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8/26/2010
The left just can’t stop hacking away at Johnson
The latest fodder for the lefty blogs – Johnson is “the recipient of government help.” Oh my gosh, NO!!! Tell me it isn’t so!!
WKOW out of Madison interviewed Johnson at his Oshkosh factory last week. Understandably, Johnson enjoyed talking about his job experience – trying to illustrate a strong worth ethic.
“In terms of what my background is, I have worked all my life," Johnson said. "From a young kid I shoveled snow, I mowed lawns, had a paper route, I caddied."
…. "I started working when I was 15 at Walgreens as a dishwasher, soda jerk, fry cook...."
But what’s the headline on the story? Did WKOW’s crack interview team celebrate youthful industriousness? No. Rather, the lead-in was Johnson’s company got government loan.
Well no, it didn’t. Per WKOW:
In the 1980s the company expanded through the help of a $2.5 million government bond issued by the city of Oshkosh - a bond that charged below-market interest rates.
…. the Johnson campaign sent a one-sentence response to our story, saying the sort of bond issued by Oshkosh is neither special treatment nor a government payment or subsidy.
Exactly. And of course, completely contradicted by the headline. Can’t these guys read?
Most likely, the “government bond” the story refers to was an Industrial Revenue Bond. They came through the Common Council for approval often in the years I was an Appleton Alderperson. It was difficult for me to understand why we were approving these loan instruments when we were told over and over that the City wasn’t taking any of the risk of the loan.
The Department of Commerce website is informative.
Even though IRBs are municipal bonds, they are not general obligations of the municipality. The company or business that will use the facilities provides the interest and principal payments on the loan. The local government is in partnership with the business, lending its name, but not its credit, to the bond issue.
IRBs are just one more funding opportunity for business expansion; they exist as a direct result of the federal tax code.
Similar to other municipal bonds, the interest earned on IRBs is exempt from federal income taxes. As a result, the bond buyer is willing to accept a lower rate of interest in exchange for tax-free income. Typically, interest rates on IRBs may be from 1.5 to 2.5 percentage points below corporate bonds. [Just as in all business lending, the] terms of the bond issue are negotiable and can be structured to meet the needs of the borrower.
The business must secure the lender. This has nothing to do with government largesse, except so far as the federal tax code is written to encourage such loans – and state departments of Commerce are encouraged to offer the loans as one more borrowing option for businesses that qualify.Any CFO would be remiss, misguided and less than competent were he/she not to consider IRBs.
The business must secure the buyer or the underwriter of the bond issue. The bonds are sold by the municipality, which in turn, lends the proceeds of the sale to the business. The funds come from private lenders or from public markets. Tight credit standards apply. The facilities and equipment are pledged as collateral for the loan. A letter of credit or bond insurance is often required. [Emphases are mine.]
Ok, you guys that want to baptize Johnson in the fire of political attacks, fine, do it. Force him to hone his B.S. skills for Wisconsin’s ever more discerning voters. But next time, at least get the headline right.
Jo Egelhoff, FoxPolitics.net
COMMENTS
Jo,
As a former alderman for the City of Wauupn myself, you are right to point out that Industrial Revenue Bonds are used quite often. It's one of MANY tools that local governments use to help local business grow. (Creates jobs, Obama and Feingold may want to look into that)
The left and the media (same thing I know) are trying to turn this campaign into a referendum on Ron Johnson. The left knows that if this race is a referendum on the incumbent, which it will eventually be, the incumbent, Feingold will lose.
Feingold is desperate, and out of new ideas. He looks beaten down, tired, scratching at anything. He has a lobbyist in a TV commercial, made up a fake name plate in another ad. He's distorting Johnson's believes on guns, and was bullying the media to go after Johnson at a recent Milwaukee luncheon.
He's no more Mr. Nice guy maverick, just sleazy hack getting down in the mud.
Now Wisconsin gets to see the Real Russ Feingold.
Rohn W. Bishop (Thu Aug 26 06:51:33 2010)
So Johnson's company got a $2.5 million loan in the 1980s. Feingold has been in the U.S. Senate since 1993. Wanna bet he's pretty close to the $2.5 million mark himself - money that was not a loan, that came right out of your pocket!
Duke (Thu Aug 26 08:31:50 2010)
That's easy Jo. They realize he's a winner and will take and spin everything they can. Typical liberal antics. Not sure you heard, but the PC had reused to print my last four letters. (On immigration, gays in the military, the disaster in Detroit and the Mosque in New York). The liberals just refuse to print or report anything factual or showing problems not being solved by those in control.
Strange though, as the Washington Times prints my stuff all the time.
John Hyland (Thu Aug 26 09:07:07 2010)
What do you mean, "no MORE Mr. Nice Guy maverick"? Feingold is an opportunist plain and simple. Any "maverick" votes of his were cast when the bills were going to pass anyway!
(He does not "listen" at his "sessions" and he never lets me know when they are, even though I've given his office my mailing address more than once. How about other known conservatives? Does he do that to you too?)
emily matthews (Thu Aug 26 10:52:20 2010)
Gosh, it would be wonderful if I got such a loan. At 2.5% a $2.5M would be $62,500 less cost a year. And where does that money come from?
>>>Similar to other municipal bonds, the interest earned on IRBs is exempt from federal income taxes. As a result, the bond buyer is willing to accept a lower rate of interest in exchange for tax-free income. <<<
From the taxpayers.
Dean Weichmann (Thu Aug 26 12:33:11 2010)
A couple points. If governments were not participating in the capital markets, perhaps loan rates would not be any higher than what RJ paid. Second, they ask RJ and his company to pay out enormous amounts of taxes, including monies that could go to their competitors, and NOT take advantage of a program that is generally available to anyone in similar situations? OK I will just stand still and fund my competition. Stupid.
Now if Johnson lobbied for a subsidy or break that was not generally available, that might be another story. And I hope once in office, Johnson will attack government interference, including subsidies and tax breaks, creating a level playing field. If not, I will work hard against his reelection.
I wonder why WKOW is not as diligent about pointing out the hypocrisy of Mr. Feingold (claims to be taxpayers' friend, despite a 23.5% NTU rating over last decade, and claims to be pro-gun, but 2 that I can think of.)
Or how about the Disaster of Obamacare (does nothing to decrease costs, much to increase, including taxes on medical devices, and add 100 new bureaucracies, many of which will interpose themselves between patient and doctor, perhaps denying care not approve by the gov't) and financial regulation, where proponents claims of its benefits are almost universally false.) No, that might require more work and greater ability to think.
Ken Van Doren (Thu Aug 26 12:59:01 2010)
Ken, could you explain what an NTU rating is? Google does not come up with anything that makes sense.
***A couple points. If governments were not participating in the capital markets, perhaps loan rates would not be any higher than what RJ paid.***
Ahhh, could you explain your reasoning here? The reason IBRs have a lower rate is because of the tax benefits.
*** Second, they ask RJ and his company to pay out enormous amounts of taxes, including monies that could go to their competitors, and NOT take advantage of a program that is generally available to anyone in similar situations?***
I actually do not fault RJ for using the program. I just wish I could use it too. Why does this program exist? But the headlne was accurate, so what? His response was fine too.
Dean Weichmann (Thu Aug 26 14:59:25 2010)
NTU= Nat'l taxpayers' union Maybe you missed the press release of Russ touting a high rating, saving taxpayers $42 Billion if legislation he WROTE were all passed. He forgot to mention his 10 yr average NTU rating was only 23.5%.
**A couple points. If governments were not participating in the capital markets, perhaps loan rates would not be any higher than what RJ paid.***
Ahhh, could you explain your reasoning here?
The Fedgov only borrowed $1.4 Trillion last year, on track for about $1.5 this yr.
>> The reason IBRs have a lower rate is because of the tax benefits.
Yes, but the fact that the government competes in the same bond markets undoubtedly tilts the price of bonds up. OR, in an inflationary economy, the REAL interest rate is reduced because the Federal Reserve counterfiets, creates out of thin air, the funds the fedgov "borrows." Either for itself, or to loan to the big banks so THEY can loan it to the fedgov. This is the reason why the FED and the big banks had record profits last yr, despite a puny economy. They got paid interest on money they created/counterfieted.
> Why does this program exist?
So that city fathers can look like pro- development heroes, so that they can wield some power by making guys like Johnson dance, so that they can provide a subsidy tot their buddies??? Just a few surmises. Keep government small, and loan rates will be lower, profits higher, no need for this subsidy.
Ken Van Doren (Fri Aug 27 20:05:18 2010)
OK....so by the NTU rating Feingold voted NO 23.5% of the time.
The NTU rating is useless, it tells us nothing about the value of a representative.
>>>government competes in the same bond markets undoubtedly tilts the price of bonds up. OR, interest rate is reduced because the Federal Reserve counterfiets, creates out of thin air, the funds<<<
OK...Ken so what is the problem?
It is illegal to create your own money, it ain't illegal for the government to do it.
Dean Weichmann (Sat Aug 28 12:36:31 2010)
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