It was back in May that I spilled the beans on the proposed CAPCO legislation, calling it “a huge handout to lobbyists and the companies who hire them.”
I’m happy to say the Milwaukee Journal Sentinel soon jumped aboard with some excellent reporting that undoubtedly helped kill the bill. As Rutgers University professor Julia Sass Rubin, an expert on CAPCOs, told the paper, states have poured almost $2 billion into CAPCOs (or certified capital companies) over the last 20 years and most of it has simply ended up as profits for the CAPCOs.
But while it looks like CAPCOs are dead – for now anyway – there is still a heated call for the state to spend money on some kind of venture capital funding program. In their rush to do this, legislators (who until recently were eager to pour state money down the CAPCO rat hole) and the media (which is irresistibly drawn to venture capital funding and high-tech industries as THE solution for Wisconsin’s economy) are likely to be just as uncritical.
A case in point is a recent JS story on a new report by a coalition formed by the Wisconsin Technology Council, urging the state to spend a whopping $350 million on venture capital funding. It’s worth noting that this is the same council that urged the state to spend $200 million on CAPCOs back in 2003. This was five years after the state had launched a $50 million CAPCO fund, whose abysmal results were by then quite obvious.
But it gets worse. The council’s president, Tom Still, wrote an op-ed for the JS last spring that called the 2011 bill to spend $200 million on CAPCOs something that “builds on the success of the widely acclaimed and often duplicated” angel investor law passed in 2005, and is “a modified version of an approach used in many states.” In fact, the CAPCO bill was nothing like the 2005 law, and all the states that passed CAPCO programs have had miserable results.
But it gets worse. The new report overseen by Still’s council doesn’t necessarily recommend CAPCOs, which the JS story rightly notes, but the report offers a blandly uninformative description of the state’s 1998 CAPCO law. The council continues to resist summarizing the horrible results with CAPCO programs nationally, perhaps because Still and company have been such proponents in the past.
I think the group’s history is quite relevant in evaluating whether their current recommendation, that the state spend $350 million on a broad array of venture capital programs, is worth taking seriously. But the JS story offered none of this background to readers.
In an earlier story by the newspaper, it covered a conference where panelists debated the value of government incentives to business. The story quoted Sass Rubin to the effect that the best-run venture capital programs don’t necessarily start out with $400 million in spending. “You can start small and see if it’s working, then you can always commit more,” she said.
Like me, Rubin is not necessarily an opponent of state spending on venture capital; she merely favors targeting the money in a way that does the best good. Why commit $350 million over five years, as the Technology Council recommends, until you’ve first seen the early (first year or two) results?
The JS story on the conference noted that it was sponsored by the “left-leaning” Economic Policy Institute, which may have unwittingly given readers the idea that opponents of things like CAPCOs are liberals. In fact, their most fearsome critic is conservative state Sen. Glenn Grothman (R-West Bend), who has probably done more to fight them than any person in the state. Here’s hoping he’s looking just as carefully at the latest proposal for venture funding.
Scott Walker in Trouble?
Something doesn’t quite add up in the ongoing criminal investigation of some aides to Gov. Scott Walker. The Journal Sentinel stories continue to reference an article the paper did in May 2010 revealing that Darlene Wink, then an aide to County Executive Walker, had been doing political work for Walker on government time.
The paper did this again after investigators went after Tim Russell, another former county aide to Walker, and yet again when the FBI raided the home of Cindy Archer, another county aide, but one who went on to serve in the Walker’s administration in Madison.
Sorry, but it’s hard to believe that a dozen law enforcement investigators swooped down on Archer’s house to chase down someone who might have been politicking on government time. That is a huge expenditure of legal resources and suggests something really major is being investigated.
Wink and Russell go back decades as fervently conservative Republicans in Milwaukee. (One longtime GOP insider describes them as “Tea Party types.”) They are true believers who might well have been tempted to campaign for Walker using government resources.
But Archer seems to fall into another category entirely, someone who worked for years for the state Legislative Audit Bureau and whom Walker appointed as the deputy secretary in the state Department of Administration. That’s a job with a lot of responsibility, and that typically has oversight over the award of state contracts (which has been known to lead to abuse in other political administrations). She is a much bigger fish, which suggests the investigation may have moved in a different direction, or may be pursuing two different potential crimes.
Wink’s attorney Christopher Wiesmueller said as much, telling the JS he saw no connection between the raid on Archer’s home and the investigation of Wink.
The John Doe probe has already convicted railroad executive William Gardner of laundering campaign donations to Walker and other politicians. That, too, might have some connection to the investigation of Archer.
Meanwhile, Archer may have chosen the wrong home to move next to in Madison. Her next door neighbor, a man named Dale Riechers, bought a computer from Archer a couple months back and offered its hard drive to the FBI. Riechers also took pictures of the investigators at Archer’s home, one of which was the lead photo in the JS story. Here’s a wild guess: I’ll bet Riechers is a Democrat.
The Buzz
-Will the race for U.S. Senator come down to Tammy versus Tommy? Back in the mid-1990s, Republican Gov. Tommy Thompson was quite impressed with Democrat Tammy Baldwin, then a state lawmaker, and privately predicted a bright future for her. He was certainly prescient: Baldwin surprised many in winning the Dane County-based congressional seat and is now looking to ascend the next rung of the ladder, running for the Senate. It would be ironic if she ended up battling Tommy for the position.
-How the turmoil in the Big East conference could help Marquette. The Sports Nut looks in his crystal ball.
