Congress fails to understand the manufacturing sector

I have come to believe that politicians think we work for them. I'm not sure where they got the crazy notion that they know what is best for us, but we cannot let Congress dictate our future. We need to take the bull by the horns and make our demands known.

Furthermore, we must hold these politicians accountable for their actions and hold this legislative group accountable for the recently passed stimulus package - the effects of which will be felt for years to come.

Congress will say that they are doing everything possible to help the manufacturing sector. However, ask yourself what they have done to help the aerospace sector sustain its growth.

Unlike the automotive sector looking for additional bailout funds, the aerospace industry remains strong with sales projected to reach $214.3 billion in 2009, up from an estimate of $204.4 billion in 2008.

With the approved "must" stimulus package, Congress fails to realize that aerospace is a capital intensive industry. To remain competitive on a global basis, the U.S. aerospace industry must continually invest in new technologies and processes. Therefore, if aerospace suppliers decide to put the brakes on capital spending during this economic down period, they will likely see their taxable income climb as well as their tax bill.

According to a new study by the Georgia Tech Financial Analysis Lab, a slowdown in capital spending will eat away at any deferred tax benefit that might have offset taxable income. Once capital expenditure spending stops, deferred tax liabilities begin to come due, and the associated payment to the IRS causes cash flow pain. This will definitely place a currently healthy sector of our manufacturing base into a tailspin.

Charles Mulford, a Georgia Tech accounting professor and director of the Financial Analysis Lab, believes that the stimulus package needed a tax break so companies could've written off assets on a shorter depreciation schedule. This would have resulted in more tax write-offs up front, creating more deferred tax assets with which companies could offset their taxable income and increase cash flow.

We've been promised that every dollar in this stimulus bill will go to boost the economy and create jobs. Yet, more concerned with its pork, Congress failed to consider the importance of capital investment. In fact, the Speaker of the House seemed to be more concerned with defending the expansion of family planning services for Medicaid recipients than helping the manufacturing sector.

How delving out $87 million to expand family planning services will stimulate the economy and help create new jobs is far beyond me.

Instead of passing money out, Congress needs to enact policies that create incentives. Lowering the tax rate on businesses and legislating a shorter depreciation schedule would make a tremendous start to turning the current economic situation around.

We are only fooling ourselves if we believe the current stimulus package, now referred to as the American Recovery and Reinvestment Plan, is a gift. The money must come from somewhere, and it's a sure bet that it is not coming out of government surplus funds.

Please e-mail me with your thoughts and opinions on this, and on what the stimulus package should have included. Hopefully, you will keep out the pork. Wagyu steak, however, is acceptable.