Posts Tagged 'stimulus'

The Solyndra Connection

Incompetence is one thing. Solyndra was criminal.

Ok, so Obama was his normal incompetent self when he lent $529 million in taxpayer funds to a struggling solar manufacturing plant which then went bankrupt. What’s the big deal? I mean besides the fact that he is asking for another $447 billion after admitting that with all the stimulus cash in the last bill he still failed to fix 152 structurally unsound bridges that Americans are driving on every day.

Except, wait, what’s this? The Obama administration specifically restructured the loan agreement so that if Solyndra went under and liquidated the investors would get their money back first. Read that again.

So unlike Chrysler, where the chicago boss stole the company from the bondholders and gave the liquidated funds to the unions, here Obama specifically determined that after giving $529 million in taxpayer funds to Solyndra, if Solyndra went under the owners of the company would get their money back before taxpayers got our money back. Congratulations, You have been officially robbed by the President.

So why would Obama do that? He didn’t care about the Chrysler bond holders who legally should have had first rights to those liquidated funds. What is so different about the Solyndra owners? Here is where this story goes from incompetent theft to 1st degree theft.

One of the two companies who is going to get paid back before taxpayers is Argonaut Ventures I, LLC, the investment firm for billionaire George Kaiser. Kaiser raised between $50,000 and $100,000 for Obama in 2008 and continues to raise significant campaign cash for him now.

Follow the money.

Barack Obama takes $529 million of our money and sinks it in a failing solar panel company. Obama changes the terms of the loan so that when the company goes under, whatever is left goes to the investors instead of back to the taxpayers. The investors donate a kickback of up to $100,000 to Obama’s campaign, that ends up being funded with our tax dollars.

Remember Tom DeLay? DeLay was accused of taking corporate donations of $190,000 to the national Republican party and finding ways of funneling them to the Texas state party, where corporate donations are illegal. DeLay’s sentence was three years in jail (currently being appealed). DeLay took donations willfully given to the GOP and redirected them to the state party. Obama took $529,000,000 of our tax dollars, laundered them through Solyndra, and now is receiving them back into his own campaign coffers through donations from George Kaiser. If DeLay got 3 years, how much time should Obama serve?

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On Unemployment, Republicans are right and wrong

Get ready for the Sally Struthers commercials about to be produced by the DNC.  Republicans blocked an extension of unemployment benefits.

But what is being missed on a large scale is why Republicans blocked the extension.  Democrats have extended unemployment benefits four times and have not paid for any of the extensions.  In the most recent extension, they allowed people to find temporary work without losing benefits, all unpaid for.  With deficits over a trillion dollars, the Democrat argument has been that unemployment benefits create jobs.  I’m sure we can all come up with a time we were down on our luck and were hired by an unemployed person.  Right?

The Republican argument is simple.  Pay for the benefits, and they will vote to extend them.  In fact, since they are good Republicans, they don’t even want Democrats to cut other programs to pay for the benefits.  Simply take surpluses from Stimulus and TARP to pay for them.  Seems simple enough, but the Democrats appear to have local stimulus funded pork projects on their priority list above paying for unemployment benefits.  You won’t see that on their “Feed the Children of Detroit” tv special.

This one seems cut and dry.  But the Republicans are wrong too.  Saying you have a surplus in the stimulus program is like saying you have a surplus if you go shopping and don’t quite hit your credit limit.  The word “surplus” and “stimulus” (which was 100% in the red from day one) do not belong in the same sentence together.  Does it really matter which account we take the money from when every account is debt funded already?

Unemployment benefit extensions have become unregulated welfare.  No, unemployment benefits do not create jobs.  Businesses who are paid to create and produce goods and services that people want and need at prices they can afford create jobs.  But instead of throwing money at those job creators, we are raising taxes on them and telling them they can no longer conduct business.  A good example is Obama deciding we no longer need the energy independence that oil exploration and drilling would have provided.  That is thousands of jobs lost in his one decision.

Towards the beginning of Obama’s Presidency, he said that “There will be a time for profits, now is not that time”.  And that thinking is why Congress is looking for a fifth extension of unemployment benefits.

Trickle up has not worked

Considering the last time trickle down was tried was 2003 and it resulted in a record number of quarters of economic growth, job growth, increased tax revenues, and low unemployment, I really don’t see how people can argue that trickle down doesn’t work.

On the other hand, we have been trying trickle up since 2007.  We raised the minimum wage, we reduced requirements for poor people to get loans, we handed out stimulus checks with AGI limits, we poured a trillion dollars into shovel ready jobs for middle class and union workers (that Obama lied about, and has since admitted that those jobs never existed in the first place), we passed healthcare legislation that taxes the healthcare industry and insurance companies and gives breaks to tiny companies who can’t afford to pay their employees a living wage, and we had the government buy and steal ownership in failed companies.  No aspect of trickle up has worked.

We have a record number of Americans on food stamps.  We extended unemployment benefits until it became a type of unregulated welfare.  We had cash for clunkers.  We had the making work pay tax credit.  We made credit for poor people and failing businesses even easier to come by.  We gave tax credits for hiring unemployed people and all the people the minimum wage squeezed out of the market.  But poor people with subsidized incomes don’t hire people.  Employers and companies do.  And not just failing companies with subsidized loose credit; companies that are successful and are growing hire people.

What have we gotten from trickle up?  When Pelosi gave her inaugural speech as Speaker of the House, she promised no new deficit spending.  Since then US debt has increased by $5 trillion dollars.  The entire 8 years of George W. Bush’s Presidency saw our debt increase by less than that, even with 9/11, the tech bubble, two wars, and two years of Pelosi/Reid. Companies are getting ready to drop insurance coverage as rates continue to spiral out of control and Obama’s penalty taxes become far cheaper than Obama’s healthcare taxes. Official unemployment (those still looking) is steady at 9.5% while real unemployment is around 17%.  Tax revenues have fallen, wages have fallen, and the only economic recovery we have in the stock market is 2/3rds Fed injections as the government has continued to buy bad debt-backed securities.

The scariest thing about the left today is that they think the Obama/Pelosi/Reid economic plan of trickle up worked.

Debunking Obama’s Business Tax Break

Obama is touting a new business deduction that could save companies up to $200 billion dollars.  The tax break will allow businesses to expense capital property and equipment 100% right away instead of depreciating them up to 39 years.  However, this plan will have limited effects until the fourth quarter of 2011.  Here is why:

Just like the Healthcare credit, this business deduction will only reach a very limited range of companies.  While Obama is heralding it as a small business tax break, small businesses already can expense equipment and some capital improvements through Section 179 deductions.  In fact, they can expense up to $250,000 in 2010.  Most small businesses will never purchase that much new equipment in one year.  So already this break for 2010 is only for medium to large businesses.  In 2011, this business tax break will act simply as an extension after Obama let’s the Section 179 provision expire.

What Section 179 does not cover is the physical building and most capital improvements to the building itself.  That is where this tax break may actually be effective for small businesses.  However, Obama runs into another snag here that most tax professionals and analysts miss.  In order to take losses in your business, you have to have basis.  In other words, you can only take out of your company what you put into it or make in the process of carrying on business.  If you borrow $100,000 from the bank and put it into your company, and then spend it all without making any money, you cannot deduct that $100,000 until you have built up basis in your company.

Most building property and significant improvements are purchased through outside financing on the small business scale.  This means that most small businesses will not be able to take the losses from this tax deduction until they are able to build up basis in the company.  In fact, companies who choose to take this deduction and then take distributions out of the company in excess of their basis will face double taxation.

The final nail in the coffin for this tax break for 2010 is that many tax advisers are telling business owners to put off capital investments until 2011 when the Bush tax cuts expire and rates go up.  Many small businesses make capital purchases and take advantage of 179 expensing in the fourth quarter as part of their year end tax planning.  This year, many businesses are planning on putting those purchases off until next year when the deduction can save them an additional 3-8.4% in taxes.  By putting off property purchases until 2011 when Obama let’s taxes go up, small businesses can save tens of thousands of dollars.

In that sense, this tax break may be a good thing.  As businesses are losing tens of thousands with the expiring Bush tax cuts, maybe this will help save some jobs in 2011.  Don’t expect it to solve anything this year.

Out of jobs to lose

After we threw a trillion dollars in debt at our economy, Obama was finally able to boast positive job growth in November.  That was short lived as December and January both saw job losses once again.  But it is one year since Obama passed the stimulus  and only 6% of Americans actually think the stimulus has created or saved a single job. That 6% represents the Obama administration, Pelosi/Reid congress and most of their extended families.  The rest of us know better.

Obama has decided to return to campaign mode in an attempt to cast his debt spending in a positive light.  On his facebook Obama is promising that he will finally focus on jobs in 2010.  As part of his new campaign, Obama is highlighting how job losses have slowed.  He has produced a graph showing how Bush made things really bad, and Obama has fixed things and put them back where they were.  This graph depicts net job growth for every month going back to 2007:

What Obama Sees When He Looks At Our Economy

Can anyone figure out what is wrong with this graph?  Eventually, you run out of jobs to lose.  If we continued to lose jobs at the rate we did in January and February of last year, unemployment rates would be so high right now that they would drop significantly every time a kid opened up a lemonade stand.   This chart doesn’t show that unemployment is getting better, it shows that we can’t get much worse.  Can’t get worse, that is, until taxes go up by 5% on employers next year and Cap and Trade laws make the cost of doing business out of reach for most Americans.

The chart that Obama isn’t putting on display is what has happened to the unemployment rate since Republicans lost the congress in 2006:

What The Rest Of Us See

The Stimulus has produced debt not jobs.  Even the dip at the very end of this unemployment rate chart is due only to people giving up looking.

Obama can continue to make speeches and declare 2010 to be the year that job growth returns, but until we rid ourselves of this anti-business administration, with their magic wand promises and band-aid solutions, we will continue to see unemployment around 10%.

Even In Nevada, Sometimes The House Deals You All Aces

Harry Reid is probably pretty proud of himself tonight.  And if Republicans behave as usual, he has good reason to be.  After working and dealing with Republicans to come up with a bi-partisan jobs bill filled with tax cuts and unrelated pork programs, Reid has thrown the bill in the trash and drafted a new copy with just the tax cuts and infrastructure spending.  The cost of his new bill is less then half of the old one.  As AP put it, he has all but dared the Republicans to vote against the new bill.

This isn’t a bad move for Reid.  If Republicans vote for it, he is already in a position to call the bill a victory for himself and the Obama administration.  He can put “Taming the Republicans in a Tea Party Era” on his resume.  If the Republicans vote against it, Reid can claim he offered them a bill with tax cuts, no pork and infrastructure spending, but Republicans were so partisan that they wouldn’t go for it.  Nevermind that Reid was the one who scrapped the bi-partisan deal they had already arrived at.

Here is why the Republicans should play the hand he dealt them.  The first inclination is going to be to attack Reid for throwing away their bi-partisan agreement.  But what Reid stripped out of the bill was unrelated items and pork spending that we can’t afford anyway.  He also stripped out popular Bush tax cuts and the Patriot Act which Republicans need to highlight separately instead of allowing Dems to sneak them in to other bills.  What Reid has given them is not a perfect bill, but it is far better than whatever the socialist Democrat’s plan B might be.  In other words, if Republicans reject this, the next bill will be more like the failed Stimulus bill.  Many Republicans were calling for a payroll tax holiday over the Stimulus bill originally.

My advice to Republicans is to highlight that Democrats are now seeking tax cuts to stimulate the economy, an idea typically owned by the Right.  Then they need to take the bill back to Harry Reid with a list of Stimulus pork that they can cut to pay for it.  After all, aren’t we in the era of Paygo?  If the Republicans play their hand right, we can see who is really bluffing.  I’ll tell you right now, Pelosi and her House have already folded on Reid’s game.

The Experts Are Catching Up

Someone once said that debt spending doesn’t equal wealth.  That same individual said that stimulus dollars on so-called “shovel ready” projects  was nothing more than short term revolving door jobs that would not result in growth.   Now I don’t claim to be an economic genius or some sort of scholar or market guru, but it is nice when the experts finally catch up to me and I can once again say told ya so.

Allow me to quote: “But AP’s analysis, which was reviewed by independent economists at five universities, showed the strategy of pumping transportation money into counties hasn’t affected local unemployment rates so far.”

“”My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who also reviewed AP’s analysis.”

“Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.”

This last month we were surprised to learn that 85,000 jobs were lost.  It was supposed to be the first month in two years that we had positive job growth.  Now, with the poor economic progress, Obama is planning a second stimulus bill to give the appearance that he is doing something to solve the problem.  Will another stimulus plan bring unemployment below 10%?

Compare the result of the pork stimulus bill to the results of the Bush tax cuts.  In the six months leading up to the 2003 Bush tax cuts we lost 267,000 jobs.  In the six months after the 2003 tax cuts we gained 307,000 jobs.  We went from 1.7% GDP growth to 4.1%.   And before you argue about Bush’s tax cuts increasing the deficit, it took Obama 7 months to increase the deficit more than Bush did in 7 years.

If we want economic growth we need to take more money out of the hands of government and put it in the hands of small businesses and individuals.  How long until the experts figure out that Cap and Trade, mandatory insurance, and more pork bills are not going to fix our economy?


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