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Buried Bonanza for Over-Builders
On Nov. 6, when President Obama signed the Worker, Home-ownership and Business Assistance Act of 2009, he extended unemployment benefits and renewed the first-time home-buyer tax credit for a while, but hidden deep inside the law was a tax break for businesses that did well in the boom years — and the resulting refund-checks will be huge.
The tax break would help struggling businesses, Obama declared, but the act actually affects big companies as well as small. Businesses are allowed to offset losses incurred in the bad years of 2008 and 2009 against profits booked as far back as 2004. Those with the biggest boom followed by the biggest bust are exactly the companies like to benefit the most. Among them, you guessed it, home-builders, exactly the folks who overbuilt and over-lent us into a mortgage and credit meltdown.
Companies like Pulte Homes will receive refunds exceeding $450 million — but Pulte’s hardly in need. The company has $1.5 billion in cash and cash equivalents on its balance sheet. Standard Pacific, which is poised to reap cash refunds of $80 million has $523 million, according to the New York Times.
There’s no requirement that companies claiming the tax refunds are in need of course, or that they will create jobs with the cash. Demanding no quid pro quo worked so well for banks that Congress is trying a repeat with builders.
Will the builders nonetheless build with the bonanza? Not likely. In building, the problem’s not supply, it’s demand.
What the companies are likely to do is keep on lobbying. Gretchen Morgenson reports that “Securing this tax break was a top priority for home builders. ” According to lobbying records, home builders paid $6 million to their lobbyists through the end of October this year, “much of focused on arguing for the tax loss carry-forward.” Pulte Homes for example, spent $210,000, — for which it’ll receive $450 million in refunds.
“The problem here is that this public policy decision was made with little to no input from the public.” Reports the excellent Morgenson in her column, in the business section, Sunday.
But her own paper could help solve that problem. How about reporting on this — before it’s a done deal — on the front page?
22 Comments so far
Show AllObama, the gift that keeps on giving - to giant corporations!
Alex, well why not, there is still a couple of dollars to be stolen from workers?
I'm pinching my nose, closing my eyes,
holding my breath, squeezing real tight
waiting for the democratic followers' explanations.
When is there any public input whatsoever sought by the demorepublicrats in Washigton???
They could care less about any common citizen. They're purely interested in continuing their own wealth-building and consequently pay attention (and dollars) ONLY to the Corporatocracy that can further it!
Haven't we learned by now?????
Maybe Obama's biggest contribution to the American economy will be one neither he nor the Congress expects: he'll may finally succeed in causing the American public to rise up in an angry revolution at the machinations of our corrupted government!
This is truly aggravating, when will it end? who will step up? I guess we either organize and mobilize or sink which will it be?
It won't end until tens of millions of Obama apologists who voted for him in 2008 and cling to brand Obama while ignoring his pro-corporate/anti-worker Senate voting record and presidential actions.
If history is any indication, we will most likely sink first and then as we gasp for air , we will start swimming for shore.
Hey Ray---
finish the sentence!
-30-
This story and the bigger one today on how Geithner as NYFed Hed grossly overpaid during the AIG bailout lead me to a hypothesis:
There IS NO "ECONOMY."
Nobody is playing by any rules anymore. Martin Hutchinson in atimes.com this week is predicting another bubble related to gold having gone over $1,100 (tax dollars pumped all that liquidity into insolvent banks which aren't making loans so they are parking their money in speculation on commodities...), followed by another crash and even worse unemployment, and possibly rampant inflation. He even used the word "Weimar" which is something you just don't do in polite economics circles! And he's talking about before 2012.
Did Hank Paulson as Bush's Treasury Secretary REALLY get on his knees and beg Nancy Pelosi for the TARP bank bailout or is that an urban legend? The corollary to Chomsky's "Manufacturing Consent" might be "Organizing Mass Hysteria."
It used to be that economists would say, given one scenario or another, the chickens must come home to roost. Today everybody is acting like the chickens flew the coop so you can burn the damn thing. This government is spending quite literally like there is no tomorrow. And on all the wrong things.
Somebody needs to shout "FIRE" in the theatre (pun intended). Run for the exits (if they aren't already locked)!
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"Did Hank Paulson as Bush's Treasury Secretary REALLY get on his knees and beg Nancy Pelosi for the TARP bank bailout or is that an urban legend?"
It was the other way around with Pelosi on her knees sucking away with Paulson instructing her as to how much and when.
"This government is spending quite literally like there is no tomorrow."
And, probably with good reason...
We are experiencing an apex of corruption beyond almost everyone's imagination. It appears that any government law titled in words that appear helpful to people, in fact, hurts working people. Quality people have been redefined as rif-raf.
The demonization of working people stimulates aggressive laws and actions against us. Working people are being actively defined down for further exploitation. Denial prevents the exploiters from recognizing increasing hardship no matter how severe. Obama is their flag-carrier. The more power they get the worse off people will become. Untamed greed will be our executioner.
Or the Exploiter's --- human beings, so long as they have anything left to lose, will compromise and justify --- when they no longer have anything left to lose --- kill their opressors. The opressors never learn the lessons of history. dh
"home-builders, exactly the folks who overbuilt and over-lent us into a mortgage and credit meltdown"
Isn't that kind of like blaming the bartender for your getting drunk and puking on your shoes?
It was,in fact, not the builders, who had tight margins, even in the best of times, but the lenders, who could not contain their greed.
I don't know, around here Toll Bros laid waste to the landscape--scooping up farmland that farmers couldn't afford the taxes on when the laws where changed to favor development. Now we have serious flooding issues due to over-development while these crooks walked away after lining their pockets. It is basically the same crowd--banks, insurance & pharm, the military that carve up the diminishing public piggy bank while the wolf is at the door for a growing segment of the public.
Partly. But it's more like blaming the bartender for getting drunk and puking on your shoes himself.
Most of us who got puked on never purchased a drink.
Capitalism tends towards monopoly, and monopoly capitalism tends towards Imperialism. We are getting screwed left and right; we're engaged in multiple resource wars. When are we going to wake up that this is not by accident and if we knew any (real) history, we'd know it's happened before. Capitalists have never made so much money. It's the system stupid!
Thanks to Laura for revealing yet another USan industrial sector contaminated by an imperial "small government" pushing incentives toward unlimited economic growth. It wasn't hard to successfully promote an over-building bonanza. A few winks/nods by Darth Viper is all it took. Now half of the US midwest is littered with empty crackerboxes. Bonanza II coming to tear them down. Invest in landfill ventures now.
What did Mussolini do again that was so bad and got the Italians riled up enough that they put his head on a post?It's hard to imagine Americans reacting to anything that they complain about.Largely a homogenized,brainwashed,apathetic society that don't like to rock the boat.
The dairy farmers are flushing their milk down the drains these days.A gallon of soap is $14.00 and a gallon of milk is less than $2.00 and the farmers are all waiting for the knock on the door from the sheriff.The latest land grab scam.
The American entropy= BANKRUPTCY/MOTHER OF ALL DEPRESSIONS/NORMALIZATION OF WARS/OBLITERATION OF THE DOLLAR.WEIMAR INFLATION WAITING AROUND THE CORNER. An addicted and or incarcerated society,largest consumer of illegal drugs in the world.The prisoners in the Penitentiaries work for corporations,Lexus etc,travel agencies and earn cigarette money 29 cents an hour?the duck Cheney private prisons are very lucrative.The illegals get scapegoated and the educational systems diminished and collapsing,(some college professors have 700 students in their classes).20% don't have enough food,25% have NO income.several hundred thousand live in tents ,some of the large formerly thriving,beautiful cities are ghost towns.Health care fable means,redistributing the new pesos to the already rich insurance companies and phamaceuticals.CHINA HAS REFUSED TO GIVE AMERICA ANYMORE BAILOUT MONEY AND THE PENTAGON DOES NOT HAVE ENOUGH MONEY AND NEEDS A BIGGER BUDGET!NOW THE BUILDERS WANT THEIR CUT OF THE ACTION!So the answer is in the lobbying.The bigger and better the lobbying firm the better are the results.Did I leave something out?
I agree Laura Flanders!
I saw this report last night on your show and I am still fuming. Another bailout "hidden deep inside" and being rammed through behind the scenes- amounting to an ongoing transference of wealth while poverty is on the rise and foreclosures and job losses mount up. Capitalism at this stage is a looting free-for-all for those who can afford opening bid of govrnment for sale.
To ILA---
I think "The American entropy" pretty much covers it. You left nothing out!
There's that "sucking sound" that Ross Perot spoke of, but it's coming from Washington.
Fourth law of thermodynamics: What sucks, sucks.
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There is a lesson in American history. In the Florida Keys a whole society grew up around ship-wreck salvage loot when ships in the straits foundered. When business was slow, and nav-maps got better, these salvagers turned to pirating ships and caused them to founder as a pretext to legally salvage the cargo.
The way I see it greedy b/a christian fascists sucked this country dry for their own selfish interest. Their bible gave them permission to do this. When these laissez-faire capitalist-democracy, robber-barons were exposed they jumped off their overheated run-away train “Economy Express’. A new naive crew had the choice to get on the train or get run over by it. When they got on board frantic conductors Obama-Pelosi-Reid, never having been on a train before, realized it was heading for a cliff. Just before it went over the cliff they dumped the last loot over the side for the benefit of their ‘campaign contributors’. As the train goes over the cliff golden parachutes and deluxe healthcare and pensions will save their lives; but the rest of us on the train can only tighten our seatbelts….