Obama’s ‘Worker, Homeownership and Business Assistance Act of 2009’ Provides Tax Breaks Worth Billions to Big Business

Nowhere has the bailout funds been seen as useless than the billions thrown around by the Obama administration in the name of creating more jobs. Now that it has been exposed as either a hoax, or at minimum – incompetence, the ‘Worker, Homeownership and Business Assistance Act of 2009,’ which was recently signed into law by Obama, offers up to $33 billion in tax breaks to big business under the guise of creating more jobs. In the meantime, unemployment continues to soar while companies use funds and tax breaks for business purpose and not hiring.

This isn’t to say I’m not glad to see tax breaks, as any move toward eliminating the excess taxes in America is a good one.

How the new law works is large companies are allowed to offset losses from 2008-2009 against profits they made all the way back to 2004. The funds will come in the form of either relief or a corporate tax refund.

In the original version of the bill, what was called ‘look-back on losses’ was to be only offered to small businesses for the last two years. As stated, it now goes beyond small companies to large companies, and encompasses five years instead of two.

Those not allowed to participate are the government sponsored Freddie Mac and Fannie Mae, along with any company that has received funds from the Troubled Asset Relief Program (TARP).

What is particularly galling to many people is the ongoing rewarding of bad business behavior and practices by the government, which seems to discriminately pass it financial favors on to whatever industry it decides to; especially those who were a major part of the economic collapse in the first place.

This time around it’s the home builders who will benefit primarily from this windfall, and industry watchers say they’re flush with cash and have no need of the tax break.

“I AM surprised that home builders are getting hundreds of millions of dollars given that many have very strong balance sheets,” said Ivy Zelman, chief executive at Zelman & Associates, a research firm, quoted in the New York Times. “We question the public policy decision to gift home builders with capital that many will not use to create jobs, since they admit that job growth will be dependent not on capital, but on improving demand.”

The problem of all of this is the stated reasons for bailouts and tax breaks haven’t lined up with the realities, so money is still being thrown around in ways that the businesses are using for whatever purpose they want, rather then the purposes our lawmakers and the Obama administration assert.

For example, where is all the lending from banks which was the key reason given for bailing them out in order to free up the credit markets? Where are all the jobs from the outrageous bailouts of the auto industry in the U.S.? Obviously they’re not there and they won’t be for a long time.

As people that understand business note, it’s all about demand in an industry, and hiring isn’t going to happen if the demand isn’t there, as there’s no reason to do it.

This is going to be the same thing with the home building industry, which has no demand at this time, yet money through tax breaks is being thrown at it with that assertion attached to it. It’s not going to happen!

When the large home builders were asked about what they planned to do with their funds, not one of them talked about hiring any time soon, but rather were going to primarily use it for operations and buying up land in order to build new homes on sometime in the future. Who knows how long that will take. They first have to sell the properties they have sitting there before they start to build new ones.

I’m a free market capitalist who believes in very low taxation, but to give breaks to companies under the guise of creating new jobs is dishonest and disingenuous. All that’s happening is companies are being rewarded a huge windfall whether they ran their companies well or not. That just doesn’t make sense.

The other problem to me is if the government is going to hand out these tax breaks, every business sector and business should get one, not just those they choose to.

Governments don’t belong in business, as they don’t have a clue as to how they’re run and what makes them successful. To pick and choose who they want to aid and help is fascism, as it blurs the lines between business and government, with the government taking a hand in financing via tax breaks, when the banks won’t touch the businesses.