these deals garners elected officials positive press coverage, allows them to release glowing press releases and social media posts, and wins them plaudits from fancy CEOs and Chamber of Commerce types, all of which creates the impression that they’re having a positive effect on the economy, building the sort of political capital to which voters inevitably react.

This is particularly important for Democrats attempting to shake the perception that they and their party are “anti-business,” a moniker that has quite effectively stuck to them at all levels of government. Afterward, when those deals go bust, the press and the fancy people have already moved on, and the politicians themselves are potentially on to other things, too — much like Whitmer, who is term-limited.

To be clear, though, this is not really a story about Whitmer. She is simply the latest iteration of a bipartisan Michigan fascination with spending billions of dollars on subsidy deals with individual corporations — often large automakers — despite having very little to show for it. In the last two decades, Michigan leaders have authorized at least eight corporate subsidy deals worth more than $1 billion, and at least 50 worth $100 million or more. In that time, just 9 percent of the jobs promised to taxpayers actually arrived.

So there’s a vast gulf between the publicly reported-upon “success” of the programs that dole out those dollars and the actual output on the ground, and everyone is to blame, from the state legislators who created the programs, to the bureaucrats in the Michigan Economic Development Corporation who implemented them, to the governors who took credit for nothing worth having.

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And to be even more clear, even if the Whitmer administration’s promises and projections became reality, it would have barely moved the needle in Michigan. Even if every promised job materialized, the cost to the public would have been about $130,000 per job. And 21,000 new jobs is barely a blip in the context of the entire Michigan economy, where nearly 850,000 jobs are created and eliminated annually. Fishing for mega-deals is simply never going to be worth the cost, as the supposedly large job numbers associated with them are a rounding error in the context of even the smallest state economies.

Other governors aren’t going to shy away from similar subsidy shenanigans, since it wins them votes and plaudits, but these numbers should serve as a warning to state legislators and advocates, who should have greater concern about the longer-term downsides of out of control corporate subsidy spending since they have other priorities they want funded in a zero-sum state budget.

Indeed, a bipartisan group of Michigan legislators have been working to put some guardrails around the state’s economic development practices, and the entire legislature managed to eliminate one of the most egregious programs during this year’s budget process. Even the candidates seeking to succeed Whitmer next year have felt the need to pay lip service to reforms (though I doubt they’d hold those commitments were they to inhabit the governor’s mansion).

It’s not unheard of for a faulty corporate subsidy deal to be a governor’s downfall: Wisconsin Gov. Scott Walker in 2018 lost re-election, in part, because of the spiraling costs of a deal with the Taiwanese manufacturer Foxconn. But that’s been the exception rather than the rule. Making it the rule, though, is key to building an economic development system that works for local communities, rather than corporate behemoths.

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UPDATE(S): Two issues I work on and follow here had some positive developments last week, as Illinois became the seventh state with a comprehensive ban on junk fees and Rhode Island became the second to ban the restrictive deeds large grocers use to block new stores from opening.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Gov. Maura Healey announced that Massachusetts is the latest state to implement a temporary pause on new data center tax incentives. (More on this issue here.)

• Atlanta’s mayor has instituted a temporary moratorium on new self-storage facilities.

• The Michigan House approved a bipartisan bill to limit large investor purchases of single-family homes.

• “Tech giant Oracle is suing the Public Service Commission of Wisconsin over financial requirements for data centers.”

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Today’s post was co-written by Maxine Adelson, an intern at the American Economic Liberties Project.

Before adjourning earlier this month, the New York State legislature approved a bill that, if signed by Gov. Kathy Hochul, would institute a one year moratorium on data center development across the Empire State. During that year (which is actually a reduction from the original proposal, which was a three-year pause), the state’s utility regulators would be tasked with creating new rates for data center power and water use; the bill also creates new requirements for labor and community feedback on data center projects.

It’s unclear what Hochul will do, though she has previously been skeptical of a statewide data center moratorium, and does have the power to offer changes to the legislature in exchange for her signature (a process known as “chapter amendments”). Last month, Maine Gov. Janet Mills faced a similar situation, and ultimately vetoed the first statewide data center moratorium to pass a state legislature.

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Three other states — Ohio, Oregon, and Arizona — have adopted data center tax break moratoriums, meaning new projects can still go ahead, but they will not receive the same public funds as did previous projects. (Arizona and Ohio’s are broader, while Oregon’s only applies to its largest data center subsidy.)

Meanwhile, across the country, about 100 municipal- or county-level data center moratoriums have already been enacted, mostly clustered in the Midwest across Michigan, Ohio, and Indiana, as well as in the southeast, across North Carolina, Tennessee, and Georgia. And billions of dollars worth of individual data center projects have been blocked or delayed.

It’s clear then that, despite some federal interest, the real action on restricting data center development, or at least denying data center developers further access to public funding, is happening at the state and local level.

The public, legislators, and regulators need to make at least three critical decisions when it comes to data center development: 1) decide if data center tax breaks or other subsidies should persist; 2) decide how data center operators will pay for additional power and water infrastructure they require and what utility rates they will face; and 3) determine what a public process for data center siting decisions will entail.

These decisions can’t be properly made in an environment in which new data centers are constantly being proposed and approved in a mishmash of processes and procedures, with advocates and state officials alike scrambling to understand a rapidly changing tech industry and likely overblown declarations of just how many AI-related data centers the industry ultimately requires. Absent the industry meaningfully engaging in providing adequate protection and answers to the taxpaying public, then, moratoriums make sense to provide that time and space.

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The tech industry and its lobbyists and assorted front groups — as well as the politicians backing them — are screaming bloody murder about the growing movement to slow down data center development, making it seem as if this very normal policy move is the end of the world. And their go-to tactic is to recast the entire debate as occurring due to misinformation.

For instance, when a data center attorney addressed a public hearing in Nashville, his takeaway for reporters was that the community was “reacting based on fear, not facts.” Two Republican members of the North Carolina House made the same case in a widely circulated op-ed opposing local data center moratoriums, assuring readers that grid and water concerns regarding data center development are simply outdated — the technology has moved on, even if the public hasn’t. The mayor of St. Charles, Missouri said an approved moratorium was “overly reactive.”

Running alongside this argument is a familiar threat to regular readers. Industry leaders and politicians contend that a moratorium is synonymous with hostility to investment, that a “patchwork” of local moratoriums makes the whole state look unpredictable, and that data center developers don’t want to deal with differing state and local laws.

The Data Center Coalition, the industry’s main lobbying group, made this case in multiple states, including Illinois and Colorado, warning of lost competitiveness, driving away investors, and development migrating to more lenient states. When that framing requires more urgency, elected officials’ land on ceding ground to China, instead of just one state versus another (even though the U.S. already has 10 times as many data centers as the next closest countries, the UK and Germany).

Finally, moratorium opponents argue that they detract from tax revenue and job opportunities. Missouri State Senator Mike Cierpiot, for example, framed a moratorium as lost tax revenue for school districts and local governments. The jobs argument is made with similar force — electricians, HVAC technicians, plumbers, security staff, middle-class careers that can’t be outsourced, all gone begging — as North Carolina proponents put it. Mills also used a version of this argument to justify her veto.

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But none of these arguments supersede the case for pausing in order to get the rules correct so that communities actually benefit from this supposed upside of data center development.

The last argument used by data center boosters, regarding jobs and revenue, is the most persuasive, but relies, as noted here previously, on the belief that the choice facing communities when it comes to economic development projects is a data center or nothing, which is not true: Other projects can be more beneficial, provide more long-term jobs, and cause ancillary economic development effects that raise revenue from multiple sources. The tech industry isn’t the only one in town, and data centers are some of the least impactful projects available in terms of creating broader economic activity.

Similarly, the “patchwork” and competitiveness argument not only ignores the fact that corporations deal with differing state regimes in a host of policy areas all the time — taxes, labor, land use, etc. — and fight for those differences when it suits them, but treats data centers as more valuable than they are. Again, though they are associated with the tech industry, they don’t actually make the area in which they’re sited any more economically competitive or attractive to anything other than data centers, as they’re simply large, noisy, boxes that don’t attract other businesses, don’t rely on local supply chains absent mandates, and don’t attract new entrepreneurs or new residents.

Finally, the “fear” argument is both an insult and an argument for the moratorium: Residents are rightly concerned about the effect data centers will have on local resources, feel correctly as if they have been cut out of planning decisions that affect them, and correctly connect the rapid spread of data centers to other AI-related abuses. If the industry is so sure none of this matters, a moratorium gives it time to set the record straight — but given the industry’s approach thus far, it’s clear that’s not of interest and that the various big tech firms feel they can’t adequately explain the benefits of data centers, hence the rush to hasten construction via nondisclosure agreements, secret meetings, and a lack of transparency.

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But even these specific points ultimately pale in comparison to the main question hanging over the debate about data centers specifically and AI generally: Who gets to decide what this new technology and the infrastructure supporting it means for local communities?

It’s not that difficult to envision a policy framework in which data centers are net positive for particular locales, so long as their negative externalities are paid for, residents are isolated from increased utility bills that may result, data center operators provide concrete fiscal benefits that aren’t washed away via tax breaks and other giveaways, and communities are protected in case all of this AI-hype and data center construction is just a bubble that pops.

It takes time, though, to get those details right — time the tech industry doesn’t want to provide either in individual data center siting debates or in the aggregate, requiring a moratorium to provide that breathing room.

“Without a pause, New York could permit projects that shift costs onto ratepayers, strain an already aging electric grid and make it harder for the state to meet its climate goal,” said New York Assemblymember Anne Kelles, a sponsor of that state’s moratorium bill. “The pause gives the state time to evaluate these impacts and put enforceable protections in place before decisions are made that could affect utility bills, public health, water resources and grid reliability for decades.”

Indeed, the danger is in foisting decades worth of costs for a underdeveloped technology onto communities, not taking a year or two to ensure policy supports the rapid buildout that big tech firms desire.

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UPDATE: A few weeks ago I wrote about a corporation called MultiPlan, which is accused of helping health insurers fix the prices they pay for out-of-network care. I also noted that centralized price-rigging schemes are proliferating across the economy, from rental housing to nursing homes to hotel rooms.

Well, we now have evidence of another one: According to a lawsuit filed in California under its newly-enacted algorithmic price-fixing ban, a corporation called Kalibrate is helping gas stations fix prices by pooling their data and having Kalibrate feed recommended prices back to all of them. If these allegations bear out, it’ll be further evidence that these collusive arrangements facilitated by software platforms really are everywhere.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• New research shows platforms such as Uber and Lyft offer customers dramatically different prices for the same ride.

• New Mexico’s attorney general has asked for nearly $1 billion in damages from Meta in a landmark trial about social media harms to children.

• The Oregon legislature approved funding to triple staff capacity at the state attorney general’s antitrust division.

• Some state attorneys general are aggressively intervening in rate cases against monopoly utilities, while others are … not.

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Washington, D.C.’s, primary election (which almost always determines the general election winner in this heavily Democratic city) was held yesterday. In the leadup to Election Day, those of us who live in the capital were deluged with mailers extolling the virtues or deficiencies of one candidate or another.

Amidst the pile I received were several mailers promoting Doni Crawford for an at-large city council seat. (Full disclosure: I donated to and voted for one of Crawford’s opponents, Elissa Silverman, who looks like she’s going to win handily.)

The content of the mailers was generic stuff, claiming Crawford will lower housing costs, support public education, take on the Trump administration, blah blah blah. The interesting part is not what the mailers said, but who paid for them: A group called American Future, based in Dallas, Texas.

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Who on Earth is that, and why do they care about a municipal election more than 1,000 miles away? Well, American Future is part of Win for America, which is an organization that is spending tens of millions of dollars on state and local elections this year., in elections on both sides of the political aisle Win for America, in turn, is funded by DraftKings, Fanduel, and Fanatics, aka, several of the behemoths of the American gambling industry.

Per the New York Times, Win for America is poised to spend at least $41 million on state and local elections backing candidates who, presumably, will be supportive of more gambling, particularly the online variety. It’s no coincidence that D.C. has a bill pending to legalize “igaming” (essentially online slot machines), and Silverman has been a skeptic of expanded gambling.

Win for America is spending on elections in about a dozen states, and in some races, including the one here in D.C., is outspending the candidates themselves. DraftKings, FanDuel and its ilk are reportedly targeting lawmakers who promise to stand in the way of ever-more gambling options being rolled out in front of the American consumer, or who simply voice regrets about their role in legalizing sports gambling.

As a District resident, I find this gross. The gambling industry consistently pushes the false argument that ever-expanding betting options are good for localities in terms of economic development — even as more and more research shows that the expansion of sports and online gambling comes not with economic benefits but with a host of negative effects, including increases in bankruptcies and loan delinquencies, declining credit scores, and increased health care spending, all of which is to be expected with the legalization and non-stop advertising and promotion of an addictive activity.

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Meanwhile, the revenue streams promised by gambling boosters consistently underwhelm, leaving state and local governments locked in an endless, hopeless, destructive quest for new gambling options to unlock that magical money stream, which, as I wrote previously, will simply never arrive:

Think about it for a moment: Either a) there is a truly bottomless pit of dollars Americans are willing to spend on gambling, which will bring with it a set of negative outcomes — addiction, debt, bankruptcy — that will require public resources and intervention to correct or b) there is not said bottomless pit, but instead a limit to what American consumers are collectively willing to spend on gambling. In the latter case, elected officials are fighting over a limited set of dollars, cannibalizing economic activity from each other both within the state and across states lines, and allowing public budgets to become reliant on a revenue stream that will inevitably drop off someday.

I also believe you can’t untangle the gambling industry’s state and local election spending from the current battle between states and the federal government over so-called “prediction markets,” which is just gambling dressed up as stock trading.

As I explained here, the Trump administration is working to backdoor nationalize gambling regulation, which has historically been a state issue, through the Commodity Futures Trading Commission, which is claiming sole jurisdiction over these “prediction markets.” (Which, again, are just gambling!)

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If that doesn’t work, though — either because courts rule that states can regulate prediction markets or another administration reverses the CFTC’s course — corporations such as DraftKings and FanDuel that are deeply invested in prediction markets (again, just gambling!) clearly want pliant politicians at lower levels of government who will presumably help them avoid situations such as the one they faced in Minnesota, which recently became the first state to ban prediction markets statewide, on a bipartisan vote.

I hasten to point out that the American Future doesn’t mention any of this, or gambling, period, in the ads it pays for, nor on its website, as the Baltimore Brew pointed out. The gambling industry has clearly internalized that it has an odious reputation, and so launders its goals through generic messages around good governance, crime, housing, public education, and the “affordability” framing that is currently dominating politics at all levels. Much like the crypto industry, gambling corporations pay for ads about all the things voters find far more appealing and pressing, so they can circle back with winning pols later.

But the goal of these election interventions is obvious: To support politicians who will vote for more gambling. And to be clear, the gambling industry being a powerful political player is certainly not new: What is new is that we’re all carrying a casino around in our pockets, and the industry is hiding behind general good governance vibes to try to bury us all in constant online wagering.

So beware the next innocuous mailer that lands in your mailbox: It might actually be big gambling interests placing a bet on a particular politician.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• New Jersey Gov. Mikie Sherrill and Attorney General Jennifer Davenport announced a wide-ranging effort to eliminate junk fees. (Yours truly is quoted in the press release here.)

• Connecticut Gov. Ned Lamont signed a new law restricting the use of private real estate listings.

• Justin Stofferahn of the Minnesota Farmers Union wrote a good piece about hospital monopolization.

• The California legislature is looking into capping corporate tax deductions.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Arizona Attorney General Kris Mayes this week sued a corporation called MultiPlan — a sort of tech middleman between medical providers and health insurance companies — as well as most of the biggest health insurers in the country (Aetna, Cigna, Blue Cross Blue Shield, United HealthGroup, etc.) for allegedly engaging in algorithmic price-fixing that had the double effect of lowering compensation for health care practitioners and raising costs for patients.

This case is important not just in the particulars — which I’ll get into below — but for what it reveals about the proliferation of centralized, price-rigging schemes, which are cropping across the economy, while price-fixing law and the judiciary are simply not keeping up.

According to the complaint, MultiPlan is a system health insurers use to determine what they should pay for out-of-network care, i.e., care from physicians who don’t contract with your insurer. Depending on your health insurance plan, your insurer will cover payments to medical practitioners not in their network up to a certain amount, with the patient responsible for the rest.

Instead of independently determining what they will each pay for out-of-network medical procedure, the dominant health insurers are allegedly handing their individual, competitive, pricing information regarding out-of-network payments over to MultiPlan, which feeds it all into an algorithm that spits out recommend out-of-network payments across the market.

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So when an out-of-network doctor treats an out-of-network patient for, say, a knee replacement, and applies for payment from an insurer (or when a patient pays and applies to the insurer for reimbursement), it’s MultiPlan setting the compensation they’ll receive, based not on the individual insurers assessment of what it should cost, but the private data of all the big insurers that has been fed through a common algorithm overseen by Multiplan.

As the Arizona attorney general’s complaint put it, insurers “agree to share their proprietary claims and pricing data with their competitors to achieve the collective purpose of setting the prices they pay for out-of-network goods and services at artificially and unreasonably low rates.” Indeed, there’d be no reason to share this competitive, confidential pricing information with a third-party that is also working with other competitors in the market were it not to facilitate some sort of price-fixing scheme! The insurers, via MultiPlan, have gone from competitors to collaborators on price.

And it works. MultiPlan allegedly consistently sets payment rates below their historical rates, and thus “healthcare provider compensation for out-of-network services has decreased every year since MultiPlan implemented its scheme, while MultiPlan’s profits have concomitantly skyrocketed.” And then MultiPlan continually trains its algorithm with those lower rates, driving them even lower over time:

MultiPlan continually drives healthcare provider compensation lower by recycling the adjusted compensation amounts generated by Data iSight and feeding them back into its algorithms to calculate median compensation levels for new claims moving forward, feeding new, artificially suppressed data into the algorithm that drives median compensation further down.

Since medical practitioners are receiving lower compensation, they’re turning around and charging the rest to patients, even though those patients have already paid for insurance.

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Crucially, the algorithm works the same regardless of which insurer is using it at a given moment, according to Sean Crandell, MultiPlan’s Vice President of Health Economics:

As part of the same testimony, Crandell was asked: “[I]f the Data iSight tool is used among various different companies in the industry, do the recommended payment rates generated by Data iSight tool vary depending on which client you’re running that calculation for?” Crandell answered: “No.” When asked whether the tool could even factor in who the client is, he answered: “No, it can’t. The system that generates the methodology cannot even factor in [who] the client [is].”

So all of the market participants — ostensible competitors — are being told by the algorithm to charge the same prices, by design.

“By using a shared algorithm to set payments, these companies harmed doctors and patients alike — driving up patients’ risk of paying more out‑of‑pocket costs, depriving providers of fair payment and sometimes forcing them to accept payment below the costs incurred for treatment, and making it harder for Arizonans to get the care they needed. This case is another example of old-fashioned price-fixing using new technology, but it’s against the law all the same,” Mayes said in a release.

In addition to the Arizona case, there is also a private lawsuit against Multiplan focused on the same allegations, in which the Department of Justice has filed a statement of interest. In that case, the judge “noted that the plaintiffs had plausibly alleged a ‘horizontal hub-and-spokes price-fixing agreement,’ facilitated by MultiPlan’s role as a central coordinating entity. ​He emphasized that MultiPlan’s communication of competitively sensitive pricing information among insurers supported the allegations of collusion.”

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If astute readers are thinking this all sounds very familiar, that’s because it is. RealPage, a corporation I’ve written about in this newsletter before, serves the same function in rental housing. AgriStats does it in agriculture markets. A corporation called Cendyn has a platform called Rainmaker that does the same thing for hotels. It also seems like nursing home operators have their own version.

In industry after industry, there are third-party price setters who all have the same business model: Collect data from ostensible competitors in a market, run them through a common algorithm, and feed back market-wide recommended prices that ensure that “competitors” won’t undercut each other and cause a drop in price or profit.

There are pending legal cases against most of the corporations listed above, but antitrust cases take a notoriously long time to make their way through the courts. There have also been legislative efforts to rein this model in, most specifically in housing: New York State, along with more than a dozen cities, have banned algorithmic collusion in rental housing markets, and Providence, Rhode Island, recently took the first enforcement action under such a law, while California adopted a wider-ranging law against algorithmic price coercion.

But it seems that all the action isn’t keeping up with the proliferation of tools and industries adopting them, which is aided by the general fog under which online pricing occurs. And while some judges have allowed cases to proceed under current law, others have been hesitant to see indirect collusion via a third-party central planner as akin to good old-fashioned, smoke-filled-room price fixing — even though it clearly is just that, wrapped in “tech” and “AI.” Therefore, some legislative efforts making that abundantly clear may be required.

For now, the best thing to do is push your state attorney general and state legislators to take this problem seriously, because they’re not keeping up.

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SHAMELESS SELF-PROMOTION: For Economic Populist (subscribe!), I wrote about the failings of Washington, D.C.’s utility regulators, and what the next mayor and city council need to do to make it all better. Read it here.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Colorado Gov. Jared Polis vetoed a ban on surveillance pricing that had passed the legislature, while the New York State legislature approved its own version, sending it to Gov. Kathy Hochul. (Background on this issue here and here.)

• Tennessee State Rep. Aftyn Behn wrote a fantastic piece about why the Super Bowl is an economic dud and what it means for Nashville.

• Ohio Gov. Mike DeWine announced a “pause” on data center tax breaks (sort of).

• The New York and New Jersey attorneys general are investigating FIFA — world soccer’s governing body — for its World Cup ticket pricing practices.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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The Illinois legislature recently approved the Junk Fee Ban Act, sponsored by State Rep. Bob Morgan and State Sen. Omar Aquino, and Gov. JB Pritzker has already said he will enthusiastically sign it, after calling for its passage in his annual state of the state address this year.

Once enacted (assuming another state doesn’t race ahead), Illinois will be the seventh state with an economy-wide ban on junk fees, those ubiquitous service and processing fees that are sprung on consumers at the last moment, driving up prices and costing families thousands of dollars per year. (The other six states, for those keeping score, are: California, Colorado, Minnesota, Connecticut, Virginia, and Massachusetts.)

In the states with these laws, sellers need to display “all-in” prices: Any mandatory fees need to be included in the base price in advertisements and price listings, which functionally makes them pointless, since they can’t be broken out and charged individually. So, for example, a $10 flower delivery with a $10 mandatory “processing” fee that’s sprung on the buyer at the end needs to be listed as simply a $20 delivery.

My organization launched the End Junk Fees campaign three years ago to support state legislators aiming to enact laws just like these, and I’ve been closely involved in several of the state efforts I mentioned (and many more that haven’t ended with a law, yet).

With most 2026 state legislative sessions winding down and the campaign putting another win on the books, I thought I’d lay out some lessons learned so that more states step up in the coming years, especially as “affordability” becomes the hot new political watchword.

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1. People understand these laws are meaningful: Polling consistently shows that people oppose junk fees, correctly finding them deceptive and unfair, and would support politicians who work to eliminate them. But I’ve also heard anecdotally from multiple state legislators who sponsored these bills that it’s the one they hear about most consistently from constituents; voters distinctly remember them for their work to eliminate junk fees. Before we launched the campaign, we suspected the politics around specific state bills would be good, and that has borne out.

2. Small business support matters: It tends to be the case — though this is not universally true, to be sure! — that large, dominant corporations use junk fees more than their smaller competitors, betting on name recognition or monopoly power to push consumers past their anger at being dinged with a last-second fee. (Think Ticketmaster/LiveNation versus smaller, independent ticket sellers and venues.) In the places, most prominently Colorado, where small businesses rallied to support a junk fee ban, it made a big difference politically, as small business owners are the ultimate sympathetic constituency in most statehouses. And these laws help them compete, so small business owners should back them out of pure self interest. I’d recommend small business organizing be a key piece of future legislative efforts in the states that don’t have a ban on the books yet.

3. Housing matters, too: The other constituency that really helps is renters, as rental housing is where folks very often experience unfair, undisclosed fees. (Surprise, you have to pay for “valet trash pickup” every month, which we didn’t tell you!) Having tenants associations and unions, affordable housing groups, and actual renters behind these bills made a difference. I’ll point again to Colorado, which has the most explicit, robust, protections for renters from junk fees, as somewhere where that support made a critical difference.

4. “We don’t do this but we need an exemption”: Now, to some of the pushback these bills receive, and how to diffuse it. Just about every industry player comes out of the woodwork to beg for an exemption from the bill, with many of them claiming they don’t actually use junk fees, but need to be exempt for reasons. There are very few complaints on the substance that are legitimate, and nearly all of the real ones can be accommodated with simple clarifications about consumer choices. For example, moving companies need to be able to charge different rates according to distance — which is fine! — but that doesn’t mean they get to tack on undisclosed, mandatory charges at the end of the process, too. Legislators working on these bills need to remember they are trying to ban a specific tactic, and other pricing quirks can be accommodated without full-blown exemptions for entire industries.

5. Beware sweeping preemption claims: There are some industries where state lawmakers simply can not regulate fees because federal law preempts, or forbids, it, with the most prominent being airlines and national banks. There are also some industries, such as broadband services, that are subject to existing federal price transparency laws, and the industries in question usually want deference to those rules. That’s fine if those rules actually require all-in pricing, and as long as the industries would be pulled under the state law should the federal pricing rule go away. But other sweeping exemption claims are likelier than not lobbyists trying to snow legislators into exempting problematic activity that isn’t actually regulated by federal law.

6. Deal restaurants in from the start: One of the ways in which consumer frustration with junk fees is most obvious is in the “service” fees charged by restaurants, often sprung on diners at the last second, hidden in tiny fine print on menus where they’re disclosed at all. However, the restaurant lobby is incredibly powerful in most states, so legislators tend to exempt restaurants from the start of the process in order to take a heavyweight member of the opposition off the table. I think that’s a mistake: In Minnesota, where they did not take such a step, it was clear that directly addressing restaurant service fees made the bill more appealing and understandable to voters, and they landed on a workable compromise with the restaurant industry that helped the bill become law. Exempting restaurants from the start, meanwhile, takes an impactful example for constituents off the table, and opens up a “why not us?” round of questioning from every other industry.

7. “Sector by sector” is a lame excuse: New York’s junk fee ban has been stuck in the mud for years, even though it’s passed the state Senate multiple times, because the Assembly side of the legislature doesn’t want to do a comprehensive bill, but prefers to take a “sector by sector” approach. I’ve heard similar excuses in other states, too. I don’t know if this is a serious claim or a way to make inaction more palatable, but to be clear, a sector by sector approach would be ridiculous: Instead of one bill, eliminating a tactic that is industry agnostic, legislators would have to tackle countless bills, and update them constantly. It would be an extremely silly way to make policy, resulting in tedious new efforts every year, whereas an economy-wide ban sets a standard that is easier to update and doesn’t play favorites.

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At the end of the day, this is a very simple policy proposal: The price you see should be the price you pay, because deceptively hiding fees that will be charged no matter what is unfair to both consumers and competitors, making the seller appear artificially less expensive than they really are. Legislators can and should push to have their states join the list of where this practice is banned, if not because it’s right on the merits than because their constituents — both consumers and local business owners — will notice and be grateful.

UPDATE: Tennessee is officially the second state to adopt a law preventing pharmacy benefit managers — the drug industry’s pernicious middlemen — from also owning pharmacies. (More background on this bill and issue here.) CVS, of course, sued the state immediately.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• The California Assembly and Rhode Island Senate both passed bills to ban restrictive deeds that dominant grocery stores use to limit competition. (Background on this issue here.)

• Ohio’s data center tax break was expected to cost $136 million last year. It’s actual cost was nearly $1.5 billion.

• Congress may override state laws regulating driverless trucks.

• “A new study from the New Mexico Legislative Finance Committee found none of the 24 state tax credits or cuts aimed to spur economic development has resulted in increased revenues for the state.”

• Auto debt in the U.S. “has reached $1.68 trillion, a 37 percent jump since early 2018, and now comprises the largest volume of outstanding loan debt ever recorded.”

• Nearly a dozen states have banned “digital sweepstakes games,” a form of online gambling.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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The 2026 World Cup, co-hosted by the United States, Mexico, and Canada, begins in just a few weeks. In this pre-tournament buildup, though, the fiercest battle is not between two teams on any pitch or coaches in the media, but between FIFA, world soccer’s governing body, and the state of New Jersey.

Specifically, FIFA is aggrieved that New Jersey Transit, which among other things connects northern New Jersey with New York City, reportedly intends to charge more than $100 for a trip between Manhattan and MetLife Stadium in New Jersey’s Meadowlands, which will host several tournament games, including the final. FIFA has warned that such costs will have a “chilling effect” on tournament attendance.

(This is the point at which I am morally obligated, as someone who grew up in New Jersey, to note that though “New York” is named as a host in the tournament’s materials, no World Cup soccer is actually being played anywhere in the Empire State, with all the “New York” games actually taking place in New Jersey.)

New Jersey Gov. Mikie Sherrill has defended those high prices saying she refuses to foist the cost of hosting the tournament — including for security and running extra transportation — onto New Jersey taxpayers. "FIFA is making $11 billion off this World Cup," Sherrill said. "FIFA should pay for the rides, but if not, I'm not going to let New Jersey commuters get taken for one."

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This is the clearest recent example of a government official pointing out the obvious: Hosting a major sporting event such as the World Cup is an economic liability, not a benefit, and should be treated as such. Sherrill is right to demand compensation for the costs New Jersey will accrue, and more jurisdictions should be doing the same, pushing back in specific ways on the sports event industrial complex.

Ample research shows that the World Cup specifically — and major sporting events such as the Olympics or the Super Bowl, generally — don’t boost local economies. The academic consensus regarding the World Cup is that “the observed impact of the World Cup has been a fraction that touted by the event boosters, and frequently the observed impact has actually been negative.” Indeed, the last time the U.S. hosted the men’s version of the tournament, in 1994, host cities saw drops in income that totaled billions of dollars.

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That effect occurs because of the costs associated with hosting, including the aforementioned transit and security costs, as well as the economic effects I detailed here and here, which boil down to World Cup tourists replacing some pre-existing percentage of tourism activity rather than adding only new spending, as well as simply redirecting entertainment spending that would have occurred under normal circumstances.

The fact that the World Cup will be an economic dud seems to be sinking in on some level not just in New Jersey but across the country, as there’s been a slew of reporting in recent days about an impending World Cup “bust” for host cities.

For New Jersey, specifically, this issue will likely be amplified, as much of the outside spending done by World Cup tourists will presumably occur in nearby New York City, accruing no benefit to New Jersey at all, or within the confines of MetLife Stadium, where the bulk of the money will wind up going to corporate vendors or FIFA itself.

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Indeed, FIFA has no legs to stand on when it comes to complaints of price gouging or a “chilling effect” due to high prices. In the run-up to the tournament, there has been justified complaining about the ways in which FIFA has priced and distributed tickets, mostly due to its use of dynamic pricing (which constantly changes prices in real time) and manipulation of the market via selective seat releases and deceptive advertising aimed at duping folks into buying more expensive tickets before cheaper ones became available. Ticket sales for some games have been very slow.

New Jersey also wasn’t the only World Cup host dealing with a cost kerfuffle. Foxboro, Massachusetts, threatened to cancel matches at Gillette Stadium unless it received reimbursement for its security costs — a threat that worked, as FIFA’s local partner agreed to pony up the funding.

Now, some folks are already trying to blame any impending World Cup economic bust not on FIFA or the simple economic reality of major sporting events, but on the Trump administration’s threats against participating countries and immigrants, difficulties faced by fans in obtaining visas, or our current economic doldrums and high gas prices.

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To be clear, those can definitely play a role in depressing turnout, but even absent those factors there was no reason to believe the World Cup would provide the flow of benefits boosters claim, because other major sporting events, all of which occurred under wildly different economic conditions, haven’t delivered them either. The through line is overblown booster and politician promises that can’t overcome economic realities.

We had a preview of this during the recent National Football League Draft in Pittsburgh, Pennsylvania — not subject to the same Trump administration jawboning! — where local business owners who were promised an influx of profits instead saw underwhelming demand, and the city itself likely paid more than it got back for the privilege of hosting.

This is simply what happens at major sporting events, and yet too many politicians, local leaders, and journalists refuse to learn the lesson. I also, to be clear, don’t know what sort of line Sherrill is going to hold or if she’ll cave for some sort of peanut offer.

Her calling out FIFA is something though. Next time around more politicians and local leaders should demand FIFA — or the International Olympic Committee, or the National Football League, or whoever — shoulder the costs that are currently being born by taxpayers and local communities. Sherrill opened the door a crack, and others need to walk through it.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Pennsylvania Gov. Josh Shapiro is calling for some smart reforms to monopoly utilities.

• The Washington State attorney general sued Albertsons grocers for allegedly using fake “buy-one-get-one-free” sales.

• A lawsuit charges that the Missouri marijuana market is run by an “illegal cartel.”

• Five more states joined a case seeking to block a merger between Nexstar and Tegna, which would create a local journalism behemoth.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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This post was co-written by Lee Hepner, senior legal counsel at the American Economic Liberties Project, and cross-posted at The Economic Populist.

Gov. Wes Moore recently appeared on the Bill Maher show, where he proudly claimed, “We made Maryland the first state in the country that now bans price gouging and price manipulation, so when you go into a supermarket, they can’t use your data against you when you go to the checkout counter.”

He’s talking about Maryland’s so-called Protection Against Predatory Pricing Act, which purports to ban a practice known as surveillance pricing in the grocery industry. But in practice, it does no such thing. Moore signed the bill this week, over the objections of consumer, labor, and small business advocates, legal experts, academics, and policymakers who have spent years working to stem the tide of retail price discrimination.

Surveillance pricing is the practice of corporations using personal information, including browser histories, social media activity, and location tracking, to set individualized prices based on a prediction of the highest price a consumer is willing to pay for something. Across industries, consumers wind up paying more for goods and services simply due to some data point the seller knows about them or their life circumstances.

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Imagine two neighbors logging onto the same big box store delivery app at the same time to buy the same package of toilet paper. One has a history of buying whatever she needs quickly, because she has a toddler and no time to shop around. The other tends to abandon her cart when prices go up. The algorithm knows this. So it charges the first person more, not because the toilet paper costs more to deliver or because of supply and demand, but because the data says she’ll pay more. Or imagine a parent seeing higher prices for a thermometer because their data shows they likely have a sick child at home and need it immediately.

Findings from a Federal Trade Commission survey released last year found that clients of third-party surveillance pricing software include grocery stores, apparel retailers, health and beauty retailers, home goods and furnishing stores, hardware stores, travel firms, and department stores. FTC staff found that “consumer behaviors ranging from mouse movements on a webpage to the type of products that consumers leave unpurchased in an online shopping cart can be tracked and used by retailers to tailor consumer pricing.”

Contrary to Moore’s assertion, this is less about the checkout counter at an actual grocery store (though QR code price tags and required in-app purchasing are adapting to make in-person surveillance pricing more prevalent) and more about online commerce, where it’s possible to collect massive profiles of individuals, and prevent them from knowing that they’re being charged a different price than everyone else as they move across the web.

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Maryland’s bill suffers from several problems that will render it ineffective — and it only applies to groceries and grocery-delivery, leaving a wide swathe of the economy untouched.

First, in a huge red flag, it allows surveillance pricing as long as a corporation claims a shopper “consented” to receiving the price, despite decades of research showing that consent policies don’t meaningfully prevent corporate abuse. Next, it exempts all “promotional offers,” undefined “temporary discounts,” and reduced prices even when — and this is the crucial point — a previous, higher price is not listed anywhere.

The great peril of surveillance pricing is it creates a world in which there’s never a baseline price from which a “sale” or “discount” is determined, because prices are constantly shifting and are tailored to each individual. Under the bill, sellers would be free to create fantasy-land higher prices no one pays, “discount” every price from those fake ones, and engage in as much surveillance pricing as they’d like.

But that’s not all. The bill exempts any loyalty program, even those built to scam customers into thinking they’re paying less when they’re not. It exempts all subscription-based pricing, a growing and increasingly scam-ridden part of the economy.

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Finally, the bill would prevent individual consumers from suing when harmed by an exploitative price hike, though such suits are a fundamental tool for deterring illegal conduct. Not only does the bill block individual suits under the new law itself, it blows a hole in the state’s Consumer Protection Act, which might otherwise be brought to bear.

To be clear, well-crafted surveillance pricing bans exempt fair, transparent discounts and loyalty programs that actually provide a reduction from a previously listed price. They don’t ban coupons, matinee prices, or clearance sales, or generalized discounts for seniors, students, or veterans. In fact, they affirmatively protect discounts from becoming vehicles for discrimination, and ensure consumers know discounts are actually real.

There are plenty of bills in the more than 20 states where legislators introduced surveillance pricing restrictions this year that correctly balance eliminating unfair, invasive pricing tactics and preserving traditional discount mechanisms. Maryland’s simply isn’t one of them.

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It’s clear the bill was influenced by industry insiders who were happy to see legislation pass that allowed them to continue business as usual, while enabling politicians to claim a win, and it’s being cheered by advocates representing the dominant tech firms.

That’s not to say that Maryland lawmakers can’t come back next year and close some of these loopholes by making sure that loyalty programs don’t arbitrarily decrease the redemption value of reward points, or by making sure that discounts are tethered to a fixed price. Lawmakers might also put up guardrails so that major retailers like Walmart aren’t changing prices every 10 seconds.

But Marylanders shouldn’t be fooled by lawmakers more concerned with declaring victory than delivering real policy solutions. As lawmakers in other states — and federally — seek to reign in the very real problem of surveillance pricing, we should demand real solutions. Otherwise Maryland risks becoming the standard instead of a cautionary tale.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• The Trump administration Department of Justice joined a lawsuit against Colorado’s artificial intelligence safety law.

• 38 state attorneys general filed a brief in support of Massachusetts’ lawsuit against the prediction market firm Kalshi. (Background on this issue here.)

• “A town of 7,000 planned so many data centers, it’s like adding 51 Walmarts.”

• The Louisiana legislature approved a new tax break for aerospace companies, as the state is reportedly in negotiations with several unnamed corporations for new projects.

• The Arkansas legislature approved $300 million in tax breaks for an undisclosed “super project.”

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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The Maine legislature last week became the first in the nation to adopt a moratorium on data center construction. If signed into law by Democratic Gov. Janet Mills — and that seems like quite the “if” at the moment (Update: She vetoed it.) — Maine will pause new data center projects until November 2027. Legislators in at least 10 other states proposed similar legislation this year, and many municipalities across the country have already adopted their own holds on data center construction, with Oklahoma City being the latest.

The anger at the rapid building of data centers to fuel big tech’s artificial intelligence apparatus is widespread, deep, and non-ideological, and voters are voicing their wrath at the polls, rightfully concerned about the effect booming data center construction will have on their utility bills, environment, and quality of life. $64 billion worth of data centers projects have been blocked or delayed in just the last two years.

There’s a story there about this particular political moment, of course, with tech and AI receiving a backlash to real (and perceived, to be fair) overreaches. But the data center boom is also, in many ways, emblematic of the larger failure that is U.S. economic development policy at the state and local level.

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Bereft of ideas for building up local businesses and deprived of options by increased corporate consolidation, politicians and economic development bureaucrats have defaulted to data centers as the hot, new thing they can entice into their community as evidence they’re doing their jobs, and they’re doing whatever they can to get a slice of the action. Once data centers are off the table, some or even most of those political actors will inevitably fall for the next thing.

Remember, data centers exemplify all of the worst aspects of U.S. economic development: Billions of dollars in unjustified taxpayer subsidies, few permanent jobs created, and secret arrangements protected by nondisclosure agreements that cut communities out of key decisions. There’s also the ever-present threat that there’s an artificial intelligence bubble that will pop, leaving states and cities that were counting on data center revenue stuck holding the bag, much like the previous iterations of company towns that were abandoned by the failed economic development projects of yesterday.

There’s been some encouraging movement on data center reforms this year at the state level, with several states adopting measures that require data center operators to shoulder the cost of any new power buildout they require. As I wrote in Governing Magazine recently, 10 states have proposals to ban or limit nondisclosure agreements for data center projects (or, even better, economic development projects in general). Several others have proposals to limit or eliminate the tax subsidies those centers receive.

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And yet, the legislative agenda hasn’t met the level of anger out there, with many of these bills stalled or watered down. Too many governors, state legislators, and in particular the civil servants who keep the economic development bureaucracy running still suffer from what I refer to as “economic development brain”: The idea that the goal of economic development policy is to close the deal with a specific business, no matter what.

This mindset was on perfect display last month during a Maryland committee hearing on a bill to ban nondisclosure agreements for data center projects at which I testified. Democratic State Sen. Ron Watson defended NDAs because they shield specific corporations from competition, which is a “sound way to grow a business.” When asked by one of the other testifiers whether he thought it was the role of local government to help a specific corporation secure land at the cheapest possible price, he responded “of course it is!” (You can view the committee hearing here, and this exchange is about an hour and 22 minutes in.)

Indeed, I get why corporate leaders likes NDAs. They don’t want competition! But government — public officials, who are the ones signing these NDAs with corporate actors — should want open, transparent, business dealings, which drives down public costs and secures public goods for constituents. Watson’s remarks make it sound like he thinks the goal of public policy is to help a specific corporation secure the best deal for the corporation, rather than the public, in the name of Maryland being perceived as pro-business. Under this mindset, the first mover on a project gets the full protection of the state from its competitors — or even businesses in other, non-competing industries — potentially offering a better deal to the public.

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I’m picking on one state senator a little bit, but his viewpoint is pervasive. There’s simply a firm belief out there that completing whatever economic development project is currently on the table is more important than seeking out the best deal for a community. Data centers have revealed this problem in spades, but that’s a symptom of the deeper rot.

And yes, before the complaints roll in, I know data centers are necessary (even just to read this post!) — but they’re also the necessary infrastructure for the corporations that are building them and profiting off the activity they enable. If data center operators and developers want access to substantial public resources, then they need to receive them on terms that actually benefit the public. And that’s not what’s happening at the moment.

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UPDATE I: Last month, I wrote about how the Department of Justice’s settlement in an antitrust lawsuit against LiveNation-Ticketmaster was a sham. Well, good news: More than 30 states carried forward the lawsuit, refusing to join the settlement, and they won, with a jury deciding LiveNation-Ticketmaster is indeed an illegal monopolist. The next phase of the trial will determine what sort of actions the corporation needs to take to remedy the situation.

UPDATE II: A couple of weeks ago, I wrote about how CVS was attempting to threaten the Tennessee legislature into voting down a bill to break up pharmacy benefit managers. But the threats didn’t work, with both the state House and Senate approving it this week. The bill now goes to Gov. Bill Lee for his signature or veto.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• California Attorney General Rob Bonta released new evidence in a price-fixing case against Amazon, which shows how the online retail giant coerces brands into raising prices at other stores.

• The Louisiana House of Representatives approved a bill to rein in online subscription traps by a vote of 95-1.

• New York is the latest state to sue prediction market firms for violating state gambling law. (Background on this issue here.)

• Amazon is still behind on the promised hiring at its Virginia “HQ2.”

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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A former editor of mine always asked for there to be three examples of anything I wanted to write about: Three bills, three comments, three incidents, etc.

Well, boss, rule of three achieved, because there are three states in which CVS — the big medicine behemoth — has used the same tactic to try to stop state lawmakers from breaking its stranglehold on the pharmacy business. These tactics, which will surely be rolled out in other states that similarly want to take on CVS’s dominance, are built on corporate bullying, market power, and misinformation.

Let’s take a quick tour. Last year, Arkansas became the first state in the country to adopt a law preventing pharmacy benefit managers — the middlemen of the pharmaceutical business, also known as PBMs, which I’ll discuss more later — from also directly owning pharmacies. During debate over the eventual law, CVS threatened to leave the state, telling customers and legislators that every CVS outlet in Arkansas would close were it to take effect. Gov. Sarah Huckabee-Sanders signed it anyway, and CVS has sued to block it.

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Ditto in Louisiana, where CVS threatened to close all its outlets in response to a similar bill last year. It also accessed phone numbers through the state employee health plan (which contracts with its pharmacy benefit manager), and texted those phone numbers telling recipients to oppose the bill. Some of those texts went to state legislators themselves. That little shenanigan earned CVS a series of lawsuits from the state’s attorney general for privacy violations, which it settled for $45 million. The Louisiana bill ultimately did not become law, though, so maybe that $45 million was worth it.

Which brings us to number three, Tennessee, where a bill to create a law similar to Arkansas’ has been moving through the legislature this year. And once again, CVS is threatening to close all of its stores in the state, telling customers and legislators it will have no choice but to take its proverbial ball and go home if Tennessee adopts a law to separate PBMs from pharmacies.

CVS is spending millions of dollars reportedly flooding the local airwaves with ads deriding the bill, and is also receiving support via a $500,000 ad buy from an Oklahoma-based group called Shaping Health Initiatives for Tomorrow, which only seems to exist as a weird, stripped-down website.

To be very clear: There is no reason CVS pharmacy locations have to close in the event the bill is signed. This is a scare tactic used to defeat legislation aimed at ending just some of the conflicts of interest that plague the American health care system. In fact, CVS and PBMs more broadly have forced the closure of plenty of pharmacies themselves through their stranglehold on the drug business.

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As a refresher (or for newer subscribers!), pharmacy benefit managers stand at the nexus of health insurers, drug manufacturers, and pharmacies. They determine which drugs are covered by insurance, how much pharmacies are reimbursed for selling those drugs, which pharmacies are in a given insurer’s network, and how much to charge public programs such as Medicaid for certain drugs, all of which ends up determining the costs of medication that are born by patients, taxpayers, and pharmacists.

The three largest PBMs in the U.S. — Caremark, Express Scripts, and OptumRx — handle 80 percent of the drug claims in the country. They are all also part of corporate conglomerates that own health insurance companies and affiliated pharmacies.

Caremark is owned by, you probably guessed if you made it this far, CVS, which also owns the insurer Aetna. As I wrote about here, Caremark has faced many legal complaints and investigations over allegations that it drives patients toward CVS-owned pharmacies and systematically under-reimburses independent pharmacies for dispensing drugs (meaning it pays them less per prescription that it pays itself), making it impossible for them to compete with CVS-owned outlets.

To get a sense of the scale here, the Tennessee Commerce and Insurance Department found “that CVS Caremark was reimbursing its own pharmacies in some cases 16,000% more for a specific drug than non-affiliated stores.” This gives CVS immense power to shape the pharmacy ecosystem and ensure that independent and non-Caremark-affiliated pharmacists simply can not compete, and may well end up losing money on the drugs they sell.

As one Tennessee pharmacist put it, “Either be a PBM or be the pharmacy. Which one do you want? But you can’t do both because it’s not a level playing field if you’re doing both. You cannot be the referee and a player in the same game.”

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Now to the specific claim about pharmacy closures. If a bill to separate PBMs from pharmacies were to pass and become law in Tennessee, CVS has the option to either sell its pharmacies to another company or series of independent pharmacists in order to comply, or to set up an independent corporation to run its pharmacies in the state. As one of the bill’s sponsors, Republican Sen. Bobby Harshbarger, who is a pharmacist himself, explained, “This bill says you have to divest. Divestment does not equal closure.”

It’s also very possible, even if CVS did follow through on the threat, that the new market opportunity provided by PBM reform would allow for a surge of independent pharmacies in the state, or an expansion of existing pharmacies. Simply shuttering every location in a fit of rage at a common-sense health care law would be a choice, not a directive stemming from anything in the legislation.

And to be clear, it’s not like the bill only applies to CVS! No PBM would be able to simultaneously own pharmacies in the state were it to become law.

Democratic Rep. Aftyn Behn referred CVS to the Tennessee attorney general, alleging that its campaign against the bill amounts to deceptive advertising. "This is not merely a policy disagreement — it is a question of whether a dominant healthcare corporation is leveraging its market power to mislead consumers, influence legislative outcomes, and suppress competition," said Behn.

Indeed, threatening to leave the state is often a go-to move from a corporation that has amassed too much local power, whether it’s in reaction to a health care regulation, a cut in economic development subsidies, a change in labor law, or anything else. Tennessee should join Arkansas in calling CVS’s bluff, and show the potential fourth, fifth, or sixth state to consider such a step that there’s nothing to be scared of.

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SHAMELESS SELF-PROMOTION: I have a new piece in Governing about the momentum to ban secret data center deals in states across the country. Read it here.

I also spoke to The City about the Mamdani administration’s push to end subscription traps in New York City. Read it here.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Pennsylvania Gov. Josh Shapiro said the latest rate increase request from the electric utility PECO is “pure greed.”

• Several municipalities across the country will vote on ballot initiatives this year regarding data center development.

• Ohio Republicans introduced two bills to overhaul the state’s gambling laws, including measures to ban online betting and in-game sports betting.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

Subscribe now

Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Last week was a rough one if you’re a social media executive, and a very good one for the general public promoting the rule of law. In two separate trials, juries held social media firms liable for harms experienced by their users, and the design and policy choices those leaders made that led to those negative outcomes.

One case, which has received the lion’s share of the press attention, occurred in Los Angeles, where a private plaintiff won a verdict against Meta (the owners of Facebook and Instagram) and Youtube. The jury agreed that design choices such as auto-play videos, infinite scrolling, and recommendation algorithms harmed the plaintiff’s mental health, contributing to her depression and suicidal thoughts.

A second case decided just the day before is what I want to focus on: In New Mexico, a jury found Meta (again!) liable for misleading users about the safety of its platform, and specifically harming children by claiming that its products were safe when they actually “enabled pedophiles and predators to engage in child sexual exploitation.” The jury order Meta to pay $375 million in civil penalties.

The case was brought by New Mexico Attorney General Raul Torrez, under New Mexico’s unfair and deceptive trade practices law, known as the Unfair Practices Act. “New Mexico is proud to be the first state to hold Meta accountable in court for misleading parents, enabling child exploitation, and harming kids,” said Torrez in a release. “The substantial damages the jury ordered Meta to pay should send a clear message to big tech executives that no company is beyond the reach of the law. Policymakers and law enforcement officials across the country can help make this verdict a turning point in the fight for children’s safety.”

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The crux of the winning case is that Meta violated New Mexico law by deceptively declaring its products safe for kids when they decidedly were not. The complaint filed in the case by the AG put it this way:

In numerous instances, Defendants’ public statements and communications knowingly misrepresented, directly or indirectly, expressly or by implication, that their platforms were not addictive, that they prioritized young users’ well-being over profits, and that their platforms were safe, while concealing and/or misrepresenting their internal knowledge that the frequency of harms and harmful material or conduct encountered by young users on their platforms was far more pervasive than Defendants’ public statements revealed.

Much like the Los Angeles trial, the New Mexico case found that Meta’s platforms include addictive design features, which Meta put into place intentionally despite knowing how harmful they could be.

But it also goes further: The case heavily features the work of undercover investigators, both independent and employed by New Mexico, who found that Meta did not take down harmful and sexually explicit material of children even when it was flagged. “None of the content below was removed by Meta, and none of it is consistent with Defendants Meta’s and Zuckerberg’s representations that Meta maintains an environment that is safe for children,” said the state’s complaint.

New Mexico State investigators also created fake profiles of minors, as well as fake profiles of adults looking to traffic children. I’ll leave out the gory details, but suffice to say there were few barriers to those fake individuals accessing a real house of horrors.

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And Meta leadership knew what people on its platforms could do, because it commissioned its own research, which it then ignored. As one former Meta employee and consultant explained, “[M]anagers including CEO Mark Zuckerberg do not seem to seek to understand or actually address the harms being discussed. Instead, they minimize or downplay published findings, and even sometimes the results of their own research. They also try to obfuscate the situation by quoting statistics that are irrelevant to the issues at hand.”

So the crux of the matter is: Meta’s leaders said one thing in public regarding the safety of their products, when they knew, or should have known, that what they were saying wasn’t true. To put a twist on the famous Watergate question: “What did Mark Zuckerberg know and when did he know it?” The jury agreed with New Mexico’s contention that he and other Meta leaders knew, and simply did nothing.

This case is a big deal both on the merits and because of the door it opens to potential future cases. Every state has some version of an unfair and deceptive trade practices law similar to New Mexico’s Unfair Practices Act, which are most commonly called “UDAP” laws (which stands for unfair and deceptive acts and practices). Also known as “Little FTC Acts,” because they grant states powers similar to those held by the Federal Trade Commission, these laws broadly protect consumers from deceptive and fraudulent business practices.

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Now, not every state’s UDAP law is great, mind you, but every state AG does have something available, and there are all almost certainly looking at the New Mexico verdict and weighing similar cases under their own respective state statutes, either against Meta or other similar tech platforms.

New Mexico’s AG office is also relatively small and less well-resourced than those in larger states, such as Illinois, New York, Texas, or even Colorado. It’s surely going to be tempting for some of those states with significantly more oomph in their AG budgets to follow the path New Mexico has opened.

To be clear, I don’t want to get too far ahead of events: There’s still another phase of the New Mexico trial coming, in which the judge will determine whether Meta’s platforms constitute a “public nuisance” that require it to make proactive changes to address the harms detailed. And, of course, Meta will appeal. This is far from over.

But it’s possible New Mexico has drawn up a roadmap that other states and policymakers can use to rein in big tech and start to end the addiction tech firms have foisted onto the American populace.

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UPDATE: The Colorado House voted last week to pass a bill banning surveillance price- and wage-setting, making it the first legislative body in the U.S. to approve such legislation. “Our online activity, not just what we post and buy, is being used to price-gouge us and intentionally offer low-ball salaries to pad the pockets of mega-corporations,” said Democratic Rep. Javier Mabrey, one of the bill’s sponsors. “We’re pushing back against these deceptive practices to save Coloradans money, allow small businesses to stay competitive in the market and increase incomes for the hardworking people of our state.” Read background on this issue here.

UPDATE II: Forgive the brief federal deviation, but it dovetails with many things I write about here: Sen. Bernie Sanders and Rep. Greg Casar last week introduced the Home Team Act, which would prevent owners of professional sports teams from relocating their franchises without first giving local buyers an opportunity to purchase the team. (Full disclosure: I worked with Casar’s office on the bill.) It’s obviously a long way from a bill with two sponsors to one that becomes law, but it reveals that the current state of affairs is a policy choice, and one we don’t have to accept forever.

SHAMELESS SELF-PROMOTION: I spoke to New Orleans Public Radio about abusive nondisclosure agreements in economic development in Louisiana. Read it here.

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• “World Cup Economic Bump Is Starting to Look Like a Bust”

• Gov. Bob Ferguson signed a law making Washington State the latest to ban noncompete agreements.

• The Ohio attorney general certified an effort to collect enough signatures to put a data center ban to a statewide vote.

• A new lawsuit alleges that DraftKings and FanDuel use various tactics to addict gamblers to their platforms.

• “Utility CEO salaries have become a bipartisan foe”

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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To hear the press and pundit class tell it, the proposed merger between Paramount and Warner Brothers — which would reduce the number of major movie studios from five to four — is a done deal. The Trump administration will likely rubber stamp the merger, giving Trump ally David Ellison, Paramount’s CEO, control of valuable Warner Brothers’ media properties, including CNN, after the administration allegedly worked to eliminate Netflix as another potential bidder.

But not so fast.

The Department of Justice isn’t the only game in town when it comes to merger review and enforcement. State attorneys general not only have the option of enforcing federal antitrust law on behalf of their constituents, but can also sue to block the merger under their respective state antitrust laws (which nearly every state has).

Already, California Attorney General Rob Bonta has said he is examining the proposed merger and rallying other state AGs to potentially oppose it.

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“Further consolidation in markets that are central to American economic life does not serve our economy, consumers, or competition well. In fact, consolidation of markets has led to increased unaffordability, a loss of good-paying job opportunities, and fewer choices for consumers,” said Bonta in a statement. “The proposed Warner Brothers transactions must receive a full and robust review, and California is taking a very close look. We are committed to fighting market consolidation that we find unlawful.”

This is good news, as the Trump administration’s Department of Justice has made clear that it is simply willing to sell merger approval to the highest bidder or, as in the case of Paramount-Warner Bros., approve mergers as favors to allies and insiders regardless of their effects on competition or the wider economy.

For example, the DoJ approved a merger between Hewlett Packard Enterprises and Juniper over the objections of antitrust staff, based on “boozy backroom meetings” with lobbyists. It cleared a merger between real estate brokers Compass and Anywhere after insider corporate lobbying, as well.

Even more concerning, DoJ, alongside the Federal Communications Commission, waived through a merger between Nexstar and Tegna, two owners of broadcast television stations. If they combine, they will own 256 stations across the country, blowing through an ownership cap Congress placed on the audience any one broadcaster is allowed to reach. (The FCC waived that ownership cap to allow the Nexstar-Tegna merger through, because laws are apparently only suggestions if the Trump administration wants something to happen.)

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States, then, have become the first line of defense for blocking illegal mergers. And it’s clear that allowing Paramount and Warner Bros. to merge runs afoul of the antitrust laws.

Why? First, the merger would have serious downstream, negative effects on wages in the entertainment industry, as fewer bidders for new projects and for labor enables those that remain to pay lower prices. It’s also likely that the merged entity would engage in widespread layoffs, as occurred when Warner Media merged with Discovery. Paramount has already predicted $6-9 billion in “synergies” should the merger go through, which is consultant speak for mass firings.

The merger would also limit consumer choice and likely raise prices, as Warner Bros.’ HBO Max would no longer be a direct competitor with Paramount’s Paramount Plus. Streaming services are already consistently hiking prices above and beyond the rate of inflation, and a more consolidated industry will have even more pricing power. The combined Paramount-Warner Bros. will also control a dizzying array of sporting events, with rights to the NFL, NHL, MLB, NCAA, PGA, NASCAR, NCAA March Madness, College Football Playoffs, UFC, and tennis’ French Open.

The story is the same with Nexstar and Tegna. Nexstar’s “consolidation playbook” involves job cuts and broadcasting duplicative content across its stations in order to eliminate the need for more staff. The combined company would also use its leverage to maximize the fees it charges other broadcast platforms to show its content, raising prices for consumers.

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So challenging these mergers, at a minimum, is what state enforcers should do. Indeed, eight states have already sued to block the Nexstar-Tegna merger.

But state legislators could also use this opportunity to bolster their state antitrust laws to ensure better merger enforcement going forward — or perhaps even apply those laws to these case, depending how long they last.

The reason for doing so is that state antitrust law suffers from many of the same shortcomings of the federal version: Thanks to half a century of influence from the so-called “Chicago School,” which posited that antitrust should only be concerned with consumer prices to the complete exclusion of any other effect of corporate consolidation, precedent and case law tend to allow mega-mergers thanks to the (often incorrect) theory that huge firms will lower prices. Antitrust cases are fought over economic models that attempt to predict which way prices will go in the future, rather than on any concrete, real-world harms in the here and now.

Instead of continuing to operate on those terms, states could update antitrust law, incorporating aspects of the 2023 merger guidelines released by the Biden administration’s Federal Trade Commission and Department of Justice, which stated that mergers should be presumptively illegal if they would further consolidate an already consolidated market.

Doing so would not only prevent increased concentration today — saving consumers money and workers their livelihoods — but would allow states to begin to address the levels of extreme consolidation that have occurred across the economy, because the federal government clearly has no interest in doing so.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Pittsburgh public schools are closing for three days while the city hosts the NFL draft.

• CVS is using a bunch of shady tactics in Tennessee in an attempt to defeat a bill that would break up pharmacy benefit managers; Democratic Rep. Aftyn Behn has called on the attorney general to investigate.

• The speaker of the Kansas House is unilaterally blocking a bipartisan health care bill.

Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.

If you don’t subscribe already and you’d like to sign up, just click below.

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Thanks again!

— Pat Garofalo

This is Boondoggle, the newsletter about how corporations rip off our states, cities, and communities, and what we can do about it. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

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Earlier this month, the Washington D.C. Court of Appeals threw out a rate increase that was requested and received by Pepco, the capital’s electric utility, for 2024-2026. The court directed Pepco and the District’s utility regulator, the Public Service Commission, to take another whack at determining the appropriate amount to charge residents for that period.

The case occurred because the District’s Office of People’s Counsel — which advocates for residents harmed by the city’s monopoly utilities — alleged that the PSC didn’t hold a proper hearing before approving Pepco’s rate request. Where it should have held a more court-like proceeding, the PSC instead held a “legislative style hearing … in which the parties were limited to presenting oral arguments and had no opportunity to present witnesses or to cross-examine adversarial witnesses.”

This is a big deal in D.C. politics, because Pepco bills are skyrocketing a few months ahead of a primary election for the city’s open mayoral position, as well as several city council positions — and when I say skyrocket, I mean hundreds or even thousands of dollars a month for some customers, basically overnight. The two main contenders in the mayor’s race are criticizing each other for failing to adequately oversee the PSC.

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The court ruling gives advocates another chance to secure lower rates, at a time in which the political establishment will have a desperate desire to see rates decline too. But this episode also, more broadly, is emblematic of the below-the-radar dysfunction and corruption that plagues utility regulators nationwide.

As utility bills climb and “affordability” becomes the hot political word of the moment, it’s worth pointing out the vary salient fact that utility regulators are making hash of everything, approving rates above and beyond what they should, while green-lighting projects they shouldn’t. There’s a nationwide crisis of corrupt or inept regulators (or both!) having the discretion to line the pockets of utility shareholders at residents’ expense, and doing just that.

From D.C., we can cross the country to Arizona to see another example. There, Attorney General Kris Mayes is challenging the Arizona Corporation Commission (which regulates utilities) for allowing a special agreement between Tucson Electric Power and a data center developer. Mayes’ allegation is that the Corporation Commission illegally delegated its authority to set electric rates to the utility and the data center developer, who are apparently working out the data center’s cost of electricity on their own.

“The Commission does not have the power to let a utility and a data center operator quietly agree to set their own rates, cut the public out of the process, and call it a day. If we allow that here, we are telling every large energy customer in Arizona that they can negotiate sweetheart rates outside of public oversight — and ordinary Arizonans will be left to pick up the tab,” Mayes said.

And those sweetheart rates for individual corporations tend to translate into higher rates on everyone else, to make up the difference.

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DC and Arizona regulators may have gone the extra mile to ensure that ratepayers were shafted, and may be forced to reconsider, but their conduct is hardly unique. In fact, in general, utility regulators have been quietly awarding outsized profits to monopoly utilities with little attention or accountability, for years.

As a reminder, most utilities, though publicly regulated monopolies, are also owned by private investors, making them investor-owned utilities, or IOUs for short. So any excess profit lines the pockets of those investors, shifting money from Main Street to Wall Street. (I’m going to focus on electric utilities here, but the same can be said for gas and water.)

The amount utilities are allowed to charge ratepayers is set during court-like proceedings known as rate cases, in which utility regulators sit as judge and jury. According to longstanding court precedent, utilities are only supposed to receive a “return on equity” equivalent to what they would need to attract investment on the open market — and that return, or ROE, determines a big chunk of what you pay in your monthly bills.

Since monopoly utilities are a very safe, almost-zero-risk investment with guaranteed profits, that return should be relatively low. Instead, regulators keep approving returns for utilities way above market rate, as if utilities were a super risky investment requiring outsized returns to draw in capital.

In fact, regulators are awarding returns to utilities that are between 30 and 50 percent above the cost of equity they’d likely receive in the market. As my colleague Mark Ellis has calculated, these excess profits “cost utility customers approximately $50 billion per year, or about 13.6% of total IOU gas and electric revenue,” which comes out to more than $300 per year per household.

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Another 2019 study of U.S. utilities found that for years regulators have been increasing the amount of return they allow utilities to make based on no good economic evidence, “highlighting a disconnect between what regulators claim to be doing and what they are actually doing.” I.e., regulators claim to be watching out for the public, but are actually extracting public money to send to utility investors.

All told, the nation’s average electricity rate today is 40 percent higher than it was in 2019, as a direct result of regulators failing in their chief duty: Determining just and reasonable rates. (You can use this handy new calculator from the Energy and Policy Institute to see how much of your utility bill is going to profits versus maintaining or upgrading service.)

So what to do about this? Get better regulators and give them less to do.

Utility regulators, depending on the state, are either appointed by the governor or elected. That means they can be ousted and replaced with better ones, given sufficient pressure. Monopoly utility leaders use this play themselves, in reverse, working to oust any regulator who dares threaten their gravy train.

But perhaps more important is adopting new rules that would constrain regulators in the first place, taking away their discretion to award sky-high, fantasy-land returns. States could adopt legislation (we wrote a model here!) to require that rates be rooted in real-world, market data, adhering more to the standard to which utility regulators are supposed to stick, rather than the corrupt, made-up one they currently employ.

Email or call your state legislators and tell them to pick it the model legislation and run with it if they want to actually lower costs for their constituents.

Want to learn more? Join me and an amazing group of legislators and experts for a virtual webinar on “Lowering Utility Costs in an Age of Data Centers” on Thursday, March 26th at 2 p.m. EST. RSVP here.

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UPDATE: A few weeks back, I wrote about a race among several states to become the first to ban restrictive deed covenants that dominant retailers use to block the entry of new grocery stores and pharmacies in local markets. Well, the race now has a winner: Washington State, where Gov. Bob Ferguson signed a ban into law this week. Kudos to Rep. Darya Farivar for her championing of the bill, and hopefully this is the first of many dominoes to fall.

SHAMELESS SELF-PROMOTION: I spoke to Action News Jax about Florida legislators gutting a data center regulation bill. (Read it here.) I also spoke to the Cleveland Plain Dealer about Ohio legislators attempting to ban nondisclosure agreements in data center deals. (Read it here.)

SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• The Washington Post apparently uses surveillance pricing in some form or fashion.

• Utah is on the front line of the effort to ban “prediction markets,” while Arizona Attorney General Kris Mayes filed criminal charges against Kalshi, a leading prediction market firm, for running an illegal gambling operation. (Background on this issue here.)

• “Across 24 states, Meta, Google, and Microsoft are giving exponentially more to influence state-level elections this cycle than they have in the past.”

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— Pat Garofalo