The $2.7 Billion Tax Break for Captain Morgan, and Other Lowlights From TARPy McStimulus

Step 1: Watch the government panic. Step 2: Be a rich company. Step 3: Profit!

Here's your daily must-read, for the masochists among you: "Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit." It's a grisly tale not of unintended consequences, but rather consequences that were perfectly intended by lawmakers who tucked various giveaways into the increasingly misnamed Troubled Assets Relief Program.

The hurried legislation adopted by a Congress voting under the threat of sudden global economic collapse led to hidden tax breaks for firms in dozens of industries. They included builders of Nascar auto-racing tracks, restaurant chains such as Burger King Holdings Inc., movie and television producers -- and London's Diageo. [...]

Congress inserted the tax benefits for companies other than banks in a fog of confusion and panic after the House of Representatives rejected the first attempt to fund the bank support effort urged by then President George W. Bush and Treasury Secretary Henry Paulson. [...]

That legislation included $20 billion in tax breaks for companies that produce energy from wind and other alternative sources as well as $1.6 billion in relief related to the tax treatment of canceled debt for Sprint Nextel Corp., the third- largest U.S. mobile-phone-service company, and other firms. [...]

The $2.7 billion Diageo tax break in the October bailout bill gives the most financial aid to a non-U.S. company.

"I don't think that the taxpayers knew they were investing in Captain Morgan when the Congress was considering the first bailout bill," says Steve Ellis, vice president of Taxpayers for Common Sense, a Washington-based government watchdog group.

It's not just TARP, obviously. The stimulus bill was a corporate welfare love-in as well:

The legislation, which includes dozens of narrowly written provisions, created a new class of bailout beneficiaries.

One, championed by Michigan Representative Dave Camp, the top Republican on the tax-writing House Ways and Means Committee, and supported by [Senate Finance Committee Chairman Max] Baucus, is saving Nascar track builders $109 million in taxes this year by allowing more generous write-offs.

Other tax breaks backed by Baucus help restaurant franchises make renovations by shortening depreciation schedules. Another shaves $478 million during the next decade from tax bills to movie and television producers as a better way of encouraging them to shoot in the U.S.

Remember this, the next time some politician or editorial board talks of "the cost of doing nothing" (which will be today, tomorrow, and every day that Congress debates health care and climate change). This list above, multiplied a thousand times, is the routine and utterly predictable cost of doing something. Politically connected industries and companies will be given micro-targeted tax breaks and subsidies, while the rest of us shlubs will not only pay for them, we'll get an earful of sanctimony from the Washington Post, David Brooks, and even the Wall Street Journal editorial board, especially those who have the nerve to say "Hold on a sec."

Whole Bloomberg story here. Reason on the bailouts here.

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  • ||

    Congress inserted the tax benefits for companies other than banks in a fog of confusion and panic after the House of Representatives rejected the first attempt to fund the bank support effort



    Ah, so it's clearly the fault of those nasty House members who voted against TARP the first time, creating a fog of confusion and panic.

  • ||

    This situation in Honduras is quite complicated. It's been building for a while.

    The President wanted to violate the Constitution by setting up a referendum to grab more power and remove term limits. Congress voted against it. The electoral commission ruled against it. It went to the Honduran Supreme Court, which ruled against it. He ordered the army to conduct the referendum anyway, and they refused, so he sacked the army chiefs. Lots of officers resigned. The Supreme Court then reinstated the officers and ordered the arrest of President Zelaya.

    Naturally, this is all just called a coup.

  • ||

    Wow, some people just have all the luck!

    RT
    www.complete-privacy.tk

  • ||

    Other tax breaks backed by Baucus help restaurant franchises make renovations by shortening depreciation schedules.

    I have no problem whatsoever with shortening depreciation schedules. As long as they are available to everybody.

  • ||

    Remember this, the next time some politician or editorial board talks of "the cost of doing nothing" (which will be today, tomorrow, and every day that Congress debates health care and climate change).

    Next, you'll tell us the Congress shouldn't vote on Bills until they actually know what's in them.

  • ||

    As a shareholder of Diageo, I say: "This shouldn't happen, but if it must happen, at least I'm benefitting."

  • ||

    This "fog of confusion and panic" is eerily reminiscent of the state of Congress in passing the PATRIOT Act - not reading the earmarks that end up funding things like spying on Americans, or building new NASCAR race tracks.
    Is this really how government legislation works now? Congressmen can vote on something they are not entirely informed about, and doom us all to an endless supply of Capt Morgan and NASCAR race tracks? We need to start getting realistic, it seems to me - no more 15,000 page documents when a fraction of that will do the same legislative work.
    How is it, by the way, that these companies were able to jump on the bandwagon so quickly, when our own Congressmen couldn't find teams with enough time to read any of these bills thoroughly?

  • Xeones||

    Is this really how government legislation works now? Congressmen can vote on something they are not entirely informed about, and doom us all to an endless supply of Capt Morgan and NASCAR race tracks?

    Yes.

  • ||

    But, but, but...

    You're libertarians! You love corporations and hate taxes! Why are you complaining about this?

  • Rich||

    >> Is this really how government legislation works now? Congressmen can vote on something they are not entirely informed about ...

    > Yes.

    But, on a more positive note, they *do* try to make sure their consitutents are just as uninformed.

  • Naga Sadow||

    As a bartender, I heartily disapprove of Legate Damar's decision to invest in that company! Shame!

  • ||

    builders of Nascar auto-racing tracks

    WTF? There is a superabundance of NASCAR tracks, already.

  • Naga Sadow||

    P Brooks you clown! There is a plethora not a "superabundance"!

  • Joe456||

    Can someone explain the pictures attached to this post? Thanks.

  • ||

    Yeah. Who is that model and why did reason make that picture so small? Wow.

  • Paul||

    Fucking proposition 13...

  • ||

    : more than ample : excessive
    -Merriam Webster

    thwpppppt!

  • Paul||

    Naturally, this is all just called a coup.

    NPR's commentary, erh, I mean news story was interesting. They chided the new leader for saying "long live democracy" without any "sense of irony".

  • Naga Sadow||

    THWPPPPPT?

  • ||

    Anyone who's against Captain Morgan Rum and Nascar tracks hates America and wants the terrorists to win.

    It's so obvious to me, I can't imagine why the rest of you can't see it.

  • ||

    Naga-

    That's not an acronym, it's a (poor) representation of the sound made by sticking the tip of the tongue between one's lips and expelling air (viz, "the raspberry").

  • Naga Sadow||

    P Brooks,

    Meh. "Superabundance" is a real word?

  • ||

    "Superabundance" is a real word?

    It is as long as you keep clapping.

  • ||

    Anyone who's against Captain Morgan Rum and Nascar tracks hates America and wants the terrorists to win.

    That's me! Staunchly anti-American, and rabidly anti-NASCAR, since as long as I can recall.

    GO TERRORISTS! SENSELESS DESTRUCTION FOR SOME, TINY ANTI-AMERICAN FLAGS FOR THE REMAINDER!

  • Naga Sadow||

    Went over my soft and empty head, SugarFree.

    What now?

  • Naga Sadow||

    Bartram is an agent of the crown. The queen has her fingers in many soups!

  • LarryA||

    That legislation included $20 billion in tax breaks for companies that produce energy from wind

    Congress, OTOH, consumes vast amounts of energy to produce wind.

  • JB||

    I hope any Leftist scum who claims that Obama and the Dems don't cater to special interests gets tortured and dies screaming.

  • ||

    Naga, Heir

  • ||

    "Hang in there, Tinkerbell!"

  • Keynsian||

    It's plainly obvious that marginal income of wealthy people is wasted on granite countertops and SUV's. Much better that government taxes them so that NASCAR can build more tracks. Come on you Stone Age supply-siders, you are stupid and uneducated. Get with the program. And start watching NASCAR!

  • Mike||

    "The hurried legislation adopted by a Congress voting under the threat of sudden global economic collapse led to hidden tax breaks for...Burger King Holdings Inc."

    Yay! Finally something that benefits me! I don't have to worry about not getting my weekly Whopper.

  • ||

    This is the sort of thing I think about whenever I hear someone say "we need Big Government to serve as a check on Big Business".

    Pfah, anybody with eyes can see that Big Government writes checks to Big Business.

  • mark||

    Balanced Budget Amendment. BBA. Just three letters.

  • DeMann||

    Bread and Circuses, people. Dems are the enemy, and Republicans are just Dems, writ slower. There is a fundamental shift in the American Spirit coming and, with luck and perseverance, a fundamental change in American philosophy. I just can't identify with any current political parties, so I have a new one, the Patriot party. What's best for America should be decided by Her people, not the pretenders in D.C.

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