Obama gets one right (for the wrong reasons),,,

[CARLHAYDEN]

Many matters of public policy are highly convoluted, with demagogues taking one position one day, and the entirely opposite position on another day, confident the complexity of the subject matter, coupled with the unwillingness of the media to fairly examine the issue, will allow them to get away with their duplicity.

A case in point is the federal law on depreciation of capital assets, particularly, in the case in point, for business aircraft.

Now, back in 2009, as a part of the so-called “stimulus” bill (more accurately known as Porkulus), Congress (at that time both chambers were heavily controlled by the Democrats) approved a tax break that sharply reduced the tax bill for companies that bought business planes, known as ‘accelerated depreciation.’

Now, normal depreciation  takes into account the fact that most capital goods are worth less over time.

However, the ‘accelerated depreciation’ included in the ‘stimulus’ bill was designed to increase the tax break beyond normal depreciation, in order to promote sales of such aircraft.
Needless to say, Obama signed the bill.

Now Obama wants to reverse the accelerated depreciation for such aircraft.

http://www.bloomberg.com/news/2011-06-29/jet-tax-break-cited-six-times-by-obama-would-cut-debt-by-about-3-billion.html

Even though the income to the government resulting from the proposed reversal is a small percentage of the money needed to reduce the deficit, and consequently the debt (less than 1%), it is a worthy endeavor (like ending special subsidies for ethanol).

Now, if we can only get Obama to agree to cuts (outside the Defense department) in expenditures.

[CARLHAYDEN]

That was a convoluted post.  I think if Republicans agreed to reasonable tax hikes on millionaires and billionaires and cutting subsides for multi billion dollar companies such as big oil and big agra Obama would have to make some deep cuts elsewhere.  Obama can't go to his base and tell grandmothers on a fixed income to eat cat food while GE pays no taxes and someone making $500,000/yr claims to be just scraping by and can't afford a tax hike.

Check out Greece if you want to see what happens when the rich don't pay any takes and the working people are forced to take wage cuts to pay the debt.  It's not pretty.

Sorry Lutz, but Obama is opposed to any significant reduction in federal expenditures other than defense.

All Obama wants is increased taxes.

Now, I am repeatedly on record attacking GE (an example of cronyism) for its preferential treatment on taxes, have opposed the ethanol subsidy, as well as bailouts for GM, the big banks, etc.

[CARLHAYDEN]

Well...you do realize that the whole point of a stimulus bill is to cease those actions and reverse them once one thinks they are no longer needed to stimulate the economy?

Gustaf,

NO!!!

First, the purpose of Porkulus was to fund liberal projects and reward selected industries!

Second, the economy has not been 'stimulated.'  In fact, the projections made by the Obama economists indicate that the economy is worse off under Porkulus than it would have been if the bill had not been passed!

Third, playing games with depreciation schedules is both and unfair, and distorts the economy (which ends up harming the economy).

[CARLHAYDEN]

Well...you do realize that the whole point of a stimulus bill is to cease those actions and reverse them once one thinks they are no longer needed to stimulate the economy?

Gustaf,

NO!!!

First, the purpose of Porkulus was to fund liberal projects and reward selected industries!

Second, the economy has not been 'stimulated.'  In fact, the projections made by the Obama economists indicate that the economy is worse off under Porkulus than it would have been if the bill had not been passed!

Third, playing games with depreciation schedules is both and unfair, and distorts the economy (which ends up harming the economy).

That's conjeture. Economically speaking, the purpose of a stimulus is to stimulate the economy in a downturn. Whether it worked or not or whether this particular part of it was a good idea or not is another issue. I'm just pointing out that it makes perfect sense to dismantle a stimulus project after a while, regardless of its succes. In fact, not doing so would be quite odd and rightly invite attacks like the one you mention here - tha tthe purpose was not to stimulate but to introduce policies under the guise of stimulating the economy.

Again, you make assumptions that are invalid.

First, the Porkulus bill did NOT stimulate the economy.  The act, is technically called The American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5). 

Second, to paraphrase A. Lincoln, 'calling a tail and leg doesn't make it so.,  So, to call Porkulus a 'stimulus' bill, is simply misleading (at best).

Third, you keep missing the basic concept of depreciation.  You seem to believe that its just a political football to be arbitrarily increased or decreased to reward whoever you want and that there is no reasonably impartial standard.  Do you also believe that accounting concepts like GAAP should be replaced by arbitrary Creative Regulatory Accounting Principles (which can change whenever it is politically convenient)?

[CARLHAYDEN]

Ok, let’s review.

First, you have kept insisting that The American Recovery and Reinvestment Act of 2009 was a ‘stimulus’ bill.  You state that the “purpose” of the bill was “to stimulate the economy.”

Now, you have subsequently admitted that it might not have been successful in achieving that purpose (“whether it worked or not”).

I have pointed out that the purpose of the bill was primarily to fund liberal interests and reward contributors with preferences (such as accelerated depreciation for business aircraft). 
If the purpose had been “to stimulate the economy,” rather than reward certain contributors, the acceleration in depreciation would have applied universally.

Also, to support my point as to the bill be primarily to fund liberal interests, let me cite some examples:

• $ 87 billion Medicaid aid to states
• $ 79 billion school districts/public colleges to prevent cutbacks
• $ 54 billion to encourage energy production from renewable sources
• $ 41 billion for additional school funding
• $ 24 billion for "health information."
• $ 6 billion for "higher education modernization”.

So, in conclusion, calling it a ‘stimulus’ bill is inaccurate and biased.

Now, to an impartial reader, calling the Porkulus bill a ‘stimulus’ bill does imply that you do approve of it (although it’s nice that you are now stating that “I'm not claiming that this policy was a good policy.”)

[CARLHAYDEN]

Ok, let’s review.

First, you have kept insisting that The American Recovery and Reinvestment Act of 2009 was a ‘stimulus’ bill.  You state that the “purpose” of the bill was “to stimulate the economy.”

Now, you have subsequently admitted that it might not have been successful in achieving that purpose (“whether it worked or not”).

I have pointed out that the purpose of the bill was primarily to fund liberal interests and reward contributors with preferences (such as accelerated depreciation for business aircraft). 
If the purpose had been “to stimulate the economy,” rather than reward certain contributors, the acceleration in depreciation would have applied universally.

Also, to support my point as to the bill be primarily to fund liberal interests, let me cite some examples:

• $ 87 billion Medicaid aid to states
• $ 79 billion school districts/public colleges to prevent cutbacks
• $ 54 billion to encourage energy production from renewable sources
• $ 41 billion for additional school funding
• $ 24 billion for "health information."
• $ 6 billion for "higher education modernization”.

So, in conclusion, calling it a ‘stimulus’ bill is inaccurate and biased.

Now, to an impartial reader, calling the Porkulus bill a ‘stimulus’ bill does imply that you do approve of it (although it’s nice that you are now stating that “I'm not claiming that this policy was a good policy.”)

Calling it what it is officially called instead of some ridiculous spin term you made up is obviously not indicative of anything. Anyway, the above is all very nice but since it doesn't contradict anything I said I'll just assume that you're tacitly admitting to being in the wrong here. Apology accepted, I suppose.

I realize that English is not you native language, but, as I pointed out, the official name of the legislation is "The American Recovery and Reinvestment Act of 2009, not the "stimulus" bill, which you seem to incorrectly believe is its official name (probably because you approve of such spending).

Now, I cannot claim to have "made up" the term Porkulus, which would be clear, if you investigated.  I leave, making things up to you.

Next, are you really trying to pass of the items I listed as "stimulus"?  If so, apparently you have been converted to Opeboism.

Finally, please stop 'supposing."

[CARLHAYDEN]

Gustaf,

While I realize that to you, "everyone" consists of those who support more and larger government (particularly centralized government).  You might want to google the term "porkulus," and you will see how many sources do not share your bias.

Next, the porkulus bill was not a good faith attempt to deal with problems in the American ecoomy, but rather a 'fix' of heroin injected into the body politic by a bunch of sickos in Congress (Pelosi, Reid and their fellow scumbags).

The economy was seriously injured by that drugging!

[CARLHAYDEN]

Well...you do realize that the whole point of a stimulus bill is to cease those actions and reverse them once one thinks they are no longer needed to stimulate the economy?

There are so many problems with the US corporate tax code it is hard to know where to begin.....

The first is that the official rate of 35% is waaaaaaay too high relative the other nations. (Sweden, long known for being under the control of hard core Capitalists, for example, just lowered it's rate as has Canada)



To offset this higher nominal rate the US tax code will filled with so called "tax breaks" which bring the effective rate for into line with international norms.. the problem is Congress uses these tax breaks to try to shape the economy (ie replace the judgement of the markets with the judgement of Congress)

Naturally, this does not work out very well.

Many companies, (Ie GE which paid ZERO taxes last year, Google which paid 5.5% effective, etc) use perfectly legal means to avoid most taxes.. we have a market place where a large element of success is how good your tax lawyers are, as opposed to, just as a silly example, the quality and value of the product they deliver to the marketplace....

It also creates a tax avoidance/compliance industry that has no actual contribution to the economy.

Last year the cost of tax compliance to the US economy was estimated at 480 Billion dollars... imagine if the tax code was simple, fair, and devoid of all the gimmics.. this same 480 billion could be used for things such as lower prices, higher profits (hence more tax revenue) R & D.. higher wages, Indeed almost any use would have a higher net benefit to the economy that well, tax avoidance....

it also distorts the economy when the "wisdom" on Congress forces out the wisdom of the market place.....  If you put a big enough subsidy on it, it can be profitable to set up a Banana plantation in Alaska.. that that does not change the fact that Alaska is a silly place to try to grow bananas....  There are a zillion real world examples of silly tax policy begetting silly economic behavior....

Another issue is the repatriation of foreign profits..  Because the nominal US rate is so high, companies use perfectly legal means to actually realize their profits over seas.

For example, Cisco has most of it's patents registered in Switzerland, so whenever Cisco USA sells something they (quite legitimately) pay an intellectual property fee to the owner of the patent (which happens to be Cisco Switzerland) hence profits are magically transferred from the US's 35% rate Switzerland's lower rate...

I could go on and one about the logical flaws of the US systems.. the bottom line is the US needs to burn it down and start again.....

Vorlon,

What you need to understand is that Gustaf reflexively takes any position which I oppose.

If I were to post a thread suggesting that one plus one probably equals two, Gustaf would jump in any contest that.

He seems (in a related thread) to be arguing for higher taxes to be inflicted on the United States.  I have never heard of any economic theory under which unemployment is reduced by raising taxes (say $200 billion a year).  But, perhaps Gustaf simply wants to make unemployment in the United States even worse.

[CARLHAYDEN]

Gustaf,

I noticed you once again engaged in evasion.

Is your support for tax increases (on the United States) because you believe they increase (or do not impact) employment levels, or because you want unemployment levels in the United States to increase due to increased taxes?

Or, are you totally indifferent to the impact of increased taxes on the unemployment rate?

[CARLHAYDEN]

First, thank you for partially answering my question, when you noted there is a negative correlation between "overall employment" and taxes.

Second, from the rest of your response, I must infer that you don't care how high the unemployment rate/level becomes so long as tax rates are increased to support big government.

So, ultimately it is the level/amount of government that determines the means of reducing the deficit and debt.  You want big government (with higher/more taxes) and I want smaller government.

You support for more taxes/higher taxes is therefor (ergo) the result of you wanting a higher amount of government, rather than the impossibility of containing/reducing expenditures to live within revenue means.