A recent article in the Wall Street Journal entitled Plane Pain talks about the worsening situation in the BizJet market from the perspective of a busines owner who sells and refurbishes BizJets.  There are a few interesting quotes in the article the business owner, Bill Woods, talks about how sharply business has fallen as the attacks on jet owners increase.  The problems are almost entirely due to perception with customers who want aircraft having difficulty getting loans from banks who are afraid to lend to customers buying the hated jets.  Even in his speech last night the President attacked jet owners once again, quoting the President:.

“CEOs won't be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.”

Great job, Mr. President.  In a speech about fixing the economic woes in this country where you tell us that we need to save the “American” auto industry (re: Ford, Chrysler, and GM) because we can’t afford to lose those jobs, you turn around and demonize the American Bizjet industry.  I guess the millions of Aviation related jobs in this country don’t count as much as those auto jobs.

Best quote from the WSJ article came at the end of the piece.  It seems there are some people who are starting to feel buyers remorse about voting for Obama.  I wish some more of the people in my own aviation company would start to understand as well:

“Mr. Woods says he wishes the White House, which has criticized airplane use by TARP recipients, would stop demonizing his product. He and his wife voted for President Obama last fall but now he admits they wonder if they made a mistake.”

While the President didn’t entirely abandon the doomsday talk during the NTSOU Speech last night, he took on a much more positive outlook overall for the future of the country.  Of course, once you start to delve into the details of the speech you realize the lofty words are undercut by the very (sketchy) details.  In many ways it is a speech that contradicted itself throughout as the President attempted to talk up the American people, but continued to degrade many of the people and institutions that are going to be needed to weather this recession.  Overall it lacked any real details, but the populist rhetoric seemed to rally the faithful.  I talked with one of our Obama fanatics at work and asked him about what was in the speech.  He told me “well I couldn’t really tell you what is in it.  I just know it sounded good.”  When pressed on some details of the speech he simply clammed up and told me “listen to it yourself for details”.

That seemed to cover the essence of the speech to me.  Lots of “red meat”; anti-business, anti-wealth, and pro-government talk that sounded great to the millions in this country angry about the recession and looking for someone to blame.  However, it was short on any real fixes or details of what to do other than something with energy, health, and education.

Unfortunately the official Republican response by Gov. Bobby Jindal was less than spectacular.  Not that his message wasn’t decent, it was mainly just a “we’ll work with you, but we want you to know that we have differences” speech.  His response took a harder line against congressional Democrats than with the President.  The primary problem with the response was the Jindal sounded like he was explaining mathematics to kindergartners.  His tone of voice was condescending and overly paternalistic.  It was an auspicious start for someone who most likely will be a contender in the 2012 presidential elections.

That was my first impressions of the speech.  I thought he might be going in the right direction with this portion of the opening.  In fact, if the President had just stopped with this paragraph he would have “knocked it out of the park” so to speak.

“The weight of this crisis will not determine the destiny of this nation. The answers to our problems don't lie beyond our reach. They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth. Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more."

 

In advance of the speech tonight the markets continue to tumble.  There are some amazing quotes in this article from a multitude of individuals in the industry.  The following quotes are all pulled out of this one article:

Tomorrow, President Obama is going to stand up and give his "not-a-state-of-the-union" state of the union address in front of a joint session of congress and millions of Americans.  Some people are looking for him to have a "FDR" moment, recalling the "nothing to fear, but fear itself" quote from FDR EJ Dionne in his article says:

Just some miscellaneous thoughts on the news of the week:

 

First off is Rush Limbaugh.  As a young, fairly conservative man in the late 80s, there was no real voice in the news that expressed views similar to mine.  Then along came Rush.  Back during his early days he was a breath of fresh air on the radio.  Those who came to Rush during the Clinton years and think that opposition to Clinton was his claim to fame often forget how critical he was of George HW Bush and his centrist ways.  The environmental updates, the Gorbasm, the "we're here, we're feminist, we're in your face", and his humor were fun.  Towards the end of Clinton and the beginning of GW Bush, my enthusiasm for Rush started to wane.  My own views had slowly become more libertarian and the support for GW Bush and the social wing of the Republican party moved me away from him.  The final straw was the Terri Schiavo case.  I also place much of the blame for our current President upon Rush and many of the "conservative" talking heads who were willing to throw true conservative candidates under the bus, such as Mike Huckabee, when their own man, Mitt Romney, pulled out.  The vitriol that was thrown at Huckabee, led many of Rush's fans to stay out of the primaries and led to McCain's nomination.

However, Rush has started to revive himself.  He has recently written two editorials in response to goings on out of the Executive branch.  Both are well written pieces in response to movement from the administration and congress.  His latest about the Fairness Doctrine is a preliminary shot to stop this movement before it gets too much traction.  I know this has been an issue on talk radio, but highly exposed editorials in papers like the WSJ may bring the issue to many who are unaware of what is happening.

 

The second thing to catch my attention was the comment by Attorney General Eric Holder.  The core comment that has gotten all the attention was the statement about a "Nation of Cowards" for not talking about race.  His main point is summed up in the following quote:

 

With the signing of the American Recovery & Reinvestment act, President Obama has started the new phase of government intervention into our economy.  He followed it up today with a $50-$75 Billion dollar plan to further intervene in the housing market.  With companies “too large to fail”, like American automobile makers GM & Chrysler, coming to the government with their hands out and increasing talk of so-called limited nationalization of the banks, it appears that this is the new paradigm in Washington.  Like FDR’s “New Deal” and LBJ’s “Great Society” before it, this movement needs a name.  I know this isn’t original with me, but I think it fits.  I hereby dub this as the “Raw Deal”.  This over-reaching and destructive move to take as much control over the private American Economy as possible is going to harm American productivity, prosperity, and quality of life for generations to come.  Not surprisingly those who are tied closest to the finances and industry in this country have responded negatively.  The stock market continues to tumble, a process that has removed 40% of the market’s value since the Nov. 4^th election (correlation anyone?), banks continue to tighten lending standards, construction continues to fall, and savings continue to rise.  All signs of what people and businesses truly think about the economy and the Raw Deal. 

There are a few bright spots in the American Landscape.  Louisiana Gov. Bobby Jindal is wary of taking Federal “Bailout” money and states that if there are too many “strings” attached he could refuse his state’s share of the money.  Nine states are already in the process of passing resolutions to take back their constitutionally given rights, as laid out in the 9^th and 10^th amendments.  Another twenty are also in the process of working on similar resolutions.  The fair tax organization is working to increase the visibility of the Fair Tax and promote it to Americans as a viable way to counter the current recession.  Finally, other than the three “Benedicts” in the Senate, the Republican party is at least looking like they have realized that it was fiscal irresponsibility and unrestrained spending that cost them the past two elections are fighting back.

Let’s hope we that the American Public realizes that it is getting the wrong end of the Raw Deal and wakes up enough to counter this foolish movement before we experience another lost decade like America in the 30s or Japan in the 90s.

Entertaining post on the Nuze portion of Neal Boort'z website where he outlines some of the "Change" that President Obama has brought us.  Here is part of the post:

During the house committee meeting with the CEOs of the large banks, California Democrat Brad Sherman once again picked up the anti-business jet mantra that has become so popular on Capital Hill.  After throwing out the “gotcha” question asking which CEOs flew to Washington on their corporate jet.  He then admonished them for continuing to own, fly, and lease their jets.  Here is his telling quote:

“It is extremely expensive to operate these planes,” Sherman said. “You could sell them and generate capital for your company, and that capital could be used to pay back taxpayers immediately.”

It is awfully nice of Rep Sherman to lay out this wonderful business plan for these banks.  However, Rep Sherman obviously has his head up his ass.  I guess he doesn’t really understand what that money to operate a business jet is used for.  Just a few of the jobs that are involved in flying a business jet include; pilots, flight control, ground crew, fuel processor, accounting, and the numerous construction and manufacturing jobs that built the plane and the related facilities.  Several million jobs in this country are related to the aviation industry and this continual drumbeat of anti-Bizjet rhetoric does nothing but help to destroy that section of the economy.

The idiots on Capital Hill, like Rep Sherman, can’t quite wrap their head around the fact that jobs and revenue are created by these businesses using, buying, and maintaining the business tools they have….including bizjets.

 

…and these are the fools who think they can run our economy…

 

As a worker in the business aviation industry I have been appalled at the all-out attack on companies that use business jets to facilitate their company’s efficiency and work flow.  From the picture that has been painted in the media and from the political class you would think that the only reason to use business jets is for CEOs to fly around frivolously while sipping their cognac and being serviced by flight attendants who look like professional models.

This ignores the reality of what business jets are used for.  Everything from shuffling management and technical specialists to hotspots around the country to flying needed parts or goods to where they are needed most.  Less than 88% percent of business aviation is used for shuttling executive level employees around the country.

Meanwhile, the business aviation industry is taking huge hits.  Deferrals, cancellations, and sell offs of business jet fleets have risen in direct correlation with the vicious attacks on the industry by people like Barney Frank (“They have to stop buying airplanes,” the Massachusetts Democrat said, referring to the recent kerfuffle over Citigroup’s aborted purchase of a corporate jet. “Until they succeed in telling the average American [they are spending the money wisely], there’s no point in asking for it because they won’t get it. ... Don’t do stupid things!”) and President Obama (The White House contacted Citigroup on Monday to reiterate President Obama's position that such jets are not "the best use of money at this point", calling them "outrageous" spending for a company getting taxpayer dollars).  These are the same people who are worried about the automobile industry because of the loss of American jobs and they are attacking another manufacturing industry and have already cost it tens of thousands of jobs. 

The tightening credit markets were going to hurt the industry some, but much of this rush away from business aviation has to be laid at the feet of these powerful people attacking its’ use.  When companies like Cessna, who started the year with a $15B dollar backlog of jets, has to lay off almost 5000 (about 30% of its workforce) because of sudden pull-outs, not all of it has to do with troubles accessing credit.  When leasing and time-share companies like Net-Jets report business falling by almost half, it cannot all be because of tightening credit markets.  Another hit for the industry is coming in the new congress with the LASP (Large Aircraft Security Program), a proposal to institute TSA security rules on business aviation.  It will cost millions in useless and unneeded compliance costs for the business aviation industry.  The list of lay-offs, furloughs, and work week shortening in the industry is rising and finally the industry is responding.

Today Cessna announced its’ plan to fight back.  Their opening salvo is a series of ads in the Wall Street Journal.  The closing quote in the WSJ article sums up the problem and reality of the situation:

"We're all trying to battle misperception," said Ed Bolen, president and CEO of the National Business Aviation Association, which represents corporate-jet owners. "The vast majority of the time, these jets are flying offices, where people can conduct business and have confidential discussions that could never occur on a commercial jetliner," Mr. Bolen said.

Actually Cessna started to fight back in December with this editorial by CEO Jack Pelton, but it was lost in the screaming about the extravagance and excesses of CEOs.  Recently a number of other articles have started to appear from the NBAA (National Business Aviation Association), the New York Times, and Business Jet Traveler.

A few good quotes from the articles:

(New York Times): ”But consider this: The General Aviation Manufacturers Association estimates that more than one million people are employed manufacturing, maintaining, flying and managing business aircraft. In addition to keeping legions at work in top-paying jobs, business aircraft facilitate and expand commerce for their users and contribute $150 billion to the American economy annually.

With that in mind, it’s astounding to see members of Congress, the very people doling out hundreds of billions of taxpayer dollars to failed companies, disparaging and even actively trying to curtail this industry, which is already reeling from the economic and credit crises. The business jet is merely a tool — one that, employed correctly, could help those same struggling institutions soar again and start paying back the money owed, with interest.”

(BJT Online): “Without warning, the media suddenly became obsessed with the business jets that Ford’s Alan Mulally, General Motors’ Rick Wagoner and Chrysler’s Robert Nardelli had used to reach Washington. Soon after the airplane story began making the rounds, the House Financial Services Committee hearings descended into a textbook example of public relations gone awry, proving yet again that corporate images have almost everything to do with perception and often little to do with reality.”

It’s time to fight back against the powers that be in Washington who are so willing to spend our money and are perfectly willing to throw one crucial industry under the bus, while trying to prop up others that have dug themselves into deep holes.  Contact your congressmen and senators and let them know what you think of this attack on the Business Aviation industry.

Here is the text of a letter I wrote in response to the President’s editorial to the Washington Post.  I am sending it to several major newspapers and the local paper and a few online sites.  Even if it is never published I am posting here for all to see.

By now it is clear to everyone that President Obama is a man full of verbose and empty words. In his recent letter to the editor at the Washington Post he wrote an opinion piece that called for dramatic and swift action. The letter was long on rhetoric and short on facts. These words demanded a swift response and dramatic counterpoint. So looking at the President’s editorial point by point.

1) The President claims that "…it's clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression." While it is undeniable that we are currently in a financial downturn, it is nothing short of a fear inducing diatribe to claim that our current economy rivals the Great Depression. Current unemployment is about 7.2%, a level unseen since 1993 when it reached 7.3%. Current foreclosure rates are at about a 30 year high or levels not seen since the late 1970s. Current GDP is about 2.2% a rate not seen since 2002 when it went as low as .3%. Every measure of the economy shows that at worst we are in a downturn that rivals the recession of the late seventies and early eighties.

2) The President claims "What Americans expect from Washington is action that matches the urgency they feel in their daily lives -- action that's swift, bold and wise enough for us to climb out of this crisis." Polls are mixed about what Americans expect from Washington. The current stimulus package in congress is quickly losing support among the public. Polls also show that more Americans would prefer a package that includes more tax cuts and less spending. It is not clear what the American people want.

3) The President continues, "…if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse." Once again fear and loathing takes center stage. Most economists and the CBO agree that little of the money from this package will reach citizens or stimulate anything for years to come. The average post-WWII recession has lasted between 12 to 16 months, usually with little or no government action beyond loosening the money supply or cutting tax rates. Many economists, even those who support government action, believe the downturn will start to slack in the latter portions of this year. To claim that we will "not be able to reverse" this current downturn is once again meant to stir fear and has little basis in reality.

4) President Obama says about this stimulus bill, "…With it, we will create or save more than 3 million jobs over the next two years, provide immediate tax relief to 95 percent of American workers, ignite spending by businesses and consumers alike, and take steps to strengthen our country for years to come." If you read the text of the stimulus bill, most of the "jobs" that would be created are temporary or short-term construction or contracting related work spent on construction, repair, or redecoration of federal owned properties. There is very little in this bill that would create long-term jobs or careers. The so-called tax-relief consists mostly of small tax credits, like the $500 worker credit, the majority of which go to individuals with almost no income tax burden. This package includes no investment related incentives for business, such as capital gains or corporate tax reductions, that would actually "ignite spending" by businesses.

5) Continuing, "…it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education." These goals sound nice. However, these issues have little to do with stimulating the economy and are issues that should be addressed by complete debate and analysis of how to take care of the problems. They should not be rushed through congress as part of a bloated, patchwork spending bill.

6) The President strikes a tone in the next paragraph that is echoed throughout the rest of the editorial. Quoting from the editorial, "In recent days, there have been misguided criticisms of this plan…", "I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change.", finally "We can place good ideas ahead of old ideological battles, and a sense of purpose above the same narrow partisanship." I’m sorry Mr. President, but this country is a republic that is based on the idea that everyone should have representation in our government that has a voice in the decisions that are made. The idea of several sides of an issue debating and coming to an eventual consensus is part of what makes our government work. You were elected by less than a 10,000,000 vote margin of the popular vote. That margin represents less than 3% of the American population. While you did achieve victory, it is hubris to claim that the result was the voice of the "American people". Those representatives elected by the people who oppose of your policies have a duty to the people they represent to stand against your policies, even if you "reject" them.

7) The last portion of the editorial can be summed up with this paragraph, "They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We've seen the tragic consequences when our bridges crumble and our levees fail."

Take a close look at that list Mr. President; healthcare, energy, education, and physical infrastructure. The remarkable thing about those items is that they are all areas of the American economy that are heavily controlled or regulated by the government. Not a single one of those areas are part of this current financial crisis, which center around financial institutions. So beyond the absurd notion that spending in areas of the economy that are unrelated to the crisis is the path to recovery, you want the American public to believe that these areas where government is already failing need more government money and influence in order to recover?

One last point, Mr. President your final sentence states, "We can act boldly to turn crisis into opportunity and, together, write the next great chapter in our history and meet the test of our time." Bold action often does not equate to smart or effective action. Custer acted boldly before Little Big-Horn, Napoleon acted boldly before Waterloo, and Oedipus acted boldly in killing his father, none of those actions ended with the expected result. History is littered with those who took bold action with terrible results. Let the process work itself out and the needed debate over these actions take place. The result is more likely to achieve that bi-partisan support that you seek.

Randall Constantine, Average American Aircraft Worker

Speaking of the FairTax, I heard a comment from a caller to the Neal Boortz show on 02/04 that they should use the current tax troubles with President Obama’s nominees to create a parody commercial of the Geico Caveman commercials.  So I took up my pen and put out a quick script for one.  The text of the script is below.  Perhaps I will work on producing one over the next few days.  So without further ado here is my draft for a FairTax commercial:

 

The FairTax:  So Easy a Politician Can Do It

(A Commercial Proposal)

  Narration:

(On screen; graphics of tax forms in the background.)

The American tax code consists of over 13,000 pages of confusing laws & regulations.

Narration:

(On screen; headlines about Geithner floating about)

            There are so many laws that a financial genius missed one.

Play:  News clip of Geithner apologizing

Narration:

(On screen; headlines about Daschle)

            They are so confusing in fact that not even a man who wrote the tax code knew them all.

Play: news clip of Daschle apologizing.

Narration:

(On screen; Shots of paycheck focusing on taxes paid and shot of deduction list of 1040 form)

However, there is one proposal in congress that would eliminate our convoluted tax code and let you keep your entire paycheck.

Narration:

(On screen; picture of receipt with FairTax listed and crossed out 1040 forms)

It is called the FairTax, and it only taxes you on new goods and services at the point of sale.  No mess, no confusion.

Narration:

(On screen; Repeat of slogan with the FairTax logo)

            The FairTax, so simple a politician can do it.

Graphic:

 (At bottom of screen)

For more information go to FairTax.org.

 

There is a good article by Ken Hoagland, communications director of Fairtax.org, about the problems with our convoluted and highly manipulative tax system.  

I like the end of the article, it is simple and effectively lays out the issue and a solution.

“…a simple, transparent tax that is paid without exception by every consumer, including the poorest workers on one end of the spectrum and billionaires on the other, is far fairer than a system that invites manipulation by “insiders” who can afford a tax lawyer, tax lobbyists or a special relationship with a member of Congress.

Our convoluted and expensive federal tax system invites both deliberate cheating and innocent mistakes and has now snagged three top national leaders.

Worse, no economic recovery effort can be fully effective as long as we continue to tax what goes into the economy instead of what comes out of the economy.

As the nation’s economy teeters, it is past time for this public policy to change to actually favor the public and our nation’s economic health.“

Here is an interesting article written back in 2002.  It’s about the cell phone format wars and has some interesting and timely insights into the dangers of government centralization and the advantages of “friendly” competition.  

It’s a great parallel to the ongoing fight in congress today about whether or not “government control” is the better method for fixing our problems or whether of not “private competition” is the better way to go.  The article talks about the temporary chaos of the free market leading to more innovation and growth as opposed to the “safer” but more stagnant government policies that has led to a costly dead-end that is solely propped up by government intervention and not sound market policy.   

The danger of looking to the “old world” for inspiration is pretty well outlined in this article…It’s just too bad that so many people in this country don’t know what they are buying into and that the wisdom of the “central planners” in our government is only going to lead to more and deeper heartbreak and pain, not the comfort they truly desire.