Tag: Subsidies

Right Problem, Wrong Solution

I can’t stand crony capitalism. I have little tolerance for special subsidies and tax breaks being paid out to rent-seeking industries. So you can imagine that I’m not on board with what’s going on in New York because … holy crap.

Nearly two-dozen studios raked in more than $1.5 billion in rebates from New York over the past nine years as the state rapidly expanded its incentives to lure in movies and shows.

Indeed, no New York tax program is as generous as the one targeted toward the film and television industry, and records obtained by Gannett’s Albany Bureau shows that big-name studios reaped massive rewards for shooting in the Empire State.

NBC/Universal was by far the leader in rebates awarded between 2006 and 2014, getting back a whopping $320 million for up to 30 percent of its production costs to film in New York.

Sony/Columbia was refunded $200 million, while HBO got $198 million, the WB got $185 million and CBS received $171 million, the records obtained by Gannett through a Freedom of Information request showed.

The figures were staggering to critics of the program, who said the money should be used instead to help existing businesses in New York, particularly in regions trying to recover from decades of decline in manufacturing jobs.

Overall, $423 million was sent back to studios in 2014 – with the most, $117 million, returned to CBS, said Empire State Development, the state agency that runs the program.

Defenders of the program point to $8.7 billion in business Hollywood studios bring to the Empire State. But there’s no way that this possibly pays for itself. Hollywood mostly brings in its own people and its own experts. What’s the benefit to New York jobs? Selling the camera crews some Starbucks? And it’s not like if the tax benefits disappeared, Hollywood would stop making movies and TV shows in New York altogether.

And the benefits to New York businesses run into another problem. If Hollywood studios aren’t paying their taxes, that means someone else is. That means businesses that are native to New York, that are based in New York, that do all their business in New York have to make up the difference.

Here’s where the critics get it wrong. They think New York should be replacing those subsidies with other more targeted subsidies for upstate businesses. That’s better, I guess, in some weird sense. But here’s a better idea: just make taxes lower for everyone. Make New York friendly to all businesses, not just those that have some pull in Albany.

But … then you wouldn’t have Hollywood movie stars kissing up to politicians and making them feel important. Can’t have that, can we?

What Taxes Go For

All right, his has got to stop, liberals. You just sound so stupid every time you say it.

Here is the latest “amusement” from the Left about those dumb “teabaggers”, via Unreal Americans. It juxtaposes anti-tax signs with things supposedly funded by taxes that the protesters are enjoying.

Heh heh. Those dumb tea baggers! They’re protesting against streets and electricity!

This is the poor man’s version of Elizabeth Warren’s dumb rant. And I’ll just repeat what I said in the comments to that post:

The other thing I failed to note is that she talks about education, roads, police. Very few people have problems paying for that. But that only accounts for a fraction of government spending.

Here’s what she should have gone on to say:

“All that money that was flushed down the toilet with Solyndra and other green boondoggles? You paid for that! Our huge welfare state? You paid for that! Our bloated education system that spends the most in the world while educating the least? You paid for that! $150 million a year paid to dead federal employees? You paid for that! Corn ethanol that fouls the Earth while not providing energy? You paid for that! Farm subsidies, fuel subsidies, unnecessary second engines for fighters? You paid for all of it!”

The last graph on this page shows a breakdown of federal spending. You’ll notice that none of things labelled in that clever picture even show up. Electricity and power lines are paid for by consumers. To the extent government contributes, it’s with subsidies that Tea Partiers (and liberals) generally oppose. Traffic lights, local roads, street signs and sidewalks are mostly funded locally and to the extent they are federally funded, shouldn’t be. Even for local and state government, infrastructure is a small fraction of what they spend.

Now if you want to ding these guys for supporting defense spending, Social Security and Medicare — which accounts for the majority of government spending, feel free. But you have to acknowledge that the bulk of government is not on roads and schools or even science or green energy, but transfer payments and government programs that have big ambitions and small results.

You know what we should post in response? A picture of liberals calling for tax increases with lots of business in the background that would get hammered by them. Or a picture of the Wall Street protesters on their iphones and droids, the products of evil American business.

Cutting the Wrong End

I’m sorry. I’m with the Democrats on this one:

The Republican-led House voted to slash domestic and international food aid Thursday while rejecting cuts to farm subsidies.

A spending bill to fund the nation’s food and farm programs would cut the Women, Infants and Children program, which offers food aid and educational support for low-income mothers and their children, by $868 million, or 13 percent. An international food assistance program that provides emergency aid and agricultural development would drop by more than $450 million, one-third of the program’s budget. The legislation passed 217-203.

As they cut other programs, lawmakers rejected two proposals that would have saved money by lowering the maximum amount of money a farmer can receive in subsidies from the government. While fiscal conservatives and other critics of subsidies argued that they need to be cut as lawmakers look for ways to save, farm-state members said those cuts should be pushed back until Congress considers a new five-year farm bill next year.

This is one of the stupider things I’ve read. Farm subsidies increase the price of food (from price supports and other programs). If you cut farm subsidies, you cut the price of food for poor people, making their dollar stretch further. In the choice between subsidizing agribusiness and making sure children have enough food, why on God’s green earth would choose to keep the subsidies for rich businesses?

The GOP did show some stones in killing the Brazilian cotton bullshit and trying to defund ethanol subsidies. But this is just ridiculous.

Update: The Senate voted to kill ethanol subsidies. This is a huge win for us.

Sitting in the Tall Cotton

Well, this is a start:

A House committee voted to cut off crop subsidies to growers with more than $250,000 a year in adjusted gross income on Tuesday — a dramatic tightening of the farm safety net.

The Appropriations Committee also voted to make cotton growers effectively pay for the $147 million a year U.S. payment to Brazil, the victor in a trade dispute over American cotton supports.

“It’s a great sign Congress is ready to end these subsidies,” said Jeff Flake, Arizona Republican and sponsor of the cuts. Both were adopted by voice vote. Only one dissenting vote was heard on the vote for a lower eligibility cap.

But of background. A number of years ago, to a thunderous “duh”, the WHO found that our subsidies to farmers were distorting trade markets and hurting farmers in other countries. The Obama Administration decided the best way to prevent a trade war with Brazil was not to cut cotton subsidies in this country but to subsidize Brazilian farmers too. It seems that Congress has figured out that this is monumentally stupid.

The higher limit on farm subsidies is also good and Obama really can’t oppose it since he called for the exact same thing. To be honest, I’d prefer not to have such hard cutoffs. The big agri-businesses will probably find ways around them anyway. I’d prefer to massively shrink the Department of Agriculture, eliminate all of the subsidy/price-support programs and replace them with a single program that helps struggling farmers on a case-by-case basis in times of drought or market glut. Such a program would be much closer to an insurance program than an outright subsidy and eliminate a huge number of ongoing trade disputes.

First ethanol, now subsidies. The Republicans are showing a little bit of spine when it comes to farm interests. No a lot, but a vertebra or two. At this rate, they might be able to stand up to the senior lobby within a few decades.