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The problem of hidden money and a hung Congress
A View From The Edge
“There’s an awful lot of cash stored under an awful lot of mattresses,” said Sean O’Keefe, the chairman and CEO of EADS (Airbus) North America.
When the economy takes a dive, companies can either contract or invest. Mostly, for the past two years, they’ve done neither with any speed. They’re waiting. For what? A clear signal that they can get what they want. In short, they’re holding this Administration to ransom and in turn the American people too. Amongst the thousands of examples, let’s list a few:
“Give us cash and we’ll invest and save jobs,” was the message from Chrysler and General Motors. They got the cash from Congress; they are making record profits again. Ford’s demand was to have the DoT approve their engine design (against the oil industry’s lobbying) and they’d invest. Their new engines are 30% more efficient than their competitors (and use less gas) but most are not made in America.
In the aviation world, plane orders are up, new designs are being rushed to market and yet there are major problems facing the nation (and world): How can we keep track of all these flights? How can we fit more planes onto existing runways, in rush hour? How can we save fuel costs to be able to make more profit?
The answer has been on the drawing board and in testing for 15 years. It is nicknamed NextGen and it allows for new methods of air traffic management and safety. So why wasn’t it put into effect earlier? The airlines withheld cash, the plane manufacturers withheld cash, the airport authorities withheld cash and so the government could not afford to finance it alone.
But in the recent FAA authorization bill, a way to allow companies to write-off their integration and buying the new systems was lobbied for and won. In short, you, the taxpayer, will allow them massive tax deductions so they can put more planes into the same airspace and make more profit. FedEx president and CEO David Bronscek said, “There’s now [finally] enough momentum and urgency and enough people get it. I think this movement is hard to stop.” Well, sure, David. How’s that tax handout looking?
Yes, this new FAA system is good for the economy over all (that’s the lobbyists’ position) but just why weren’t the airlines and airports willing to self-finance? But why should they with a hung Congress? Wait it out, put on the pressure and see if you can get something for almost nothing.
In the defense industry, major companies are worried that this hung Congress will achieve nothing, so they are not investing much in new research and development, laying off technicians and engineers... while they wait to see what will happen and what leverage they can exert. “Give us a tax-free holiday and we’ll build that new missile guidance system – if not we can out wait you - until you pony up your money.”
As Sean O’Keefe said, there’s an awful lot of money waiting for something in D.C. to change. Meanwhile, a hung Congress keeps Americans off the production lines and fills the “mattresses” on Wall Street with play money. Next time you check out the stock market, see how much money some of these corporations have in liquid cash: about $2 trillion that the Wall Street Journal knows of.
That is some mattress.
Peter Riva, a former resident of Amenia Union, now lives in New Mexico.