Filed under: Capitalism, Economy, Taxes | Tags: 100% Investment Write-Off, A Good Proposal for Business, President Obama's Good Idea
President Barack Obama, after many months of badmouthing business, has made a dramatic proposal that will allow companies to write off 100% of their new investment in plants and equipment through 2011. White House economists say this would cut business taxes by nearly $200 billion over two years. Good idea.
This has long been on the wish-list of conservative economists, but has never won support from either Republican or Democrat administrations. This kind of incentive can really have a significant effect, because they pull investment forward.
Let’s assume that you are have a successful manufacturing plant, and you need new machinery. This policy would allow you to write off the full cost of the new machines on 2010 or 2011 taxes, instead of dribbling it out over several years. Under current law, if a company spends $8 million on new machinery, it gets to deduct the full amount of the cost over a period of between three and 20 years, depending on the investment. Under the new proposal, they would get to deduct the whole $8 million at once. This is a big incentive to make the upgrade now. A boost for the economy.
The accompanying proposal is for another round of infrastructure investments to supplement the billions already being spent from the 2009 stimulus act. This is merely proof that the first $816 billion didn’t work — as is laughable.. He also wants to expand the research and experimentation tax credit. There seems to be a conviction that businesses won’t do research or experiment without help from the government. Not such a good idea. Obama will present his proposals in a speech in Cleveland on Wednesday.
When Obama gets something right, he deserves some credit.
Filed under: Domestic Policy, Economy, Environment, Freedom, Science/Technology | Tags: Genetically Modified Food, Proving That It's Safe
U.S. District Judge Jeffrey S. White decided on Friday, in San Francisco, to undo the government’s five-year-old approval of genetically modified sugar beets — the source of nearly half of the nation’s supply of sugar. This won’t affect supplies for at least a year, but it could cause big problems for food companies after that.
The Judge decided in September of last year that “the U.S . Department of Agriculture had not lived up to its obligation to fully consider whether the weedkiller-tolerant sugar beets might harm the environment.” This order blocks farmers from even sowing the seed next spring, but leaves the crop in the ground alone. It can be processed and sold as sugar.
The Agriculture Department will have to repeat its regulatory review process. Sugar-industry officials expect them to reach the same conclusion and clear the seed for planting, but it takes time. Draft impact statements can run to 1500 pages or more.
The plants are genetically modified with Monsanto Co genes that give them immunity to Roundup weedkiller. Before this farmers would have to weed their fields by cultivating — and many farmers have already sold off their cultivating equipment.
The lawsuit against the USDA was filed by activist groups including the Center for Food Safety and the Sierra Club. The Center for Food Safety is not about food safety, but about promoting organic food. “Organic” in reference to food is simply a marketing ploy. It refers to a process, and includes the requirement to use manure as a fertilizer. There is no health benefit to organic food, it is not more nutritious, nor is it fresher. Its only noted benefit is that it costs about 30% more which convinces some that it is somehow more refined.
Most of our modern fruits and vegetables bear little resemblance to their wild ancestors. Plant breeders have been genetically modifying plants for hundreds of years. You can still see tiny ears of corn found in the storerooms of the cliff dwellings at Mesa Verde in the museum there. Activist groups have been quick to object to “genetic engineering” of plants to resist certain diseases of plants or to resist, as in this case, a specific weed killer. In every case, careful study has determined that the modifications are harmless to human health. The interests of the activists are usually in something else — as in this case — promoting organic food.
We read often about the failure of our schools in teaching science. Our courts too often demonstrate how that failure plays out in the real world.
Filed under: Capitalism, Domestic Policy, Economy, Politics, Taxes | Tags: "Recovery Summer", Ineffective Stimulus, Obama Administration
Back on the 17th of June, the Obama administration announced “Recovery Summer.” The President and Vice President would visit Recovery Act sites that had been funded by the $814 billion “stimulus” — in full expectation of a triumphal tour announcing more economic growth and more jobs.
Meanwhile, outside of Washington DC and environs, there was no triumph. Bankers weren’t lending, businessmen weren’t borrowing, and businesses weren’t hiring.
Fred Barnes reports in the Wall Street Journal that one pessimistic businessman he met said “he’d like to move his company offshore. Another said he wanted to hire but had backed off because his firm would exceed 50 employees and then be subject to the mandates and requirements of the new health-care law.”
This is what businessmen write in letters to the editor, what callers to talk shows say, what business organizations say, the complaints are everywhere. The disconnect between Washington DC and the rest of the country is astounding.
The Tea Party protests began, not in a right-wing radical back room, but by a CNBC financial correspondent speaking from the trading floor of the Chicago Mercantile Exchange, on Feb. 19, 2009, outraged that the government was rewarding bad behavior.
Rick Santelli argued that people who work hard and play by the rules shouldn’t have to subsidize those who took on debts that they couldn’t repay. Many of the beneficiaries of the administration’s mortgage modification programs ended up in foreclosure anyway. Santelli went on to point out the flaw in Keynesian economics:
If the multiplier that all of these Washington economists are selling us is over one, then we never have to worry about the economy again; the government should spend a trillion dollars an hour, because we’ll get 1.5 trillion back.
That’s as succinct an explanation of the flaws of Obamanomics as I’ve heard. The economy is growing, but not enough to restore prosperity. The Journal says:
In sum, never before has government spent so much and intervened so directly in credit allocation to spur growth, yet the results have been mediocre at best. In return for adding nearly $3 trillion in federal debt in two years, we still have 14.9 million unemployed. What happened?
The explanations from the White House and liberal economists boil down to three: The stimulus was too small, Republicans blocked better policies, and this recession is different because it began in a financial meltdown. Only the third point has some merit, and for a different reason than the White House claims.
A major cause of the Obama malaise, according to the Wall Street Journal, is that when it took office many advised the Administration to focus on nurturing the recovery and postponing social-policy priorities.
Instead Democrats went for the most sweeping expansion of government since the 1960s — national health care, rewriting financial laws, re-regulating the telecom industry, imposing vast new costs on energy, and in January a huge tax increase on “the wealthy”— the most profitable small businesses. All accompanied by trashing business and bankers as “greedy profiteers.” Obama cannot stop, but continues to believe that he can buy the way back to prosperity with more taxpayer debt, and more government directives, and more nonsensical multipliers.