Monday, August 20, 2012
Live By The Tax Credit, Die By The Tax Credit
Clipper Windpower is laying off at least 75 people in Cedar Rapids, says the CR Gazette.
Notice how the article doesn't wholly blame the layoffs on the sale of the company from United Technologies to Platinum Equity, but also interjects the possibility that the inability to get tax credits extended in Congress might be a factor.
Dave Franzman wouldn't want to point out that United Technologies sold Clipper in order to raise money to try to buy Goodrich Corp. New owners always know where they might cut out duplicate or unnecessary employees. But it's much easier to blame Congress or, because of all the ads Obama has been running in Iowa, Mitt Romney, who doesn't want to extend the tax credits. That's what the media really wants to do, blame Mitt Romney. See, a private equity firm bought Clipper, a private equity firm just like Bain! And they laid people off! That's what the crack smokers on the left will say.
Even if it was true about the tax credits expiring, the media never points out the obvious: When you live by the tax credit, you also die by the tax credit.
When your business model is almost entirely based on government tax credits and government mandates, just like ethanol, there's no guarantee that things won't drastically change. Especially when the country is trillions in debt thanks to stupid government spending on things like these tax credits.
This is crony capitalism at play here. Nobody wants to admit it. The whole thing is built like a house of cards. I fully expect to see Clipper close in the future. Especially if the tax credits aren't renewed and regulations are changed. Maybe we can put these people back to work by building coal-fired power plants.