SOTU 2012: The Tax Loophole Jump

SOTU 2012:The Business Tax Loophole Jump

 

There were some nice things about Tuesday’s State of the Union Address:  Representative Gifford’s recovery, the accomplishments of our awesome Navy SEALs, and Mitch Daniels’ well-spoken and clever GOP response.  And there were some not so nice things.

Looking at the fiscal picture, President Obama’s speech boiled down to two proposals: shuffling business tax credits and asking for more money on things we already spend a lot on.  Among the various behaviors the President aspires to manipulate through a fresh scrambling of our already deeply convoluted tax code: who businesses hire, how much they pay those employees, what  manufacturers make, and where they make those things.  Has the White House not gotten one of those memos on tax simplification?  What ever happened to the recommendations from the Simpson-Bowles report they commissioned?  All of the new tax credits (read: loopholes) will only distort market behavior.  And market distortions are “what got us into this mess.”

Then there are the new outlays he requested.  First, to create a new bureaucracy, the Trade Enforcement Unit.  I think he is going for the Jack Bauer vote by calling it a unit, as in “Counterterrorism Unit (CTU).”  Its a worthy cause, but can’t it be done by retasking existing agencies?  Next on the list is money to transform community colleges into “community career centers.”  I don’t know what they were before if not that!  Just a place to find a date for Friday night?  Finally, he asked us to fork more money over for teachers.  But it seems like school voucher programs don’t count.  Democrats only accept more money for education when it doesn’t threaten unions.

I don’t think our President has managed to outdo himself in 2012.  Last year’s “Winning the Future” (WTF) theme with $53 billion for high speed rail projects is just too tough to beat.  And that outlandish record will hopefully stand if this State of the Union address is President Obama’s last.

HSRA: Get stuck in traffic?

California HSRA hopes you get stuck in traffic?

 

The Sacramento Bee has offered us a strange, new angle on California’s budget-busting high-speed rail project.  Having interviewed the HSRA’s chair this week, they inform us that the Authority’s latest business plan hinges on a friendly Washington budget environment in the years ahead.  Basically, HSRA is betting its chips on President Obama’s re-election.  With forecasters putting his odds somewhere in the neighborhood of 50-50, isn’t this plan a little reckless?

As it is, Jerry Brown’s gimmicky budget for the current fiscal year is  well on track to trigger further cuts.  And we all know the long line of agencies begging for fiscal mercy: education, prisons, parks, sundry social services, and so on.  Given these dire straits, where will the money come from?

The global track record for high speed rail is abysmal.  These extremely capital- and labor-intensive projects don’t recoup their start-up costs, and there is no reason to believe the latest projected ridership numbers, given the stubbornness of the American Love Affair and the high level of competition airlines will bring to bear.  Train passengers might not need to stand in security lines, but the door-to-door times will be comparable, and at the end of it all they will still need to get picked up or rent a car anyway.

The funny thing about the article though is the last bit about getting stuck in traffic.  It’s not clear whether the Bee is trying to be cute, or imply something more sinister about the Rail Authority.  Even then, local traffic patterns only have partial bearing on the need for a high speed train.  When was the last time you were caught in traffic outside of Harris Ranch?

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