Senator Max Baucus got $26 billion for private equity companies -- the vultures that buy companies, load them up with debt, collect exorbitant fees, and then try to sell them to the unsuspecting public.
Senator Robert Byrd is getting $4.6 billion for clean coal. "Clean, carbon-neutral coal can be a 'green' energy," Byrd said.
What the hell other crap is out there?
Drucker, Jesse and Peter Lattman. 2009. "Senate Provision Would Let Buyout Firms Defer Taxes on Canceled Debt." Wall Street Journal (28 January).
"Senate Finance Committee Chairman Max Baucus included language in the tax portion of the proposed stimulus package that would allow companies to defer income taxes triggered when they repurchase their own troubled debt at a discount. That would benefit a wide array of companies and industries, but would be a particular windfall to private-equity firms, which acquire companies using piles of debt in hopes of producing large profits for their investors. Amid the economic downturn, many of these deals have run into trouble and the firms are seeking to refinance them."
"The Joint Committee on Taxation estimates the proposal would cost the government roughly $26 billion over the next three years."
"A study by Boston Consulting Group found that, of 328 private-equity portfolio companies, roughly 60% had debt trading at levels considered "distressed"."
"To stave off default, private-equity executives have made reduction of their companies' debt a top priority. The companies are asking investors to swap their bonds for ones with lower values and longer maturities and also seeking to settle debt with cash. However, reducing debt levels can result in a big tax bill. For example, if a company issues $1 billion in debt, but later runs into trouble and exchanges it for new debt worth $600 million -- or buys it back for $600 million -- the remaining $400 million in cash is taxable income."
Well, I think research funding for clean coal is a good thing. In the US we have lots of coal and lots of coal-fired power plants. If they could be retrofitted, this might be practical, although we are not quite there in terms of the technology yet. But it is not some joke or mirage. Solar for electricity still looks pretty far off, especially in terms of mass use. Wind is more cost effective, but there are environmental problems with it, especially if you want to do it on a mass scale. There is no more capacity for hydro, and we all know nuclear has some major problems, even as it is very clean in many respects. So, clean coal does not look all that bad. Not a boondoggle at all, or at least not definitely so, despite the role of that old porker Robert Byrd.
Mostly right, but deferring tax on canceled debt is pretty much necessary.
Loan balance reductions are considered income, even though the borrow doesn't actually receive any cash (he received it earlier, when he borrowed the money). So you owe tax that year on the amount of the reduction.
This is a problem. Obviously, if you had any cash, your lender would never have given the reduction. So anyone who gets a loan reduction will, almost by definition, be unable to pay the tax on the reduction.
This same exemption is being granted to homeowners who renegotiate mortgages.
Do people deserve this helping hand, when it was their own fault for borrowing too much. No, they don't deserve it. But it's not like they are enjoying a direct benefit from it. The borrowed money is already gone. They blew it all on a bad investment. Punishing them now will just trigger more failures, without helping anyone.
The "clean" part is the joke. Coal will be needed in the immediate future, but clean coal is more of a mirage than solar electricity.
Regarding William Mitchell's comment, not much was said about this tax problem hitting homeowners. Why then come to the rescue for private equity firms? Help the homeowners; let the vultures expire.
Vultures don't "expire" unless they're shot dead. So that's a bit extreme. Maybe the only reasonable approach to the over all problem of this financial "crisis," which is beginning to resemble the last scenes of Le Grand Buffet, would be to reorganize a Jacobin Club near to Wall Street.
I think you are jumping the gun on all aspects of this. I suggest googling "solar panels toxic" and you will find all kinds of stuff about cadmium-telluride panels and various other unpleasant things that get used in some other panels. Not a problem as long as this remains the dinky operation it is now, but the minute you talk about trying to replace the main sources of electricity power with this, you get a very large problem.
Wind will be increasing more than solar, but the best wind locations are not where the populations are, and where the populations are sometimes have problems, such as the tendency to kill bats on eastern mountain ridges, not to mention the efforts by some people to block the offshore ones. It will increase, but again, an effort to really make it the main power source for electricity is going to run into these problems in a very large way.
OTOH, while with current tech, it is probably 40 to 80% more expensive than current tech, carbon capture and sequestration is being studied in a bunch of experimental plants. The issue is funding the research. It is not some fantasy, and when I did my googling a lot of the naysayers said some really stupid things, although this still has problems and is not there. But, retrofitting existing facilities may well be a lot cheaper than building whole new complexes, especially if long new transmission lines will be needed.
A final argument on coal is that it is dangerous to mine. Yes, but tell the coal miners that you are taking away their jobs for their own good, and keep in mind that many of those mines are in areas that are traditionally quite poor. There is a reason why Robert C. Byrd has long been one of the last of the "brown Democrats," although CCS would save his image if it eventually works. I do not see money spent on this research as such a boondoggle at all.
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