How a Corporate Giant Enhances Their Bottom Line:
There is something utterly charming about Vice President Joe Biden. He opens his mouth and the most remarkable statements come out. This one was quoted by George Will:
Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive. (Joe Biden, October 26)
The nation’s most outstanding example of corporate welfare, corporate giant General Electric, has found the Obama administration’s attempted takeover of America’s energy economy useful in padding their bottom line.
The Obama administration has given General Electric $24.0 million in grants from the $787 billion economic stimulus law that the president signed in February of 2009, according to records posted by the administration at Recovery.com. In spite of the money coming in from U.S. taxpayers, GE cut their US. based employment by 18,000 workers in 2009.
Some of those employees used to make incandescent light bulbs — jobs now outsourced to China. The profits on compact flourescents will be much higher and made the shutting down of American bulb factories a small price to pay. The law banning incandescent light bulbs was achieved after much lobbying about the energy savings achieved with CFLs. The fact that Americans hate CFLs and had no say in GE’s rent seeking was of little moment.
General Electric has become a master at corporate welfare, as enumerated yesterday in the post titled …And They Think We’re Stupid, which showed how GE has turned government subsidies and favorable tax treatment to enhance the bottom line for energy projects that don’t really accomplish what is claimed.
Guess who makes “smart-grid technology” where the company stands to gain from Obama’s market-socialist plans that advance the electrification of the automobile. Part of the deal with transforming General Motors into Government Motors was Obama’s insistence on GM manufacturing the Volt. GM had intended the Volt as a test car to try out electric technology, but was not prepared to roll it out commercially.
Since the Volt costs $41,000, and theoretically goes only 40 miles without a charge, and a charge takes 7 hours, the fact that you can buy a brand new Mercedes for around the same price makes the task of the advertising people fairly difficult. Mark Reuss, President of GM North America said in a letter to the Wall Street Journal that “The early enthusiastic consumer response — more than 120,000 potential Volt customers have already signaled interest in the car, and orders have flowed since the summer — give us confidence that the Volt will succeed on its merits.” The merits seem to include up to $7,500 tax credits to every customer. And that’s pretty slippery language anyway.
And it seems, it isn’t an electric car as claimed, but another hybrid. GM was expected to produce 60,000 cars this year — but make that 10,000 for all North America, and those will be available only in CA, TX, MI, NY, NJ, CT, and DC.
In steps General Electric. As a “vote of confidence” in the Chevrolet Volt, General Electric will convert half of its 30,000 worldwide vehicles to electrics, including purchasing 12,000 cars from GM beginning with the 2011 plug-in electric Chevrolet Volt. They will purchase 25,000 plug-in cars by 2015. Fortunately, the charging stations needed for those plug-in cars are the GE Wattstation, made by General Electric. And, oh yes, there is a subsidy of $2,000 of your tax money for purchasing a charging station.
Obama’s Tax Hike is a Really Dumb Idea!
Austan Goolsbee, the president’s new Chairman of the Council of Economic Advisers wants to raise taxes on those who earn more than $200,000. He claims, interestingly, that tax cuts for “the rich” are “expensive” because it would reduce tax revenue by $700 billion over the next ten years. But that money is not the government’s money. It belongs to the businesses and families that earn it.
Democrats are deeply invested in the idea of “fairness.” They don’t think it is “fair” that some people should be rich while others are “poor.” So they naturally assume that if they take more money away from the rich in taxes, then they can make the poor less poor. It’s a feel–good thing, you see.
But taxes are more complicated than that. The 2003 tax-cuts proved once again that rich people are the most responsive to changes in tax rates. When rates are high, they invest less, hire accountants to protect more of their income from the IRS, and park more of their money in tax shelters, such as municipal bonds. From 2003 to 2008 millionaires increased their tax payments to $249 billion from $132 billion.
Those who earn more than $200,000 a year in adjustable gross income–the group that Mr. Obama and the Democrats want to tax more were 3% of all taxpayers in 2008 but they paid more in taxes than the other 97 % of taxpayers put together. The lower tax rates are, the less incentive there is to avoid taxes. If Democrats raise taxes, they will get less income.
Many people do not understand that if the Democrats do not extend the present taxes, they will go up automatically on January 1. In 2010 the top income tax rate bracket for ordinary income is 35 percent. Besides wages and interest income, this category includes profits from pass-through business firms — sole proprietorships, partnerships and S-corporations — the very people who create all those jobs that the economy needs so badly. Under the president’s proposal that rate will rise to 44.6 percent in 2013, and adding in state income taxes will be over 50 percent.