The President's Loophole Lie

Public Record: That jet-tax loophole derided by the president is one he himself proposed as part of the stimulus approved by a Democratic Congress. Does the left teleprompter know what the right teleprompter is saying?

Demagoguery was redefined at Wednesday's news conference, when President Obama mentioned corporate jets and their owners no fewer than six times as an example of how the rich should pay more taxes, lest necessary things such as food safety face a budget ax.

"I think it's only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break that no one else enjoys," the president stated to an oblivious White House press corps. The "NBC Nightly News" dutifully repeated the charge twice in its coverage. For media obsessed with gaffes by GOP candidates, real and imagined, the hypocrisy is mind-boggling.

As Rob Bluey of the Heritage Foundation points out, the so-called loophole — the incentive — first used to help plane-makers recover from the 2001 terror attacks, was included as part of the president's own stimulus package, designed to save or create jobs in the aircraft manufacturing industry.

Bluey notes that U.S. companies such as Cessna and Gulfstream have facilities that help build these corporate jets in 15 states. The tax incentive allows depreciation over five years for business jets as opposed to the seven for commercial aircraft. It was included in the stimulus as a means to spur economic activity by encouraging purchases of large manufactured goods.

As in oil and other industries, this depreciation allowance is designed to encourage investment and production in industries where the U.S. needs to compete in an increasingly competitive and troubled global economy. In so doing, it creates jobs for Joe Sixpack. Somebody has to build those planes.

Bloomberg reports that changing the provision as the president wishes would add a meager $3 billion to the Treasury over a decade and generate a mere 0.075% of the $4 trillion in deficit-reduction that Obama claims to be seeking. It might actually increase the deficit by hurting a key industry.

Pete Bunce, president of the Washington-based General Aviation Manufacturers Association, recalls that Obama was just at an Alcoa Inc. plant in Bettendorf, Iowa, on June 28 emphasizing the importance of the company's products to airplane manufacturers. Now, Bunce says, "He's going after a segment of the aircraft industry that uses Alcoa's products. We're just scratching our heads."