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Stateside with Sharon Harris
The Recovery and Reinvestment Act recently signed into US law has Sharon Harris seething...
Timing is everything. Fortunately, my deadline followed the passage of the $787 billion Recovery and Reinvestment Act of 2009. Originally written by the House of Representatives, Democrat Speaker Nancy Pelosi of California steered this “stimulus package”. It was revised in the US Senate, and then both groups voted to pass it.
Ringing alarm bells on its urgency, it seemed like a frantic race to the finish line late February 13. One moronic reporter claimed speed was crucial despite no legislator having read the final 1100-page document – they got it only hours before the vote – or completely knowing what was in it. Funny thing about those members of Congress… why should we expect them to actually be informed?
It became so politically charged that President Barack Obama sent an official plane to return one senator to Washington after his mother’s funeral. Obama signed the Act into law on February 17.
Everyone realizes the American economy desperately needs help. Like millions, I advocate a truly productive long-term solution. However, I fear this legislation may help in the short term, but indebt the US even more by spending billions on non-stimulating projects. After trying to dissect many elements of this package, I lament my lack of full support.
The American Congress comprises 100 senators and 435 representatives. Regardless of population and size, each state has two senators, serving six-year terms. Based solely on population, representatives reflect a specified district within their home state for two years, so re-election is always on their minds.
Granted, there are thousands of needed planned expenditures, including infrastructure funding for crumbling roads and bridges, extended unemployment benefits, healthcare assistance and increased help with food stamps. Also, it provides some small tax breaks – an average family will gain an extra $65 per month.
The downside is that this construction and renovation will create finite work projects rather than build career opportunities through business growth. After completing the bridge or highway, the work ends.
Small businesses, the backbone of America, get little relief. Think of how many smaller private companies supply the gaming industry, growing jobs for people across the country. It is a staggering number.
However, I fear this legislation spends too much on projects with minimal long term economic rewards. For example, sex trumps slots. Among Pelosi and company’s ridiculous provisions are hundreds of millions for contraception, sexually transmitted disease (STD) research and funding a shelter for prostitutes. How about $600 million for new cars for government workers? Or hundreds of millions for all-terrain vehicle tracks, smoking cessation programs, doorbells, landscaping in Washington, upgrades to digital television and other non-emergency items.
I must also mention Senator Harry Reid, the Democratic Majority Leader from Nevada. He advocated $8 billion for high-speed train construction. He wants money for a rail line to cross hundreds of miles of desert between California’s Disneyland and Las Vegas. Can’t you imagine the crowds waiting to get on board rather than drive or take the hour flight?
However, the final bill did contain “gaming carve-out language”, which specifically excludes financial aid for numerous leisure industries – from casinos to stadia. So, money awarded to projects retrofitting government buildings or climate research is okay. But offering economic aid to companies that employ hundreds of thousands of people, and house thousands of small retail and dining outlets, plus contribute billions in taxes, is no good.
Officially, the American Gaming Association (AGA) favors two generic pro-business provisions that offer relief from Cancellation of Debt Income (CODI) rules. First, when a firm restructures debt, the price differential is considered income. However, income taxes will now be deferred for five years. Businesses will then spread their tax liabilities over another five years. Also, companies may deduct up to half the cost of equipment purchases or upgrades within the first year, rather than over several years.
I support the need for action but I worry about this specific “solution”, which creates enormous debt and was written with such speed.
Compare it to doctors recommending immediate emergency surgery, without exploring less radical interim steps that could resolve the problems in stages. Red flags go up for me when things happen too quickly.
Metaphorically, we are all being wheeled in to the operating room. Let’s hope these government surgeons know their field, and cannot later be accused of malpractice.
More next month on this economic tool’s wide-ranging effects on gaming.
