(The Center Square) – As calls intensify for reform at the Michigan Economic Development Corp., one state lawmaker is calling for its abolishment.
In an exclusive interview with The Center Square, state Rep. Steve Carra, R-Three Rivers, said reform and lawsuits isn’t enough.
“The current system is a complete failure, a wealth destroyer for the hardworking middle class, and a crooked scheme benefiting the rich and politically connected,” Carra said. “The MEDC should be abolished.”
Currently, investigations are underway into MEDC after a Gov. Gretchen Whitmer political appointee and donor was set to receive $20 million of taxpayer funding for her Oakland County-based nonprofit.
Fay Beydoun, a long-time political supporter of Whitmer, was serving on the MEDC executive board in 2022 at the time the grant was awarded. She filed paperwork to incorporate Global Link International just days before securing the grant.
Carra said cases like this are emblematic of a broader pattern of cronyism.
“Since her first term, Gov. Whitmer’s focus has been directed toward corporate welfare giveaways,” he explained. “She’s one of the biggest fans of crony capitalism in Michigan’s history, and this recent grant to one of her prominent fundraising allies raises concerns on potential conflicts of interest.”
Currently, Michigan Attorney General Dana Nessel is conducting an investigation into the matter, raiding the MEDC Lansing office June 18 to seize relevant documents.
Following that raid, MEDC’s attorneys filed a lawsuit. They argued the three boxes of documents and laptop seized in that raid were confidential under attorney-client privilege.
Oakland County District Court Judge James Brady gave MEDC until July 11 to appeal his decision which allowed the AG’s office to begin reviewing the documents for privilege through an independent taint team. MEDC did decide to move forward with that appeal, as previously reported by The Center Square.
Carra joined other Republicans urging both state and federal investigators to dig deeper into a controversial grant.
“I hope the Attorney General’s office fully pursues this investigation. I’d also welcome a federal investigation to ensure the people of Michigan receive the answers they deserve,” he said. “I hope an investigation will yield accountability. Wasting tax dollars on political favors is morally reprehensible and unacceptable for representative government.”
Just this week, Whitmer broke her silence on the controversy, telling reporters that she is “very troubled.” MEDC is currently working to recover $8.2 million in funding from Beydoun, which Whitmer said she hopes they are able to do.
Carra said this is bigger than just this one controversy though. As chair of the House Oversight Subcommittee on Corporate Subsidies, he has been working to expose how MEDC spends tax dollars, which he has labeled “clearly corrupt.”
“Abolishing the MEDC would go a long way in solving wasteful abuse of taxpayer dollars,” he said.
While supporters of the corporation argue it helps fuel the state’s economy, Carra said it is a faulty understanding of the economics of it.
“The MEDC and its supporters clamor for ‘economic development,’ but they miss the mark on what it means to truly develop an economy,” he said.
He called it the “broken window fallacy,” which allows the MEDC to claim success for economic successes that would have otherwise happened if taxes were just lowered.
No serious moves have been made to end MEDC, which was first established in 1999. In the meantime, Carra and other Republicans are working on legislation that will require more transparency on MEDC and other state-funded “corporate welfare schemes.”
“Specifically, I’m seeking to address the conflicts of interest that are part of these deals,” he said. “Solving this issue will take a relentless commitment to transparency from our state government.”
Ultimately, for Carra, the solution to ending corruption would be to return the economic decision-making to Michiganders.
“The people of this state will drive the economy through investment and consumption. They have preferences on how they spend their money, and the less the government is involved in these private matters, the better,” he said. “Government’s only involvement in economic development will be removing itself from the equation as much as possible.”
