Follow The Money

[philunderwood]

www.qando.net/?cat=8

Repatriating corporate profits with tax breaks

June 20th, 2011 | Author: Bruce McQuain

It’s under consideration, and if you read the article, the NYT isn’t particularly thrilled about it.

Why? Because those nasty corporations didn’t create jobs the last time this was done:

But that’s not how it worked last time. Congress and the Bush administration offered companies a similar tax incentive, in 2005, in hopes of spurring domestic hiring and investment, and 800 took advantage.

Though the tax break lured them into bringing $312 billion back to the United States, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research.

This money comes from overseas operations and in some cases accounting maneuvers that shift domestic profits to low-tax countries. The study concluded that the program “did not increase domestic investment, employment or research and development.”

My question is, it didn’t increase “domestic investment, employment or research and development” where? Because unless the stockholders took their money and buried it in a coffee can in the back yard, that’s most likely exactly where it went – via a more circuitous route that the NBER didn’t bother to follow. That money didn’t just disappear when it went to share holders. Where did it go?

Well, first remember that share holders are what? Investors. So even if all they did was let that money ride, it was “invested”.

If, in fact, it was invested elsewhere, then one would assume that those companies in which the investment was made may have increased employment or R &D. But you have to chase the money to find that out.

Bottom line, repatriation of overseas profits means more tax revenues, even at the reduced rate that would be found in a “holiday” as is being proposed. And even if shareholders get the lion’s share of the money (and that’s why they’re called “shareholders” NYT, because they own a share of that money), they’re going to spend it, save it or invest it themselves.

If one could get past the first step in the process and look at how money usually flows and is used, they’d realize that whining about “shareholders” getting most of the money is about as ignorant as complaining that if government gives taxpayers a tax break we wouldn’t spend the money properly, ala Bill Clinton.

Injecting billions of dollars of private money into the private economy in times like this isn’t going to hurt anything. But it stands a great chance of helping. But hey, those damn corporations wouldn’t spend it the way the NYT thinks they should, so they’re against it.

~McQ

[philunderwood]

Unknown Unknowns

By Thomas Sowell

www.JewishWorldReview.com |

When Donald Rumsfeld was Secretary of Defense, he coined some phrases about knowledge that apply far beyond military matters.

Secretary Rumsfeld pointed out that there are some things that we know that we know. He called those "known knowns." We may, for example, know how many aircraft carriers some other country has. We may also know that they have troops and tanks, without knowing how many. In Rumsfeld's phrase, that would be an "unknown known" — a gap in our knowledge that we at least know exists.

Finally, there are things we don't even know exist, much less anything about them. These are "unknown unknowns" — and they are the most dangerous. We had no clue, for example, when dawn broke on September 11, 2001, that somebody was going to fly two commercial airliners into the World Trade Center that day.

There are similar kinds of gaps in our knowledge in the economy. Unfortunately, our own government creates uncertainties that can paralyze the economy, especially when these uncertainties take the form of "unknown unknowns."

The short-run quick fixes that seem so attractive to so many politicians, and to many in the media, create many unknowns that make investors reluctant to invest and employers reluctant to employ. Politicians may only look as far ahead as the next election, but investors have to look ahead for as many years as it will take for their investments to start bringing in some money.

The net result is that both our financial institutions and our businesses have had record amounts of cash sitting idle while millions of people can't find jobs. Ordinarily these institutions make money by investing money and hiring workers. Why not now?

Because numerous and unpredictable government interventions create many unknowns, including "unknown unknowns."

The quick fix that got both Democrats and Republicans off the hook with a temporary bipartisan tax compromise, several months ago, leaves investors uncertain as to what the tax rate will be when any money they invest today starts bringing in a return in another two or three or ten years. It is known that there will be taxes but nobody knows what the tax rate will be then.

Some investors can send their investment money to foreign countries, where the tax rate is already known, is often lower than the tax rate in the United States and — perhaps even more important — is not some temporary, quick-fix compromise that is going to expire before their investments start earning a return.

Although more foreign investments were coming into the United States, a few years ago, than there were American investments going to foreign countries, today it is just the reverse. American investors are sending more of their money out of the country than foreign investors are sending here.

Since 2009, according to the Wall Street Journal, "the U.S. has lost more than $200 billion in investment capital." They add: "That is the equivalent of about two million jobs that don't exist on these shores and are now located in places like China, Germany and India."

President Obama's rhetoric deplores such "outsourcing," but his administration's policies make outsourcing an ever more attractive alternative to investing in the United States and creating American jobs.

Blithely piling onto American businesses both known costs like more taxes and unknowable costs — such as the massive ObamaCare mandates that are still evolving — provides more incentives for investors to send their money elsewhere to escape the hassles.

Hardly a month goes by without this administration coming up with a new anti-business policy — whether directed against Boeing, banks or other private enterprises. Neither investors nor employers can know when the next one is coming or what it will be. These are unknown unknowns.

Such anti-business policies would just be business' problem, except that it is businesses that create jobs.

The biggest losers from creating an adverse business climate may not be businesses themselves — especially not big businesses, which can readily invest more of their money overseas. The biggest losers are likely to be working people in America, who cannot just relocate to Europe or Asia to take the jobs created there by American multinational corporations.

[Ritty77]

Electric Car Maker Folds, Salinas Loses $500,000

A Salinas car manufacturing company that was expected to build environmentally friendly electric cars and create new jobs folded before almost any cars could run off the assembly line.

The city of Salinas had invested more than half a million dollars in Green Vehicles, an electric car start-up company.

All of that money is now gone, according to Green Vehicles President and Co-Founder Mike Ryan.

The start-up company set up shop in Salinas in the summer of 2009 after the city gave Ryan a $300,000 community development grant.

When the company still ran into financial trouble last year, the city of Salinas handed to Ryan an additional $240,000 in investment money.

Salinas Mayor Dennis Donohue said he was "surprised and disappointed" by the news. City officials were equally irked that Ryan notified them through an email that his company had crashed and burned.

Salinas Redevelopment Director Jeff Weir said Green Vehicles folded because of a "lack of investors," and a $2.7 million grant from California Energy Commission that never materialized.

Donohue said he will work with the state to try to get at least $240,000 back from the now-defunct company.

Last year, Salinas city officials said they were excited about Green Vehicles moving from San Jose to Salinas because they wanted to turn Salinas into a hub for alternative energy production.

City leaders wooed Green Vehicles to jump-start the sputtering local company and turn Salinas into an "electric valley." Donohue and Weir both voiced their high hopes for Green Vehicles.

The start-up company promised city leaders that it would create 70 new jobs and pay $700,000 in taxes a year to Salinas.

Green Vehicles was supposed to be up and running by March 2010 inside their 80,000-square-foot space at Firestone Business Park off of Abbot Street.

Ryan had lofty goals, listing his company's mission as: "To make the best clean commuter vehicles in the world; To manufacture with a radical sense of responsibility; To engage in deep transparency as an inspiration for new ways of doing business."

Green Vehicles designed two vehicles, the TRIAC 2.0 and the MOOSE, which it planned to manufacture.

On July 12, Ryan wrote a blog post announcing that his company was closing.

"The truth is that not realizing the vision for this company is a huge disappointment," Ryan wrote.

Ryan outlined three mistakes he made while steering his company into a brick wall. All three reasons boiled down failing to generate enough capital.

Reported by KSBW's Felix Cortez and written by Amy Larson

Read more: www.ksbw.com/money/28586219/detail.html#ixzz1SV3YcirJ

[Ritty77]

Parents Taking Care Of Special Needs Children Forced To Join SEIU, Union Takes Dues From Medicaid Checks

www.theblaze.com/stories/forced-unionization-seiu-collects-union-dues-from-disabled-kids-medicaid-checks/

Sigh.

[Ritty77]

This is funny.

[leisuresuitlarry]

Irish Spring, clean as a whistle! LOL

[Ritty77]

Comparing the Compensation of Federal and Private-Sector Employees

www.cbo.gov/doc.cfm?index=12696

[philunderwood]

It's all about cronies: That's why Dems pour money into programs that fail

By Jack Kelly

www.JewishWorldReview.com |

President Barack Obama's new chief of staff is a multimillionaire, as were his first two chiefs of staff.

Like the recently departed William Daley and Rahm Emanuel, Jacob Lew "made his millions while passing through the revolving doors that lie between the Democratic Party and Wall Street," said Daily Caller reporter Neil Munro.

The fund Mr. Lew managed for Citigroup lost billions. The bank was bailed out by the Troubled Asset Relief Program.

Mr. Daley is a banker by trade. Mr. Emanuel, who was paid $16.4 million for two and a half year's work, had no prior experience in business or finance when he was hired by Wasserstein Perella.

New York Times reporter Gretchen Morgensen described in "Reckless Endangerment" how the Federal National Mortgage Association (Fannie Mae) "and the government housing policies it supported, pursued and exploited brought the financial system to a halt in 2008."

Fannie and the Federal Home Loan Mortgage Corp. (Freddie Mac) bought bad loans from firms such as Countrywide Financial -- where "fraud was systemic" -- then resold the toxic mortgages to Wall Street.

Mr. Daley served on Fannie Mae's board. Mr. Emanuel was on Freddie Mac's board. Journalists rarely report these facts, because they clash with the narrative.

For Democrats, politics is all about narratives, of which the most important is: Republicans are the party of the rich.

According to exit polls, 52 percent of Americans earning $200,000 a year or more voted for Barack Obama. Fourteen of the 15 wealthiest counties --22 of the top 30 -- usually vote Democratic. The seven richest senators are Democrats.

Republicans who criticize domestic spending programs are selfish, greedy, mean-spirited and racist, the narrative continues.

This slander is despicable, but shrewd. It shifts focus away from whether government programs deliver what Democrats promised.

They don't. Since Lyndon Johnson declared the War on Poverty in 1964, about $16 trillion has been spent on means-tested welfare programs. That's more than double the $6.4 trillion (in inflation adjusted dollars) America spent on all its shooting wars combined.

We won most of the real wars, but poverty is winning this one. In 1970, 12.6 percent of Americans were living below the poverty line. Now, 14.3 percent are.

Democrats' programs cost much more than they predict. Congress projected in 1987 that the subsidy for hospitals it had added that year to Medicaid would cost less than $1 billion in 1992. The actual cost that year was $17 billion.

They also deliver less than promised. Medicaid patients are more likely than the uninsured to die in hospitals, researchers at the University of Virginia found.

Efforts to explain to Democrats how better results could be achieved for less money fall on deaf ears. Democrats don't care how much their programs cost or how little they achieve, because the stated goals aren't the real goals.

There is an economic divide between Democrats and Republicans, but it isn't based on wealth. It pits those who live off the government against those who pay for it.

The poor come first in Democratic rhetoric, but not at their feeding trough. At the head of the line are crony capitalists who receive subsidies and bailouts. Next are faculty and staff at colleges and nonprofits that depend on government funding. Then come the unions.

Democrats design programs to benefit providers of services. There are 69 different federal welfare programs. From this the poor get mostly confusion. But duplication multiplies jobs for bureaucrats and consultants. If the War on Poverty were ever won, most of these jobs would go away. This may explain why Democrats are content to have it go on and on, with little progress made.

To Democrats, teacher unions matter more than children trapped in failing schools. The federal student loan program has saddled thousands of young people with debts they can't repay, but has been a bonanza for colleges and universities.

Times are tough for most Americans. But Wall Street is making record profits. Members of Congress are getting richer. Crony capitalists reap billions in taxpayer subsidies.

If you want to know what's really going on, follow the money.