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Saturday, September 25, 2010

Letter to Senator Mark Warner

I just received a letter from Senator Mark Warner. This is a reply.


Thank you for your email.

Thank you for letting me know that you strongly support additional bailouts for favored businesses.

I realize that the small business package includes some things that will be positive, like allowing those who choose to invest in capital to write off the balance more quickly. However, allowing the current tax rates to expire on most of these businesses (taxes on the "rich" who own these businesses and file personal returns that reflect the business income) will cost far more than this plan could ever save.

Moreover, the majority of the cost (which will have to be paid for, despite the claim that it doesn't cost anything) is for direct bailouts (loans) for favored businesses. The loan industry has no shortage of funds available. The $1.5b is minor compared to the $300b already available. This money will go to companies, like those you indicated, which are politically favored, and some of whom do not have a sound business model which would be required to otherwise get loans. And which will be required to actually succeed and to pay back the loans.

In addition, while the deductions on capital investment may reduce the short-term cost of business growth, the new healthcare regulations will greatly increase the cost of employees. In other words, recent regulations still create an environment that is strongly negative for jobs growth.

It is laws like these that have overseen the increase in unemployment from 7.2% under Bush to over 10% under Obama. These laws with more regulation and higher taxes have made things so bad that some experts do not expect unemployment to ever return to the low rates that President Obama inherited.

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