Fiscal Cliff (Pork) Notes

Tyler Durden's picture

The 'deal' is done and even the evening news seems perplexed by the market's excited reaction to three-quarters of the nation paying more taxes. Perhaps, as ABC News highlights below, it is the 'pork' that stuffed the bill...

The mix of tax perks covering the next year, but with budget implications for the next two years, includes everything from incentives for employers to hire veterans to incentives for employers to invest in mine safety. But it also includes these:

 

  • $430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects.
  • $331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.
  • $222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.
  • $70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”
  • $59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.
  • $4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.

And the not so Cliff Cliff notes from Bloomberg:

Wind farms, motorsports tracks, global banks and other businesses won revived tax breaks in a $75.3 billion package included in a last-minute budget deal Congress passed yesterday.

 

The tax-break extensions, mostly for companies, made it into the bill past Republican demands for spending cuts and Democratic resistance to benefits for businesses. Both parties have complained for years about some of the special-interest provisions.

 

Most of the tax breaks had expired at the end of 2011 and will be extended through 2013. The companies that benefit say the on-again, off-again breaks are important though the uncertainty makes it almost impossible to use them to plan business investments.

 

Although they are lumped together, the miscellaneous tax breaks are very different.

Some are broad, like the credit for corporate research, which is backed by a coalition of technology companies, manufacturers and lawmakers such as Representative Kevin Brady, a Texas Republican, and Senator Max Baucus, the Montana Democrat who is chairman of the Finance Committee. The two-year extension of the research credit would cost the government $14.3 billion in forgone revenue.

 

Some breaks are specialized, like the $11.2 billion, two- year extension of the active financing exception, which lets GE, Caterpillar Inc. (CAT) and Citigroup Inc. (C), among others, defer taxes on financing income they earn outside the U.S. The congressional supporters of this provision include Pat Tiberi, an Ohio Republican, and Richard Neal, a Massachusetts Democrat, both senior members of the House Ways and Means Committee.

 

Others are narrow and often ridiculed by lawmakers. They include $78 million worth of accelerated depreciation for motorsports tracks, $248 million in special expensing rules for films and television programs, and a $222 million provision that directs excise taxes on imported rum to Puerto Rico and the U.S. Virgin Islands.

 

Alex Brill, a former aide to Republicans on the House Ways and Means Committee, said tax breaks that some consider questionable -- such as the motorsports benefit backed by International Speedway Corp. (ISCA) and Senator Debbie Stabenow, a Michigan Democrat -- are often made temporary as a compromise.

 

Whirlpool Corp. (WHR) benefits from a $650 million tax credit for manufacturing energy-efficient appliances. JPMorgan Chase & Co. (JPM) and other financial institutions are aided by the $1.8 billion extension of the New Markets Tax Credit for investments in low- income areas. That is supported by Representative Jim Gerlach, a Pennsylvania Republican, and Senator Jay Rockefeller, a West Virginia Democrat.

 

Restaurants such as Cracker Barrel Old Country Store Inc. (CBRL) and McDonald’s Corp. (MCD) benefit from the $1.9 billion extension of the Work Opportunity Tax Credit for hiring workers from disadvantaged groups.

 

The bill includes a one-year extension through 2013 of the production tax credit for wind power, at a cost of $12.2 billion. That will save as many as 37,000 jobs in an industry that’s expected to stall this year, the American Wind Energy Association said.

Read more on the 2013 Corporate Recovery Act Obama Tax Cuts here.

(h/t nmewn)

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Muppet Pimp's picture

Weeeee!  Handouts bitchez! 

flacon's picture

For those unbelievers that Governor Chris Christie engaged in PRICE CONTROLS OF GASOLINE, you need to read the following from the Governor himself:

 

"New Jersey's price gouging statute, N.J.S.A. 56:8-107, et. seq., makes it illegal to set excessive price increases during a declared state of emergency or for 30 days after the termination of the state of emergency. 

 

Price increases are deemed excessive under the law if they are more than 10 percent above the price at which the good or service was sold during the normal course of business, prior to the state of emergency."

 

http://nj.gov/governor/news/news/552012/approved/20121027c.html

 

For those who are economically challanged, price gouging is a euphemism for FREE MARKET PRICE. Nobody is holding a gun to your head to buy the gasoline, it is VOLUNTARY exchange. In addition, if the price increases significantly it would drive supply to where the price is highest, thus lowering the price in short order. 

lasvegaspersona's picture

theater for the masses from a 'conservative'....wonder what Christie thinks conservative means...something different from what it means in Nevada that is for certain...

SafelyGraze's picture

many people neglect to account for the amazing by-product of increasing taxes, even if said increase doesn't actually increase treasury receipts -- the resulting spending can be increased by even more than the tax increase.

the increase in spending leads to more dollars for everyone, which is why this recent (overdue) action by congress is so good for america, and for middle-class america in particular.

hugs,

mdb & pk

 

flacon's picture

‎"Much of the social history of the Western world, over the past three decades, has been a history of replacing what worked with what sounded good." --Thomas Sowell

Michaelwiseguy's picture

I don't want to hear it referred to as the "Fiscal Cliff" anymore.

From hear on out we are going to be referring to it as a "Fiscal Episode".

Everyone needs to get on the same page with this and refer to it with the proper ZH terminology.

Thank You.

Dr. Sandi's picture

I've stopped reading bold faced comments including this one.

GetZeeGold's picture

 

 

Thanks you for that.

 

If you really want to be heard....you should always post in all caps.

smlbizman's picture

lets just call it what pastor williams calls it...the physical cliff...

theprofromdover's picture

I find that typing louder convinces me my message gets across better.

TraderTimm's picture

I use a script to replace words in my web-browser for this specific reason. If I'm sick of someone's name showing up, or a certain news story title - it gets replaced.

For instance, "Fiscal Cliff" is now "Oiled Boobies" in my browser, leading to amusing titles like "We're sliding off the Oiled Boobies!" in news articles.

"Debt Ceiling" is now "thong-clad asses" - leading to "Extension of the thong-clad asses is contemplated"

Just one way I try to retain some humor and sanity.

 

James-Morrison's picture

Well I'm glad none of these loopholes went to the rich. </sarc>

flacon's picture

I'm just reporting FACTS and the FACT IS that Governor Christie used price controls with the unintended consequence of having even MORE fuel shortages. Facts are stubborn things. 

fonzannoon's picture

flacon it is also a fact that Christie went to alternate day fill ups and he very successfully eased New Jerseys fuel crisis. That is a fact. Unlike NY which kept their heads up their asses for weeks after that.

flacon's picture

Fonzannon,

 

Is there really any difference between PRICE CONTROLS vs. DEMAND CONTROLS? If Chris Christie had allowed the FREE MARKET PRICE of gasoline to be what it was (what ever that would be, $25/gallon, or $2,500,000,000/gallon or WHATEVER...) wouldn't PRICE HAVE DICTATED WHAT DEMAND WOULD HAVE BEEN?

 

Christie imposed UNNATURAL LOW PRICES of gasoline, and so people bought more, so he had to also impose UNNATURAL DEMAND.... What's so wrong with having NATURE do it's thing? There is no FREE LUNCH. Nobody can erase the fact that the hurricane caused havoc.... but government seems to think that by putting all these unnatural controls and counter-controls makes things better, but it doesn't. 

 

Government NEVER, EVER, EVER, AND NEVER EVER makes things better by interveining in the supply/demand/price dance. NEVER EVER!

fonzannoon's picture

flacon i agree with you philosophically. I am pointing out a simple fact. there was a fuel shortage in NY and NJ and people were acting irrationally and by going to alternate days and controlling demand it actually worked to calm people down and made things more efficient. If gas station owners tried to charge $20 a gallon to let price determine demand there would have been a lot more dead people. Going to alternate days allowed soccor moms to get to the mall and others to get to work with less violence. I lived it. I am just pointing that out. The fuel shortage was a function of temporary loss of power. when the economy collapses more permenantly price and demand controls will not have the same success.

flacon's picture

Not trying to bicker like a married couple, but you only lived one scenario, you didn't live the Free Market scenario. How can we know which would have been more humane? The answer is that we can't. so glad you didn't get shot. :)

 

The only thing I know is: Government is a disease masquerading as its own cure

fonzannoon's picture

let me be clear, I am a total hypocrite. For example I am the first person to say any problems with gold can be solved by price, because despite my boating mishaps I still believe in it. So for me say what I have said is absolutely hypocritical because had I not been here I would be up arrowing you left and right. I just have to call it like I see it though. I am out on Long Island. There was very little in the way of gas delivery's. I live a block away from a gas station so I passed my time by watching people. I know in my heart that if that guy put up $20/gallon on his sign, anyone who would have filled up would have been carjacked. I probably sound dramatic, but that kind of shit was happening as it was. I remember Kito on here saying that going to alternate days in Jersey calmed things down weeks before that happened here. Soon after they announced alternate days here things calmed down. I just had to throw that out there.

flacon's picture

No problem. Glad to hear you were safe. 

fonzannoon's picture

Thanks, I have been married almost 10 years. I wish bickering with my wife went this smoothly.

zhandax's picture

fonzannoon, RichardP may be trying to say this, but my tolerance for psychobabble is about two paragraphs, and I tend to be a bit more direct.

I rode out Andrew, so I am not unsympathetic to the hardships which hurricane survivors have to endure.  That said, I rode out Andrew in Boca, which was probably 50 or 60 miles north of the eye.  Fuck the soccer moms in Boca getting to mall if it diverted gasoline away from rescue efforts, or basic survival, in south Miami.  Unlike Miami, there were people trying to just keep from freezing after Sandy.  I don't have a big problem with preventing price gouging in severely affected areas, but some bureaucratic attempt to maintain normalcy in relatively-unaffected areas that would rather pretend it didn't happen, is delusional, as well as bad public policy.  /rant off, glad you came out OK.

PrintemDano's picture

Fonzannoon:  I too live on LI and lived through it.  What I saw was the government waited a week before stopping the ethanol mandate which exacerbated the problem immensely.  I also noticed deliveries were increasing and lines were getting shorter BEFORE they went to odd even days, they then kept the odd even until way after there was no longer  a problem.  I grade governments response a big ole fat F.

XitSam's picture

Once again a politician mangles what would have been free trade by imposing foolish economic rules.  Actuallly, we don't know what the result would have been.

tango's picture

I have to agree.  As a free market supporter, I admit there are extraordinary circumstances when temporary common sense rules can work.  Like not using water for beauty projects in the midst of a drought or lowering thermostats due to energy shortages or requiring vaccinations.  One is not abandoning their philosophy when emergency measures are in place.

Nostradalus's picture

yeah, and we had all this "energy shortage" Kabuki theater 40 years ago, seems like we used billions of bbls of oil since then... and "requiring vaccinations"? = statist moron. Enjoy your diminished living standard along with mercury poisoning/SV-40/cognitively deficient children.   YAY!

keesooi's picture

The first rule of golf:  Never follow a bad shot with a stupid shot.

First rule of government:  always follow an immoral rule with an even more immoral rule (and then another, and another,...).

Please read http://mises.org/daily/6278/PostSandy-A-ManMade-Disaster

And please stop relying on the government, I now they appear well intentioned, but the fact is, they are all morons who couldn't survive a minute in the real world. 

flacon's picture

Good article. Thanks for posting it. 

Fake Jim Quinn's picture

There is no mathematical reason why alternate odd/even days makes an iota of difference. It just makes things more inconvenient. Demand is demand, regardless of the mix. Christie did nothing to ease the shortages with that move (maybe some psychological difference at best). However, his hot air and other flatulence may have added carbon supplies

RichardP's picture

You sound like you don't know much about Que theory.  For starters, see:

http://www.scribd.com/doc/86167817/Que-Theory

S.N.A.F.U.'s picture

Quinn is right.  If you have random people showing up every day, making the "odds" show up randomly on odd days and the "evens" show up randomly on even days doesn't do jack to reduce the number of people going to the pumps on any given day (it doesn't change the mathematical distribution unless the # of odds/evens is mismatched, in which case it makes it worse every other day) -- except as he pointed out for possible psychological impacts (fooling people into thinking things "were under control" and thereby preventing people from rushing to the gas station to fill up their vehicle to make sure they got some.)

I skimmed the referenced doc.  I didn't see anything that contradicts what I just said.  Rather than just pointing to a large document without specifying what part applies you could, you know, make a logical argument why such scheduling would make a difference.

(Happy to be proved wrong...  Queueing, though not the human variety, is part of my job and I'm always looking to improve.)

edit: OK, after thinking about it a bit I realized it might flatten out the distribution a bit.  (If you could break it down into even more bins it would flatten it out even more.)  However, that doesn't really change the supply/demand situation -- it only means SOME people might have to wait a bit less time in line to get gas while some others will have to wait LONGER.  Still not sure how that's supposed to be some kind of significant net win for "NJ society" though, and why it justifies the government stomping on individual's rights.

edit #2: If the strategy had a significant (non-psychological) effect, I suspect the real answer (from here: http://mises.org/daily/6278/PostSandy-A-ManMade-Disaster) is this:

"who are led to waste endless hours, day after day, trying to get the supplies that don't exist"

I.e., instead of have N people waiting every day for gas they won't get, you now have only N/2 people waiting on a given day for gas they won't get.  (That's somewhat simplified of course since presumably some people got gas before they ran out and started turning people away.)

Ideally no one would wait in line when they won't be able to get gas.  The strategy is basically telling 1/2 the people up front "you can't get gas on this day", and whether it was true or not before, the law is now making it true.

spdrdr's picture

flacon,

If I recall correctly, you are a Global Warming/Peak Oil alarmist, with extremely partisan Democrat leanings.

Be that as it may, I agree with you 100%.  Fatso is an embarrasment.

Happy New Year!

 

 

Dr. Sandi's picture

I've stopped reading bold faced comments including this one.

 

Bobbyrib's picture

How long has this country fixed food prices? No more crop subsidies, let farmers manage their own business.

DoChenRollingBearing's picture

Maybe that's why the bitch RINOs went along.

Or maybe they're just scaried wussies...

ball-and-chain's picture

Handouts?

Why demonize the poor?

It's the rich who put us in this hole.

They made bad bets.  They didn't want to pay.

We got left holding the bag.

Food stamps have nothing to do with it.

http://www.angrysinner.blogspot.kr/2013/01/yesterday-dragon-lady-served-hormel.html

keesooi's picture

Stop blaming "the rich".  We are all to blame, because we allowed our constitutional republic to be transformed into a fascist democracy.

I know plenty of rich folks, who became so by providing a product or service that their fellow humans were willing to pay for.

earnulf's picture

So do I, in fact I read about them every day when they are busted for dealing drugs because they aren't getting rich enough, fast enough.

They are "becoming so, by providing a product or service that their fellow humans were willing to pay for."

Like fraud, mismanagement and corruption, it's illegal, so it's all in how much you make, how fast you make it and how you apply it to avoid the consequences.

Same applies to politicians, they are"providing a product or service that their fellow humans were willing to (let others) pay for."

As long as you are self-sufficient, that's one thing.   It's when you need something you can't produce that things start to get hinky.

Just Ice's picture

I doubt if anyone here associates gubmint handouts as necessarily corresponding with "the poor".  The political pork lading down bills more often than not consists of  handouts to the well heeled.  There's much corporate welfare in want of elimination.

Dr. Sandi's picture

There are obviously a lot more rich people bribing politicians than there are poor people bribing politicians.

I guess that means the poor are more honest.

zhandax's picture

Virtuosity may be a better way of describing it.  The difference is, on hitting the lottery, the poor man will think of buying a car, and the rich man will think of bribing his congressman.

Chupacabra-322's picture

These people are Criminals and treasonist. They're protecting a global criminal economic bankster enterprise system that controls the world's Governments and politcians. It's a criminal cabal based on shadow CIA/Mossad/MI6 etc.. intelligence, murder, espionage, blackmail, rackertering, bribery, threats, drug trade, human trafficing. It's a Global Criminal Cabal based on Evil Lucerferian belief system.

The rest is just political therater the consumption by the masses.

Go Tribe's picture

Brought to us by the revolving door of insider lobbyists - Breaux, Lott and the Clinton Administration.

http://washingtonexaminer.com/tim-carney-how-corporate-tax-credits-got-i...

 

Fred Hayek's picture

When the corruption is this open and disgusting, it helps to present the bill to the 80 year olds in the senate at 1:36 a.m. for a 1:39 a.m. vote.

Dr. Sandi's picture

The problem isn't the age of the cheese. It's the cheese itself.

I think I need to buy a gun's picture

whats after a trillion, a quadrillion and then what 2X that decimillion?

logicalman's picture

The word you are looking for is 'quintillion'

closely folowed by 'sextillion'

Now that's what you call 'hyperinflatiillion'