Imagine for a moment that you are an entrepreneur, and a successful one at that. Let’s pretend that you own a chain of coffee shops that you have built up over time so you have $10 million invested in them. Before this economy, your business was very profitable and your taxes were minimal (under Bush). Now, in this economy, your sales have decreased drastically, but you are still doing relatively well. Let’s say you are going to make $400,000 this year in profit for yourself.
Under Obama’s tax policy, let’s guess that your taxes will be an additional 10% (so 40% rather than 30% just to make the numbers easy), so your after tax income will be $240,000 rather than $280,000. Not what you’re used to, but still a comfortable amount. Now Obama is going to take that extra $40,000 (or the entire $160,000 if you want to think of it that way) and use it to pay people to do a public work. For this hypothetical, we’ll say that the money goes to fund road construction in your area.
Now those people who then get hired to build that road will have an income they otherwise wouldn’t. And now that they have expendable money, they begin to purchase things they used to before the recession, like coffee. So your sales go back up, and your profit slowly returns.
Let’s see what would happen under the policy of low taxes. Let’s even take it to the extreme and say no taxes. So you make $400,000 this year and don’t pay any taxes. The conservatives argue that you will then use that extra $160,000 towards new investment and creating new jobs, but I am going to assume you’re a rational businessman. In this economy, any investment in expanding a business is risky-- more risky than investing in gold at least. Even if you aren’t risk adverse, you would require a sizable potential return on investment to take on that risk. Currently though, you’re return on investment is 4% (ROI = profit/investment = $400k/$10mil). To invest and expect more than a 4% return is illogical.
Now normally, you’d be able to take out a loan to leverage your investment money to get a better ROI. You would go to a bank and get a $640,000 loan, so you could invest $800,000 and expect to increase profits by $32,000 (for an ROI of $32k/$160k = 20%). But remember, we’re in the scenario where the conservatives get their way. And if that’s the case, the banks aren’t getting their bailout, so they aren’t lending money. Good luck finding one who would give you $640,000 for what is still a relatively risky investment. So no new investment, no new jobs, but at least you get to keep that extra $160,000. Until next year of course, when even less people have jobs and your sales drop further.
And remember, you aren’t paying any taxes in that scenario. So no one else is either. Imagine for a moment what that would do.
Jordan Genso
Friday, February 27, 2009
Thursday, February 26, 2009
Granholm Trumps Rogers on Stimulus Spending
So when one of the cities in your district receives $4.8 million for new streets, sewers, and water lines from a bill that you voted against, how should you react?
If you're Republican Mike Rogers, you say, "Streets, sewers, water lines? That's not what you need. You need tax cuts!"
That's more or less what Michigan's 8th District congressman did earlier this week when Gov. Jennifer Granholm came to Howell to tell its city officials that they were one of the first cities in Michigan to qualify for money from President Barack Obama's stimulus package.
In her appearance Tuesday, as covered by the Livingston Press and Argus, Granholm said funds were being distributed through existing channels to make sure the money goes to projects that local communities have identified as their priorities and to de-politicize the process. Remember, this is Livingston County, that bastion of red surrounded by a sea of blue, getting money that not one single Michigan Republican lawmaker voted for. That's pretty non-political.
Rogers, in his statement after the president's budget message, paid lip service to wanting to put people back to work, but then called for doing it by spending less to help cities like Howell, saying, "We can do that if we stop spending like it doesn't matter how far we run up the national debt and if we reward rather than punish small businesses for creating the jobs that are so crucial to our future economic health."
"Rewarding" small businesses is GOP code for tax cuts.
But Rogers doesn't explain how cutting taxes for small businesses will help the city of Howell fix its streets, install sewers and replace old water lines. Tax cuts don't do those things.
But as city officials know, the $4.8 million in stimulus money means that the city of Howell will have to borrow that much less money to carry out its $24 million improvement plan. So instead of having to increase property taxes 2 mills to get the job done, it may have to levy only an additional mill.
That's tax relief, but Mike Rogers can't take one iota of credit for it.
If you're Republican Mike Rogers, you say, "Streets, sewers, water lines? That's not what you need. You need tax cuts!"
That's more or less what Michigan's 8th District congressman did earlier this week when Gov. Jennifer Granholm came to Howell to tell its city officials that they were one of the first cities in Michigan to qualify for money from President Barack Obama's stimulus package.
In her appearance Tuesday, as covered by the Livingston Press and Argus, Granholm said funds were being distributed through existing channels to make sure the money goes to projects that local communities have identified as their priorities and to de-politicize the process. Remember, this is Livingston County, that bastion of red surrounded by a sea of blue, getting money that not one single Michigan Republican lawmaker voted for. That's pretty non-political.
Rogers, in his statement after the president's budget message, paid lip service to wanting to put people back to work, but then called for doing it by spending less to help cities like Howell, saying, "We can do that if we stop spending like it doesn't matter how far we run up the national debt and if we reward rather than punish small businesses for creating the jobs that are so crucial to our future economic health."
"Rewarding" small businesses is GOP code for tax cuts.
But Rogers doesn't explain how cutting taxes for small businesses will help the city of Howell fix its streets, install sewers and replace old water lines. Tax cuts don't do those things.
But as city officials know, the $4.8 million in stimulus money means that the city of Howell will have to borrow that much less money to carry out its $24 million improvement plan. So instead of having to increase property taxes 2 mills to get the job done, it may have to levy only an additional mill.
That's tax relief, but Mike Rogers can't take one iota of credit for it.
Monday, February 23, 2009
Bill Rogers -- A Man of Few Ideas
When Bill Rogers was running for state rep from Michigan's 66th District during the 2008 campaign, he was a man of few words. In a debate sponsored by the Livingston Press and Argus, for example, he answered one question by saying, "Taxes, deregulation. Fix it and they will come."
Turns out, Rogers is also a man of few ideas. When WHMI radio station asked him about his bill to make sure winners of Republican Party primaries don't have any extra competition in the general election, he responded that he had a chance to introduce only 10 bills and he introduced nine others and that one was the 10th.
So he had nine ideas to improve Michigan and this was the best he could do for the 10th -- a power-grab by local Republicans that Rogers now says was intended to help Democrats, too.
For the record, Democrats didn't ask for this bill and want nothing to do with it. Livingston County Democrats adopted a resolution against it at their Feb. 7 county convention and the resolution was unanimously adopted by the state party at its convention Saturday (Feb. 21, 2009) in Detroit.
So if Bill Rogers can't think of another idea for the state, I guess we'd better help him out by suggesting things he could have introduced.
How about a bill to ban smoking in bars and restaurants? It will save millions in health care costs by eliminating second-hand smoke from work places.
How about a measure restoring the right of Michigan citizens to sue to protect the environment, a right taken away by the Michigan Supreme Court and former Supreme Court Justice Cliff Taylor and the rest of the Gang of Four?
How about a measure supporting WALLY, the commuter train between Howell and Ann Arbor, to cut down on congestion on U.S. 23?
Or maybe a bill to tighten restrictions on using public property for political advertising?
Expanding Michigan's bottle bill to cover non-carbonated beverages such as water, juice, and energy drinks would reduce trash and encourage recycling.
Rogers could have proposed a measure to impose a moratorium on home foreclosures to keep people in their homes and try to stabilize home prices and neighborhoods. States did this during the Great Depression with farm foreclosures.
He could have suggested a ban on new coal-fired power plants. Electrical power demand is flat in the state right now so there is no need to be building more fossil-burning plants.
Rogers might have banned utility shutoffs in the winter time to keep elderly people from freezing to death in their homes.
He could have suggested a bill requiring lawmakers to make personal financial disclosures while in office.
Why not a measure cracking down on steroid abuse, or one giving Michigan workers preference on state-funded projects?
None of these made the grade with Rogers. Only the bill that says Republicans get to veto anybody running as an independent.
Turns out, Rogers is also a man of few ideas. When WHMI radio station asked him about his bill to make sure winners of Republican Party primaries don't have any extra competition in the general election, he responded that he had a chance to introduce only 10 bills and he introduced nine others and that one was the 10th.
So he had nine ideas to improve Michigan and this was the best he could do for the 10th -- a power-grab by local Republicans that Rogers now says was intended to help Democrats, too.
For the record, Democrats didn't ask for this bill and want nothing to do with it. Livingston County Democrats adopted a resolution against it at their Feb. 7 county convention and the resolution was unanimously adopted by the state party at its convention Saturday (Feb. 21, 2009) in Detroit.
So if Bill Rogers can't think of another idea for the state, I guess we'd better help him out by suggesting things he could have introduced.
How about a bill to ban smoking in bars and restaurants? It will save millions in health care costs by eliminating second-hand smoke from work places.
How about a measure restoring the right of Michigan citizens to sue to protect the environment, a right taken away by the Michigan Supreme Court and former Supreme Court Justice Cliff Taylor and the rest of the Gang of Four?
How about a measure supporting WALLY, the commuter train between Howell and Ann Arbor, to cut down on congestion on U.S. 23?
Or maybe a bill to tighten restrictions on using public property for political advertising?
Expanding Michigan's bottle bill to cover non-carbonated beverages such as water, juice, and energy drinks would reduce trash and encourage recycling.
Rogers could have proposed a measure to impose a moratorium on home foreclosures to keep people in their homes and try to stabilize home prices and neighborhoods. States did this during the Great Depression with farm foreclosures.
He could have suggested a ban on new coal-fired power plants. Electrical power demand is flat in the state right now so there is no need to be building more fossil-burning plants.
Rogers might have banned utility shutoffs in the winter time to keep elderly people from freezing to death in their homes.
He could have suggested a bill requiring lawmakers to make personal financial disclosures while in office.
Why not a measure cracking down on steroid abuse, or one giving Michigan workers preference on state-funded projects?
None of these made the grade with Rogers. Only the bill that says Republicans get to veto anybody running as an independent.
Hamburg Township -- Now It's the Treasurer's Office Turn
Hamburg Township Clerk Matt Skiba has been hogging the limelight in the ongoing soap opera that passes for township governance in Hamburg Township.
But Treasurer Pat Evon is now demanding his turn in the spotlight by firing his deputy, Julie Hardesty, just the week before taxes are due. Retaliation for being the daughter-in-law of ousted Clerk JoAnna Hardesty, it appears.
It's hard to remember that this all-Republican team was elected last fall on a promise to restore dignity to Hamburg Township.
But Treasurer Pat Evon is now demanding his turn in the spotlight by firing his deputy, Julie Hardesty, just the week before taxes are due. Retaliation for being the daughter-in-law of ousted Clerk JoAnna Hardesty, it appears.
It's hard to remember that this all-Republican team was elected last fall on a promise to restore dignity to Hamburg Township.
Saturday, February 21, 2009
Rogers Chickens Out of Gubernatorial Primary
Don't be fooled by that stuff about not wanting to put his two young children through a statewide race. And don't swallow that baloney about how he's too busy looking out for your jobs to worry about his own.
Mike Rogers was thinking about nobody's welfare but his own when he decided not to enter the Republican gubernatorial primary for 2010.
The fact is, the 8th District Republican looked at the potential competition and decided his name and being from a Republican County like Livingston (with signs put up on public property by his friends) weren't going to be enough to guarantee him the nomination.
And with two other Republican members of Congress in the running, how was he going to stand out? By arguing he voted "No" more times than they did?
Mike Rogers was thinking about nobody's welfare but his own when he decided not to enter the Republican gubernatorial primary for 2010.
The fact is, the 8th District Republican looked at the potential competition and decided his name and being from a Republican County like Livingston (with signs put up on public property by his friends) weren't going to be enough to guarantee him the nomination.
And with two other Republican members of Congress in the running, how was he going to stand out? By arguing he voted "No" more times than they did?
Friday, February 20, 2009
Pragmatic Projects Dominate Livingston List
Whittling the hundreds of millions of dollars of projects submitted for Michigan's share of stimulus funds down to the money available looks like it is going to be a tall order.
The Livingston Press and Argus came up with an estimate of $231,697,739 for Livingston County projects. By my count, it is more like $321,735,065 because I counted projects by state agencies that are intended to benefit Livingston County -- Michigan Department of Corrections, Michigan Department of Transportation, Michigan Department of Natural Resources, as well as some by private agencies such as hospitals and wireless internet providers. Even that higher tally leaves out the multiple projects of South Lyon Community Schools, which covers part of Livingston County but is also in Oakland County.
Livingston County policymakers stuck mostly to the pragmatic, which means pothole fixing and energy conservation work. We can use plenty of both. Our roads are in terrible shape, as we all know. And energy conservation projects have a big payback for local units of government such as schools.
But it would be a shame if all the stimulus money went to just those two sectors of the economy. After all, the New Deal wasn't just the Civilian Conservation Corps, as valuable as that was. It also included the arts -- beautiful murals painted in post offices, incredibly haunting photos of people suffering through the Great Depression, some of the music of Woody Guthrie, and the WPA interviews with former slaves that are one of the most valuable archives in existence for understanding slavery. People in lines of work other than construction need jobs in this economic downturn, too.
And taxpayers need to get lasting value from the projects -- like those CCC parks projects and WPA sidewalks that are still in use. The projects also should benefit all segments of society -- children and the elderly, not just downtown businesses. They should not duplicate efforts or facilities, and they should help move the nation forward into the 21st century.
That said, there isn't much to pick from among Livingston County's proposals that go beyond the literal shovel-ready type projects.
The Livingston County Road Commission listed 15 projects, all small-potatoes type resurfacing. The list does not seem to be particularly well balanced -- six of the 15are in Cohoctah Township.
Municipalities listed a number of street and road projects, too, as did the Michigan Department of Transportation. Rep. Cindy Denby even had the nerve to ask for $5.1 million for work on the intersection of Interstate 96 and M-59, even though her party opposes this bill because it's only "spending."
Short-sighted as usual, the Livingston County Commission failed to request funds for the Ann Arbor-Howell commuter rail line known as WALLY, but others did. The city of Howell seeks funds for building five stations for the project (listed at $3.75 million under Washtenaw County's request) and MDOT seeks $7.1 million for other aspects of the project.
Schools put energy conservation projects -- more efficient boilers, better windows, etc. -- on their lists, but other types of "green" projects were lacking. Putnam Township is seeking $20,800 for a recycling project, but Recycle Livingston, which is in dire financial shape, requested nothing.
Recreation-oriented projects were few and far between. Some tennis courts in Howell and some work on the Lakelands Trail are a few examples. The Department of Natural Resources picked up the slack for the local lack of initiative with campground, playground, and other improvements in area recreation areas. Unfortunately, this also included funds for improvements around the controversial Island Lake shooting range.
A few other projects fall into the recreation/arts category -- the Howell Historic Society seeks an unspecified amount for renovaton of the old depot downtown, the Livingston Arts Council asks for $10.8 million to finish restoration of the Howell Opera House, and Michigan Information Exchange wants an unspecified amount for a museum-type expo near I-96 and U.S. 23.
Some projects seem unnecessary. Cheryl Stockwell Academy wants $20 million to build a new high school, when Howell has one going unused. We don't need to duplicate facilities. And as far as drainage for a new shopping center which was on the list -- do we really need more retail facilities right now when existing businesses lack customers? The millions for the Howell airport benefits too few people to justify the $3.45 million requested. And surveillance cameras for downtown Brighton conflict with democratic values of a free society.
Not a lot of original thought went into these projects. They appear to be things that were already in the planning stages rather than dreamed up merely to get federal money. They reflect communities that are having trouble maintaining what they have and that reduces the likelihood of wasteful projects.
But that tendency to color only inside the lines results in some big gaps. I didn't find any projects aimed at a project for the elderly, even though services for them have been cut locally. Libraries must have everything they need because projects for them are lacking, too.
Some of these projects may already have been selected for funding. Gov. Jennifer Granholm announced Thursday (Feb. 19, 2009) that some $853 million in road projects have been selected. And the regional planning agency of which Livingston County is a part, SEMCOG, will set priorities for some of the funding.
Most of these projects won't be funded, at least by the stimulus package. Their completion will come only after years spent on the priority list of entities with budgets that can't keep up.
The Livingston Press and Argus came up with an estimate of $231,697,739 for Livingston County projects. By my count, it is more like $321,735,065 because I counted projects by state agencies that are intended to benefit Livingston County -- Michigan Department of Corrections, Michigan Department of Transportation, Michigan Department of Natural Resources, as well as some by private agencies such as hospitals and wireless internet providers. Even that higher tally leaves out the multiple projects of South Lyon Community Schools, which covers part of Livingston County but is also in Oakland County.
Livingston County policymakers stuck mostly to the pragmatic, which means pothole fixing and energy conservation work. We can use plenty of both. Our roads are in terrible shape, as we all know. And energy conservation projects have a big payback for local units of government such as schools.
But it would be a shame if all the stimulus money went to just those two sectors of the economy. After all, the New Deal wasn't just the Civilian Conservation Corps, as valuable as that was. It also included the arts -- beautiful murals painted in post offices, incredibly haunting photos of people suffering through the Great Depression, some of the music of Woody Guthrie, and the WPA interviews with former slaves that are one of the most valuable archives in existence for understanding slavery. People in lines of work other than construction need jobs in this economic downturn, too.
And taxpayers need to get lasting value from the projects -- like those CCC parks projects and WPA sidewalks that are still in use. The projects also should benefit all segments of society -- children and the elderly, not just downtown businesses. They should not duplicate efforts or facilities, and they should help move the nation forward into the 21st century.
That said, there isn't much to pick from among Livingston County's proposals that go beyond the literal shovel-ready type projects.
The Livingston County Road Commission listed 15 projects, all small-potatoes type resurfacing. The list does not seem to be particularly well balanced -- six of the 15are in Cohoctah Township.
Municipalities listed a number of street and road projects, too, as did the Michigan Department of Transportation. Rep. Cindy Denby even had the nerve to ask for $5.1 million for work on the intersection of Interstate 96 and M-59, even though her party opposes this bill because it's only "spending."
Short-sighted as usual, the Livingston County Commission failed to request funds for the Ann Arbor-Howell commuter rail line known as WALLY, but others did. The city of Howell seeks funds for building five stations for the project (listed at $3.75 million under Washtenaw County's request) and MDOT seeks $7.1 million for other aspects of the project.
Schools put energy conservation projects -- more efficient boilers, better windows, etc. -- on their lists, but other types of "green" projects were lacking. Putnam Township is seeking $20,800 for a recycling project, but Recycle Livingston, which is in dire financial shape, requested nothing.
Recreation-oriented projects were few and far between. Some tennis courts in Howell and some work on the Lakelands Trail are a few examples. The Department of Natural Resources picked up the slack for the local lack of initiative with campground, playground, and other improvements in area recreation areas. Unfortunately, this also included funds for improvements around the controversial Island Lake shooting range.
A few other projects fall into the recreation/arts category -- the Howell Historic Society seeks an unspecified amount for renovaton of the old depot downtown, the Livingston Arts Council asks for $10.8 million to finish restoration of the Howell Opera House, and Michigan Information Exchange wants an unspecified amount for a museum-type expo near I-96 and U.S. 23.
Some projects seem unnecessary. Cheryl Stockwell Academy wants $20 million to build a new high school, when Howell has one going unused. We don't need to duplicate facilities. And as far as drainage for a new shopping center which was on the list -- do we really need more retail facilities right now when existing businesses lack customers? The millions for the Howell airport benefits too few people to justify the $3.45 million requested. And surveillance cameras for downtown Brighton conflict with democratic values of a free society.
Not a lot of original thought went into these projects. They appear to be things that were already in the planning stages rather than dreamed up merely to get federal money. They reflect communities that are having trouble maintaining what they have and that reduces the likelihood of wasteful projects.
But that tendency to color only inside the lines results in some big gaps. I didn't find any projects aimed at a project for the elderly, even though services for them have been cut locally. Libraries must have everything they need because projects for them are lacking, too.
Some of these projects may already have been selected for funding. Gov. Jennifer Granholm announced Thursday (Feb. 19, 2009) that some $853 million in road projects have been selected. And the regional planning agency of which Livingston County is a part, SEMCOG, will set priorities for some of the funding.
Most of these projects won't be funded, at least by the stimulus package. Their completion will come only after years spent on the priority list of entities with budgets that can't keep up.
Thursday, February 19, 2009
Big Wish List in Livingston County for Stimulus Package
I haven't seen such a Christmas wish list since my daughter was 5.
Check out the list of requests for Michigan's share of the Obama stimulus package (via the link first put up by Michigan Liberal.)
Livingston County, which of course is solely represented by Republicans in the state Legislature and by Mike Rogers in the U.S. House, has requests for hundreds of projects even though its Republican representatives wouldn't stoop to voting for the measure because it was just "spending."
So now the Republicans on our township boards, county commission, and county road commission will get busy spending the money that they didn't want.
Start with the $1.5 million request for a new "broadband network" from the Livingston County Commission. Sounds suspiciously like that new dispatching system they've been trying to find the money for.
And the airport has got its eyes on some pretty big prizes, too -- three projects totaling $3.45 million for runway expansion, sewers and a new terminal building. Seems like an awful lot of money for the small number of people who use that facility compared to the thousands who use our roads.
While the county commission seems to be looking at this as their own personal pot of money to spend on their priorities, other agencies in the county are more down-to-earth.
The road commission has some 50 projects, mostly crushing asphalt on roads and putting down a new overlay. Local schools have dozens of energy-efficiency upgrade projects, the kinds of things that need to be done and will save taxpayers money but schools don't have the up-front money to invest in saving money.
What's eye-opening is how many times these projects are described as "deferred maintenance."
The city of Brighton has some strange priorities -- surveillance cameras for downtown. Big Brother is watching you shop?
One intriguing project is a center proposed by The MIX (Michigan Information Exchange) in an old industrial building at I-96 and U.S. 23 that would highlight Michigan resources.
It'll be spring before these projects can start, but when you drive down a newly re-surfaced road, remember one thing -- Mike Rogers didn't want you to have this.
Check out the list of requests for Michigan's share of the Obama stimulus package (via the link first put up by Michigan Liberal.)
Livingston County, which of course is solely represented by Republicans in the state Legislature and by Mike Rogers in the U.S. House, has requests for hundreds of projects even though its Republican representatives wouldn't stoop to voting for the measure because it was just "spending."
So now the Republicans on our township boards, county commission, and county road commission will get busy spending the money that they didn't want.
Start with the $1.5 million request for a new "broadband network" from the Livingston County Commission. Sounds suspiciously like that new dispatching system they've been trying to find the money for.
And the airport has got its eyes on some pretty big prizes, too -- three projects totaling $3.45 million for runway expansion, sewers and a new terminal building. Seems like an awful lot of money for the small number of people who use that facility compared to the thousands who use our roads.
While the county commission seems to be looking at this as their own personal pot of money to spend on their priorities, other agencies in the county are more down-to-earth.
The road commission has some 50 projects, mostly crushing asphalt on roads and putting down a new overlay. Local schools have dozens of energy-efficiency upgrade projects, the kinds of things that need to be done and will save taxpayers money but schools don't have the up-front money to invest in saving money.
What's eye-opening is how many times these projects are described as "deferred maintenance."
The city of Brighton has some strange priorities -- surveillance cameras for downtown. Big Brother is watching you shop?
One intriguing project is a center proposed by The MIX (Michigan Information Exchange) in an old industrial building at I-96 and U.S. 23 that would highlight Michigan resources.
It'll be spring before these projects can start, but when you drive down a newly re-surfaced road, remember one thing -- Mike Rogers didn't want you to have this.
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