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.

It's good ta be da captain

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:

Guide to corporate welfare effectiveness

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.