I've beat this drum so long you could call me Ringo but buying machines to look under people's clothes isn't a stimulus. Giving people tax credits to buy cars or homes isn't a stimulus, it's trickle down economics. I give you a tax cut to buy a new home and the benefits will trickle down to the rest of the economy.
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It just makes you scratch your head and wonder, what the hell is wrong with us? It seems that our three branches of government have become Moe, Larry and Curly and if you include the Tea Party -- Shemp. We have lost the ability to solve our problems as every issue becomes convoluted. Every issue becomes a wrangling, partisan, bickering festival.
The political parties seem to have forgotten that their purpose is to protect us -- to protect us from all enemies foreign and domestic. To protect us not just from bombs and bullets but to protect our livelihoods and our industries as well. Their motto is -- government which serves least serves best. The wealthy and the powerful will always have easy access to government, it's the other 300-million of us who have a hard time being heard.
In 1945, Germany was crushed flat. Schools, rail lines, power plants and sewer systems all destroyed. In less than 30 years, the West German economy was the envy of Europe. After the fall of the Eastern Block, Germany was reunified with her East German brethren. It cost the West German nation over a $100-billion just to begin; yet, no one questioned if it was the correct thing to do.
Germany began a program a decade ago to encourage the use of alternative energy, and the number of wind turbines have multiplied so quickly that infrastructure is having a difficult time keeping up. Germany reports that solar energy will be cheaper than fossil fuel-generated electricity by 2013. Once alternative energy is below the cost of fossil fuel the subsidies can be withdrawn. Germany will not have to burn coal or import natural gas and, for the first time since the industrial revolution, Germany will become practically energy independent.
In this country however, nothing is quite that easy. Legislation to extend grants to encourage renewable energy projects have been curiously tied to the renewal of the Bush tax cuts. Solar, wind, geothermal and biomass power companies fear that, with the Republicans in control of the House of Representatives, these grants are history. Here's the lump in the pudding, the grants might have already been passed had it not been for objections raised by Democrat Nancy Pelosi and and Senate Energy Committee Chairman New Mexico Democrat Jeff Bingaman.
It is all about their pound of flesh; so the President not only has to fight with Republicans, he has to fight with his own party members as to who gets to wet their beak. This seems to be standard operating procedure, the TSA (Transportation Safety Administration) has contracted with Rapiscan Systems to purchase 150 full-body scanners. Rapiscan Systems is a firm represented by the Chertoff Group. The Chertoff Group is headed by the same Michael Chertoff who was formally George W. Bush's Secretary of Homeland Security.
One hundred and fifty machines, and that's just the beginning. Do you know where they got the money to purchase these intrusive machines? From the stimulus of course. So, let's review; grants for alternative energy -- maybe, full-body scanners purchased from a former cabinet secretary -- sure!
The largest single hole in our foreign accounts deficit is made by the purchase of petroleum. In 2009 it was 9,667,000 barrels of oil per DAY! People make a lot of money by importing that oil and it gives them a lot of leverage in Washington. So much in fact, that they whisper to our congressional leaders, "maybe grants to encourage alternative energy isn't necessarily a good thing. Maybe what you want to encourage is more drilling in the Gulf of Mexico."
Let Germany develop its solar and wind potential. Let Great Britain develop enough wind energy to power every home in the country by 2020. So what if American companies are moving to Europe? Partisan interests with lots of money think that drilling and spilling is better than blowing and going.
I've beat this drum so long you could call
me Ringo, but buying machines to look under people's clothes isn't a stimulus. Giving people tax credits to buy cars or homes isn't a stimulus, it's trickle down economics. I give you a tax cut to buy a new home and the benefits will trickle down to the rest of the economy. The President has proposed a 100% instant depreciation on business purchases. That means if the boss buys a 100 new computers for the office, he can deduct the full $40,000 from his taxes. The boss picks up the phone and orders the computers with American nameplates but the computers were actually built in Asia.
The company that sells the computers must pay the bulk of the sale to its Asian supplier. The computer company makes an $8,000 profit on the sale and sends $32,000 back to Asia. So we just gave a $40,000 tax break for $8,000 in profits added to the economy. The boss is so pleased with himself that he buys an $80,000 Mercedes Benz. The dealership earns a $12,000 profit and Mercedes Benz in Germany gets $68,000 added to the German economy. It's not a stimulus -- it's Christmas -- and it all depends on whether the boss has any business.
If the boss has laid off half of the staff, then there are plenty of extra computers lying around. He's not planning to buy that new car unless the company buys it for him because then it's almost free. Tax cuts are a way for the federal government to say that they are doing something without actually doing anything at all. Tax cuts won't stimulate an economy that isn't stimulated already. How about a $1,000,000 tax credit for every American that buys a Boeing 747?
NYT SAN FRANCISCO -- Solyndra, a Silicon Valley solar-panel maker that won half a billion dollars in federal aid to build a state-of-the-art robotic factory, plans to announce on Wednesday that it will shut down an older plant and lay off workers.
Solyndra said that it would lay off 40 workers and 150 contract workers because of increased price competition from China. Now who would buy Chinese solar panels over American solar panels? Nellis Air Force Base would, and so would Rutgers University -- and Rutgers used state matching funds to do it!
We have made protectionism a dirty word but stupidity is an even uglier word. If you think you are going the go to France and sell discounted wine and cheese, you're out of your cotton picking mind. If you think that you're going to sell Kia's in Berlin, think again. You say that you want to sell Buicks in Beijing? Sure, come on over build a factory, staff it with Chinese workers and management. Then you must take on a Chinese partner and train them and share with them all of your trade secrets.
Your Chinese partner will then be free to go into direct competition with you, but you will never be free of them. The Chinese Government selects certain industries which it considers vital and it nurtures these industries and protects them. The solar industry is at the top of the list, because any fool can see that solar technology is the wave of the future and he who controls the market is going to earn an awful lot of money.
The American Congress is only interested in protecting vested interests and technologies of the past while the Chinese are looking towards the future. Instead of giving Solyndra half a billion dollars to build a robotic factory, the Federal Government should have given Solyndra a half-a-billion-dollar contract to supply solar cells for every federal building in the country. Then Solyndra could build any factory that it wanted, and the money would stay viable in the economy. Contracts could be let all over the country to install all those solar panels. Then the benefit of that half-a-billion dollars spent would be ours.
Imagine if John Kennedy had said, "This nation stands prepared to give tax cuts to any corporation that can build us a moon rocket." Real government builds things and doesn't give loan guarantees or tax credits for somebody else to build it. FDR didn't give tax credits to build all those dams in the Tennessee Valley; he let out contracts to build them.
Barack Obama's mortgage rescue plan is a case in point; 50% of all applicants drop out or aren't qualified. Of those who stay in the program, only one-third receive a permanent mortgage modification. The administration scratches its head and ponders, "gee, what's wrong? We offer the banks $1,500 for every mortgage they modify. If the home goes into foreclosure all the bank will get is a tax write off and credit for the full amount of the unpaid mortgage from the Federal Reserve."
The New Deal's Homeowners Loan Corporation rescued more than a million homes and farms in one year. The President's HAMP mortgage rescue program hasn't yet saved half-a-million mortgages in almost two years! Obama's program pays the banks to modify mortgages, while in the New Deal program the federal government directly bought the mortgages from the banks and refinanced them.
It was direct aid versus indirect aid, it was government doing something instead of paying someone else to do something. Those dams built by the Tennessee Valley Authority created tens of thousands of jobs directly and millions more indirectly. Millions of kilowatts of electricity were generated, making the cost of those dams insignificant.
Kennedy's space program spent $24-billion dollars and created 400,000 jobs directly and millions more indirectly. It revolutionized the modern world as whole new industries sprang up from nothing. It means that our trip to the moon was virtually free when compared with the economic benefit to our economy.
The Home Owners Loan Corporation went out of business and it returned to the treasury a small surplus. Over one million families were assisted and the banks were assisted and it didn't cost the taxpayer one thin dime.
I don't fault the Chinese for looking out for their national interest nor do I fault the Germans or the French for wanting to protect their own national industries. International trade isn't supposed to be a winner-take-all proposition. Monopoly is a winner-take-all proposition -- and protection from monopoly is real government's sworn duty.
Authors Bio:
I who am I? Born at the pinnacle of American prosperity to parents raised during the last great depression. I was the youngest child of the youngest children born almost between the generations and that in fact clouds and obscures who it is that I am really.
Given a front row seat for the generation of the 1960's I lived in Chicago in 1960. My father was a Democratic precinct captain, my mother an election judge. His father had been a Union organizer and had been beaten and jailed for his efforts. His first time in jail was for punching a Ku Klux Klansman during a parade in the 1930's. I never felt as if I was raised in a family of activists but seeing it print makes me think, yes. That is a part of who I am.
We find ourselves today living in a world treed by the hounds of madness, a complicit media covering contrite parties. Multilevel media, giving more access to communication yet stunting actual communication. More noise, less voice, more sound less music, more law less justice, more medicine less life.