|President Obama holds up the American Jobs Act 2011|
When the president introduced the American Jobs Act with a baroque speech filled with passages of hope and change to the public and a joint session of Congress the bill arrived with the usual ceremonial fanfare that comes along with the president or any government official claiming to have solutions for America’s problems. The ongoing problem for this administration is the American economy and the saving grace presented to the public this time is the American Jobs Act of 2011. The administration peddled payroll tax cuts, investment in infrastructure buying American goods, offsets to close corporate tax loopholes that ask the wealthiest Americans to pay their fair share. At first look the Jobs Act appears to make amends with liberals and progressive Dems and looked like a bill that could make some Republicans happy. As with any bill further reading reveals what the Jobs Act really is a titivated version of the stimulus bill full of legislative illogicalities.
Buy American – Use of American Iron, Steel, and Manufactured Goods
Did the memo finally reach the White House that blue collar workers and unions are losing millions of manufacturing jobs overseas? Is the tide turning for the American worker? Unfortunately, the answer is no.
SEC. 4. BUY AMERICAN -- USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS
“None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.” Except if inclusion of iron, steel, and manufactured goods produced in the United States will increase the cost of the overall project by more than twenty-five percent. Also this section does not apply to countries that have treaties with the United States or obligations under international agreements. In total this includes roughly fifty countries as exempted from the requirements of the buy American provisions, where they are covered under a variety of treaties. Those treaties include the World Trade Organization Government Procurement Agreement, various Free Trade agreements including the North American Free Trade Agreement (NAFTA), and the United States-European Communities Exchange of Letters. The countries include Canada, Mexico, most of Europe, Japan, Hong Kong, Singapore, and Israel.
SEC. 245. Establishment of AIFA- The American Infrastructure Financing Authority is established as a wholly owned Government corporation.
(b) General Authority of AIFA shall provide direct loans and loan guarantees to facilitate infrastructure projects that are both economically viable and of regional or national significance the board will consist of seven members appointed by the president by and with the advice and consent of the Senate, not more than 4 of whom shall be from the same political party.
Considering that amount of money in the Jobs Act that will go to infrastructure and the recent Solyndra scandal and what we now know about the administrations judgment and oversight of taxpayer funded projects AIFA could be another costly administration experiment with billions of taxpayer dollars. Placing so much money in the hands of seven people with a quorum of only five members required to approve funding might not be something the president should be asking for right now. Just this week Republicans on the House Energy and Commerce Committee released the findings of a seven-month investigation into U.S. support for Fremont, California-based Solyndra. Two administration officials faced questions about White House support for the company and its goals for clean energy. The Washington Post released emails yesterday of two administration official pressuring OMB to secure the Solyandra deal in time for a Biden press event. The House Energy and Commerce Committee found the Department of Energy and the Office of Management and Budget “did not take adequate steps to protect taxpayer dollars,” according to the report.
Solyndra, promoted by the Obama administration as a successful example of the use of stimulus money to spur development of a clean-energy industry, filed for bankruptcy on Sept. 6, and two days later its offices were raided by the Federal Bureau of Investigation.
This provision that establishes AIFA as the finance management body of infrastructure projects in the Jobs Act effectively takes the purse strings away from Congress and puts them in the hands of seven people appointed by the president. The only requirements for a person to be considered for an appointment to the AIFA board are; be a citizen of the United States, have significant demonstrated expertise in the management and administration of a financial institution relevant to the operation of AIFA or a public financial agency or authority or the financing, development, or operation of infrastructure projects or analyzing the economic benefits of infrastructure investment.
Title IV Offsets
The title IV offsets at first look give the president and democrats plenty of talking points to take back to voters in next year’s campaign cycle however the increased target and trigger clause for the Super Committee on Deficit Reduction eliminates all of Title IV with an amendment to the Budget Control Act that specifies that if the Joint Committee exceeds the $1.2 trillion in deficit reduction necessary to avoid sequestration by the cost of the jobs creation provisions, then the offsets listed below in Title IV of the Jobs bill will not take effect.
Title IV offsets includes tax deductions and loopholes for wealthy individuals or corporations. The Twenty-eight Percent Limitation on Certain Deductions and Exclusions which would limit the tax value of otherwise allowable deductions and exclusions to twenty-eight percent. Tax Carried Interest in Investment Partnerships as Ordinary Income, this section would “tax as ordinary income, and make subject to self-employment tax, a service partner’s share of the income of an investment partnership attributable to a carried interest because such income is derived from the performance of services.” Closing Loopholes for Corporate Jet Depreciation. This section closes the loophole where corporate jets can be depreciated over the same number of years as other aircraft, like commercial airlines thereby allowing individuals or corporations to use RTD’s or rapid depreciation tax loopholes under the same timeframe as commercial airlines rather than by actual use requirements like mileage, damage, repair cost etc. Repeal Oil Subsidies, a portion of this section would repeal the exception under existing law for oil and gas working interests from rules that limit deductions and credits from passive trade or business activities. Passive activities are defined to include trade or business activities in which the taxpayer does not “materially participate.” Dual Capacity Taxpayers, this provision is to mitigate double taxation of income by the United States and a foreign country. For example “When a payment is made to a foreign country in exchange for a specific economic benefit, there is no double taxation.” None of the title IV offsets will be enacted until after next year’s election and none will take effect if the Joint Committee exceeds the $1.2 trillion in deficit reduction.