How Congress Will Steal the Recovery

Forbes ^ | 6/24/2009 | Janet Novack and Brian Wingfield

[bruinbirdman]

That rebound you are counting on in corporate profits? Washington is going to tax, mandate and regulate it away.

The economy got stimulated. That was Act I. in Act II it is going to be smothered.

Tech companies won big when the money was being dished out, with $37 billion of the February stimulus set aside for health information technology, smart electric grid and broadband investments. They'll also be a prime beneficiary if Congress adopts President Barack Obama's bid to make the research and experimentation tax credit permanent at a cost of $74 billion over a decade.

But at the Technology CEO Council, Executive Director Bruce Mehlman says his "number one, two and three" priority these days is to block a Treasury proposal to wring $210 billion more in taxes over the next decade from multinationals' offshore profits. "We found the Obama Administration a great partner on infrastructure and research and we hope the distraction of populist tax policies can be shelved so we can help enable a long-term recovery," says Mehlman, whose members include the honchos of IBM, Intel, Dell, HP and Motorola.

When Washington was putting trillions in bailouts and stimulus on Uncle Sam's credit card, many business leaders applauded (or at least stuck out their hands for the cash). Now, with economy seemingly back from the brink, cheering has stopped and the defensive game is on. Someone, after all, must pay for all that emergency deficit spending; for the $46 trillion (net present value) of Medicare and Social Security benefits already promised but not funded under current law; for renewing some of the expiring Bush tax cuts and containing the growth of the dreaded alternative minimum tax. Moreover, someone must pay for the Democrats' expensive shopping list: covering 46 million Americans without health insurance;

[blueplum]

William R. Berkley, chairman of the domestic-based insurers' group and the insurance company that bears his name, notes that while the Bush Administration opposed all tax hikes, his group hopes the Obama Treasury will support a tax on offshore insurance operations.

nice little gem there