The Obama Watch

An Obsession With Corporate Jets

Our president was against taxing them before he was for it.

By 6.30.11

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Who knew that straw men could fly jets?

To justify his destructive economic policies over the past two years, President Obama has set fields full of straw men aflame. Not surprisingly, the economy continues to struggle. Burning political props, it turns out, doesn't create jobs. Alas, the president has not noticed.

During his press conference yesterday, the president presented his newest straw man: the tax-escaping corporate jet owner. The tax-escaping corporate jet owner is such a bad person that President Obama mentioned him six times during his press conference. He portrayed these people as "millionaires and billionaires" whose big tax breaks stand in the way of Washington adequately funding college scholarships and child safety programs.

"I've said to some of the Republican leaders, 'You go talk to your constituents -- the Republican constituents -- and ask them," Obama said, "are they willing to compromise their kids' safety so that some corporate jet owner continues to get a tax break? And I'm pretty sure what the answer would be."

But how are corporate jets preventing Washington from keeping children safe?

Politics, of course. A few years ago, we had a president who wanted to pass some tax breaks in the name of stimulating the economy. He thought it would be a great idea to let corporations depreciate the cost of their company jets more quickly. Allowing a faster depreciation would help the companies as well as aircraft manufacturers, who were hurting for business. That president's name was Barack Obama.

In 2009, as part of the stimulus, Obama supported accelerated depreciation for many corporate assets, including jet aircraft. The Associated Press reported in 2009 that the accelerated depreciation for corporate jets was first used after 9/11 and, according to an industry study, increased sales by 43 percent. It was widely viewed two years ago, including by the administration, as a proven way to help the economy by stimulating purchases of American-made jets.

For a president who boasts constantly of all the taxes he has cut, it seems odd that Obama would advocate not just undoing one of his own stimulus-based tax changes, but would single it out as an unfair advantage for the super-rich. It seems odd until one realizes that this is President Obama we are talking about. This is the same man who campaigned in 2008 against a federal health insurance mandate, only to embrace the idea almost immediately after taking office. This is the man who promised that one of his first official acts as president would be to close the prison at Guantanamo Bay. More than two years into his presidency, it is still open.

These were not just campaign promises broken. They were telling signs of how this politician operates. Obama did not believe a word of what he said about the impracticality of Hillary Clinton's individual mandate. He simply deployed the argument he thought most effective against it. Likewise, Gitmo. If he really believed that the prison at Guantanamo Bay was a betrayal of America's core values, it would be closed by now. He is the commander in chief. It is a military prison. He could close it. But he never meant what he said. It was a straw man to use against President Bush.

And so are the evil corporate executives in their three-piece suits filling the cabins of their corporate jets with smoke from cigars they light from the corners of flaming $100 bills. They are not preventing Congress from funding child safety programs. Their tax advantage, which the president supported only two years ago, amounts to roughly $3 billion over 10 years. The federal debt rises by $3.9 billion a day. This is chump change by Washington standards. And the president knows it.

But that doesn't mean it is economically meaningless. In 1991, a 10 percent luxury tax on yachts took effect. This is how the Baltimore Sun reported on the effects of the tax just two years later:

The luxury tax was meant to soak the blue-blazer crowd when it went into effect in 1991. Instead, it slammed into the boating industry with the force of a northeaster, leaving the scattered debris of decreased sales and lost jobs.

Before the tax went into effect, there were 600,000 people employed in the marine industry nationwide. The recession cost 100,000 jobs, and the luxury tax resulted in the loss of another 25,000, the National Marine Manufacturers Association estimates. Boat sales nationally dropped 42 percent during the period, from $17 billion in 1989 to $10 billion in 1992.

While industry officials note that most of that downfall can be blamed on the nagging recession, they say the luxury tax helped make a bad situation worse.

Many businesses failed.

Throughout Maryland, as many as 300 of the state's estimated 1,500 marine-related businesses went under, leading to hundreds of layoffs, said David Morrow, president of the Marine Trades Association of Maryland. Mr. Morrow, an insurance agent, has seen his boat-related business drop about 20 percent.

The accelerated depreciation for corporate jets is not exactly the same as a luxury, but it provides tax relief that has reportedly produced significant sales for U.S. aircraft manufacturers. Obama wants to end it during this sputtering economy, just as the luxury tax on yachts hit the boat-building industry during a recession. The results are predictable: reduced sales and some job losses.

But Obama doesn't care. He has a straw man to burn.

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About the Author

Andrew Cline is editorial page editor of the New Hampshire Union Leader. You can follow him on Twitter at @Drewhampshire.