No too long back, during the recent Great Recession, we learned that big businesses had downsized during the tough recession times and was holding on to large money surpluses but, despite that money in the bank, were not hiring. Their reasoning for not hiring was explained simplistically; there was not enough demand to increase production and so hire more workers. No one questions the strategy, no one objected to it. It just made sense under the economic circumstances of the time.
Since then the economy has slowly improved, Americans are spending more, unemployment is down, and things are getting better or, for some, not getting worse. Apparently, though, supporters of HR 4457 didn’t get the memo despite those very clear facts that there is simply a lack of demand to significantly increase business growth. It should be noted that HR 4457 addresses itself to small businesses, those business generating less than $10 million yearly in revenues.
At a time when spending cuts is the mantra unless we otherwise leave an insurmountable debt to our children and grandchildren we would hope for some wisdom when determining if a bill will reduce the deficit or increase it if we really need to. We look at the Senate action on veteran’s needs, an off-budget bill providing long overdue improvements to the VA medical system we see the need. Not so the case of HR 4457. The bill would make permanent the expensing of up to $500,000 for small business equipment rather than allowing it to return to the pre-recession rate of $25,000. The bill is touted as one that will allow small businesses to upgrade and then hire more employees.
But it will not do that; let’s remember that the bill is essentially a tax break which we have learned time and time again, is spending in a Federal budget. Coupled with that insight we look to how the Joint Committee on Taxation calculated the bill:
“Enacting H.R. 4457 would result in revenue losses in each year beginning in 2014. The Joint Committee on Taxation concluded that, “Increased investment can be expected to result in an increase in the amount of economic growth and in the long run growth potential of the economy. Thus, we expect that the bill is likely to result in a small increase in overall economic growth. However, the increase in allowed expensing under the bill, from $25,000 in 2014 to $500,000, and the size of firms it applies to (firms using this provision cannot invest more than $2,500,000 in 2014) limit the expected impact of the incentive. JCT estimates that the amount of investment that could potentially take advantage of the provision is less than 10 percent of projected baseline investment. The availability of this incentive to a small subset of firms also poses the possibility that it could distort efficient investment decisions by favoring investment by certain types of firms over other types of firms…. Finally, in the short-run, the net reduction in tax receipts resulting from the bill could provide for a small increase in overall demand, thus resulting in some economic growth. In the longer term, the resulting increase in deficits would result in higher interest rates, reducing the positive investment incentive effects from the expensing…. Overall, we estimate that the effects of the bill on economic activity are as small relative to the size of the economy as to be incalculable within the context of a model of the aggregate economy.” It is estimated that the provision will affect over ten percent of small business tax returns.”##
What Our Country Needs From the Press
By Lee H. Hamilton
“One of the basic truths about our representative democracy is that it does not work without solid information.”
There is a place for entertainment that plays off the news, but there is no substitute for dogged reporting and the traditional values of accuracy, truth and fairness.
These days, the scandal involving long wait times at VA hospitals can feel like some made-in-Washington spectacle generated by politicians looking for headlines. But it isn’t. It had its genesis in a late-April report on CNN that as many as 40 veterans may have died waiting for appointments at VA hospitals in Phoenix.
This investigative piece was notable for two reasons. It’s been a while since a news story so quickly provoked such a storm of public indignation that a cabinet secretary — deservedly or not — had no choice but to resign. And it’s a reminder of just how important old-fashioned shoe-leather reporting remains to our system of government, especially when it uncovers official misdoing.
One of the basic truths about our representative democracy is that it does not work without solid information. Public officials, both elected and appointed, need to know what’s happening in the communities they serve, and the people who live in those communities need to know what the government they elect and fund is doing in their name.
A lot of forces try to distort that flow of information, or even block it altogether — from officials who aren’t living up to our expectations to politicians counting on public ignorance to lobbyists and advocates hoping to sway public opinion. This is why the press — and by this I mean print, broadcast and online journalists — is so crucial to our country’s health. It is, or ought to be, a steady, dispassionate, truth-seeking, skeptical and tough-minded force for public understanding.
In an ideal world, our media would focus on the serious side of the news. It would explore and highlight the substance of issues, not simply the politics of issues. It would detail the facts underlying a story, rather than dwelling on the personalities at play in the story. There is a place for entertainment that plays off the news — as people like Jon Stewart and Stephen Colbert have amply demonstrated — but in their search for an audience, news executives shouldn’t let it become a substitute for dogged reporting and the traditional values of accuracy, truth and fairness.
These are not easy times for journalists, however. I don’t pretend to understand all the forces that are reshaping what we see, hear and read in the news media, and I know that news executives are struggling with a host of formidable economic and social challenges. Yet if the line between news and entertainment gets blurred, if loud opinion replaces accurate reporting, and if journalists take the easy road of covering politics and the horse race rather than the core of policy-making — substance, consensus-building, and the painstaking search for remedy — then representative democracy is in trouble.
New organizations and websites are trying to make up some of the ground that’s been lost in the years of news-industry turmoil: investigative outfits like ProPublica and the new wave of “explanatory” and data-driven sites like Vox and 538.com. But their very presence suggests that they see a void to be filled. These days, only a handful of news organizations in the country have the resources — both human and financial — to spend weeks or months chasing an investigation. Given the cuts that have stripped newsrooms of the expertise they once contained, I sometimes wonder whether the kind of reporting that brought us Watergate and uncovered the Enron scandal could still occur.
Because make no mistake: we need maximum oversight. You and I need it if we’re to be certain that misdeeds cannot hide in the darker corners of government. And Congress needs it if it’s to carry out one of its core responsibilities: overseeing the operations of government. All of us rely on the press to check abuses of power, see that laws are properly implemented, hold officials accountable, and tell those officials when their policies and operations are failing or going astray. Without a strong independent press, those in power could simply tell us what they want us to know and we’d be none the wiser. And that is no state of affairs for a democracy.
Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.