Business & Economy
Safeguarding Bailout Dollar$ PDF Print E-mail
News Releases - Business & Economy
Written by Grassley Press   
Monday, 10 May 2010 14:03

Q&A with Senator Chuck Grassley

Oversight of Government Bailout

Friday, May 7, 2010

Q: How exactly is the claim made that General Motors paid back a multi-billion dollar taxpayer-supported government bailout loan “in full, with interest, ahead of schedule, because more customers are buying vehicles.”

A: Here’s what’s happened and, unfortunately, the reality doesn’t match the rhetoric.  As part of the government bailout of the automakers, the taxpayers had loaned GM around $20 billion by May 2009.  After GM declared bankruptcy in June, the Treasury Department loaned GM another $30 billion.  Then, to help GM emerge from bankruptcy, the Treasury Department struck a deal with GM that contained three components -- a $7 billion loan, $2 billion in preferred stock and 61 percent of GM's common stock -- in exchange for the original $50 billion in loans.  The deal translated into the taxpayers paying roughly $41 billion for the GM common stock.  Today, when GM says it paid its loan "in full," it’s talking only about the newer $7 billion loan, not the original $50 billion in taxpayer loans.  And, the repayment money came from a $17 billion escrow account that was created with the $41 billion in tax dollars used to buy GM common stock.  The escrow was for expenses, and GM needed permission from the Treasury Department to use the money.  The way that GM repaid the newer $7 billion loan was with the TARP money in that escrow account, not earnings.

The taxpayer bailout of GM still stands at around $40 billion.  Taxpayers won’t get back that money unless GM’s stock price goes up enough to repay the $40 billion.  Will that happen?  No one knows, but the nonpartisan Congressional Budget Office estimated in March that, in the end, taxpayers will lose around $30 billion on GM.

Another question is why the Treasury Department allowed GM to repay the $7 billion, seven-percent loan out of escrow and gave permission to take the final $6.6 billion out of escrow free and clear, but did not require that a $2.5 billion, nine-percent loan that GM owes to the union health plan be repaid?  You’d think the higher interest rate loan would be paid first.  And, with $6.6 billion left over in the escrow, GM could have paid both loans.  When I asked the Treasury Secretary during a Senate hearing, he didn’t have a good answer.

Q: What can be done about it?

A: I hope one lesson that’s been learned by the Treasury Department is to tell it like it is.  Overall, the effort to collect the bailout funds is speculative at best.  So far, since coming out of bankruptcy, GM has lost billions.  Beyond that, the way the agreement was set up with the Treasury Department, GM now has access to the remaining $6.6 billion in the escrow account without any strings attached.  GM said publicly that it didn’t need the escrow money.  If that’s the case, then the extra $6.6 billion should be returned to the taxpayers right now.  The most important lesson from all of this is that it doesn’t make sense for the federal government to own private businesses.

 
Grassley Receives Small Business Group’s Rare Award for Leadership, Efforts to Support Small Businesses PDF Print E-mail
News Releases - Business & Economy
Written by Grassley Press   
Monday, 10 May 2010 13:38
 

WASHINGTON -- Sen. Chuck Grassley of Iowa just received the Small Business Council of America’s Special Congressional Appreciation Award, which has been given only a handful of times over the last 26 years.  Grassley received the award for his “outstanding leadership and efforts on behalf of small businesses in the country,” according to the organization.

“I’m grateful to receive this award,” Grassley said.  “It’s a no-brainer to work to strengthen small businesses.  They create 70 percent of jobs.  Their innovation and services are felt every day. Economic recovery and success depend on the ability of small businesses to preserve and create employment opportunities.”

As ranking member or chairman of the Committee on Finance over the last 10 years, Grassley has been in a position to oversee tax and health care policy with an eye toward small business growth and preservation. The Small Business Council of America describes itself as a national nonprofit organization that represents more than 20,000 small businesses in the retail, manufacturing, and service industries on federal tax, health care, and employee benefit matters.

The group said it singled out Grassley for special recognition for his dedication to small businesses, his understanding of the health care and estate tax challenges facing such businesses, and especially his efforts to correct the disproportionate penalties placed on small businesses under a tax shelter crackdown meant to capture large corporations.

For months last year, through the end of the congressional session, Grassley protested the IRS’ placement of liens on small businesses that unknowingly invested in prohibited tax shelters. Some of these businesses were assessed tax penalties as high as $300,000 per year but received a tax benefit for as little as $15,000 from the transaction.  Grassley, joined by colleagues, fought to persuade the IRS to provide temporary relief to small businesses facing these penalties until Congress could enact bipartisan, bicameral legislation to fix the penalty structure. Last December, Grassley announced he would hold up all Treasury nominees until the IRS agreed to suspend its enforcement actions.  The IRS agreed to suspend collection enforcement action, and legislation making a permanent fix is advancing through Congress.

Grassley acted out of concern that the Treasury Department gave favorable tax treatment to government bailout participants, including Citigroup, while placing liens on small businesses contrary to congressional intent.

Similarly, the $800 billion stimulus bill was enacted hurriedly in February 2009 with less than one-half of one percent of the bill as tax relief for small businesses.  Grassley protested the lack of consideration for small business.  Last year, he introduced S. 1381, the Small Business Tax Relief Act of 2009.  “This legislation contains a number of provisions that will leave more money in the hands of small businesses so that they can hire more workers, continue to pay the salaries of their current employees, and make additional investments in their business,” Grassley said.

Several provisions in Grassley’s bill are under consideration for inclusion in a small business tax relief bill under development in the Senate.  The National Federation of Independent Business strongly supports the Grassley bill, writing, “To get the small business economy moving again, small businesses need the tools and incentives to expand and grow their business.  S. 1381 provides the kinds of tools and incentives that small businesses need.” 

In addition to his legislative efforts, Grassley has worked and continues to work to educate Congress and the public about the impact of various policy proposals on small businesses.  For example, the President and Democrats in Congress have proposed increasing the top two marginal tax rates from 33 and 35 percent to 36 and 39.6 percent, respectively; increasing the tax rates on capital gains and dividends to 20 percent; fully reinstating the personal exemption phase-out, known as PEP, for those making over $200,000; and fully reinstating the limitation on itemized deductions, which is known as Pease, for those making over $200,000.

Proponents say those increases would hit only “wealthy” individuals and only a small percentage of small businesses.  Grassley has explained in numerous speeches on the Senate floor and elsewhere that according to the Joint Committee on Taxation, 47 percent of all flow-through business income would be subject to the tax rate hikes.  This hits small businesses especially hard, because most small businesses are flow-through entities, which are S corporations, partnerships, limited liability companies and sole proprietorships. Grassley frequently uses data from the Joint Committee on Taxation and the Congressional Budget Office, the nonpartisan, official scorekeepers, to underpin his analysis. 

Similarly, during the health care reform debate, Grassley highlighted the cost of various proposals on small businesses, both in terms of their ability to provide health care to their employees and the regulatory burden imposed on them by the new health care regime.

“Just this week, the Treasury Department said hiring by small and mid-size businesses remains stagnant even though large firms have seen an uptick in employment over the last six months,” Grassley said.  “If we don’t look out for small businesses, we’ll be shooting ourselves in the foot and letting down the scores of people who work hard and deserve secure employment.”

The Small Business Council of America said it gave the award to Grassley this year “in appreciation and recognition of ongoing, outspoken, and effective legislative efforts on behalf of Small Business in connection with federal tax matters as well as sustained and consistent support of America’s private enterprise system.”

 
Harkin Welcomes Largest Job Growth in Four Years; Says Government Action is Spurring Growth PDF Print E-mail
News Releases - Business & Economy
Written by Sen. Tom Harkin   
Monday, 10 May 2010 13:37

WASHINGTON, D.C. – Senator Tom Harkin (D-IA) today issued the following statement on news that the economy had added 290,000 jobs in April, the largest job growth in four years.  Harkin is Chairman of the Senate Health, Education, Labor and Pensions Committee and the Labor Appropriations Subcommittee.

“Today’s employment report is welcome news across all sectors of our economy – not only is our economy adding jobs in manufacturing, construction and health care, but Americans are starting to feel more confident in this economic growth.  In recent months we saw real signs of improvement, but with this best month of progress, Americans should start to feel that we are on more solid economic ground.

“This growth is due largely to actions taken by the Federal government.  The Recovery Act continues to send much-needed dollars to states, without which we would have seen an even deeper recession.   Unfortunately, there are still dangers ahead for those still looking for work, so additional efforts to move the country forward are needed. 

“In particular, Congress must pass an extension of unemployment insurance through the end of the year so that families can access this critical safety net.  Unfortunately, Republicans have exploited every opportunity to delay and obstruct this important legislation.  In addition, we must take immediate action to prevent job losses among our nation’s educators – to protect the quality of education – and we need to pass additional job-creating legislation to assure that the economy is on solid footing.  I intend to continue to advocate for those efforts in this Congress."

 
Senate Republican Leader Paul McKinley to Speak on Iowa’s Business Climate PDF Print E-mail
News Releases - Business & Economy
Written by Sarah Mesick   
Monday, 10 May 2010 13:32
Senator David Hartsuch and Senate Republican Leader Paul McKinley will be putting on a forum entitled “Transforming Iowa's Business Climate”.  The event will be held on Thursday the 13th at 5:30pm at Frank's Pizza in Bettendorf, near 53rd and 18th Streets. Senator Paul McKinley as a small-business owner from Chariton, Iowa, who has faced first-hand the challenges posed by Iowa's exploding bureaucracy.  Since his election to lead the Republican Senate Caucus in 2009, he is focused on growing Iowa businesses rather than growing government.  Senators Hartsuch and McKinley will share the Republican vision for business growth in Iowa.  Senator David Hartsuch has a 100% perfect voting record as scored by the National Federation of Independent Business and has been a champion for small-business owners in Iowa.  During this past session, Senator Hartsuch promoted legislation in order to ensure that more government contracts were awarded to Iowa owned businesses.  The event will be held on Thursday, May 13 at 5:30 PM it is open to the public.  For additional information call Iowans for Hartsuch at 563-823-8442.

 
TAG Communications Announces Name Change PDF Print E-mail
News Releases - Business & Economy
Written by Susan Weber   
Monday, 10 May 2010 13:24

Davenport, IA – The Ad Group today announced that the company has changed its name to TAG Communications, Inc.

The change was made in response to the company’s growth in recent years, both in terms of the range of services offered and the geographic regions of clients served.

Mike Vondran, President and CEO, states that the new name doesn’t mark a dramatic change in direction for the company, but rather an acknowledgement that client needs and expectations have grown. “Our industry has gone through significant changes in recent years,” he notes. “The rise of fact-based marketing, increased understanding of brand dynamics and, of course, the e-media revolution; all demand a wider range of expertise. These changes call for a greater understanding of our clients’ overall business as well as a new set of tools. The name change reflects the steps we’ve taken to meet the resulting needs.”

In the past year, the company has added a level of senior management with broad experience, both in the region and with the range of industries served. A new healthcare marketing division was formed, both to acknowledge The Ad Group’s longstanding service to the healthcare industry and to address growing industry needs. New media management tools have been added and, more recently, the addition of an in-house Web Services department that incorporates social media and addresses the demand for integrated e-media in the marketing mix.

Vondran stresses that current clients figured heavily in the improvements made. “I’m proud to say that a number of clients have been with us since our founding in 1990,” he says. “You don’t keep a client relationship for 20 years by staying in one place. Our primary mission is to help them reach their goals and these changes are critical to staying true TAG Communications, Inc. is a full service marketing communications company headquartered in Davenport, Iowa.

Founded in 1990, the company serves consumer and business-to-business clients in local and regional markets nationwide. TAG also provides specialized marketing expertise through its TAG Healthcare, TAG Legal, TAG Yellow Pages, and TAG Automotive divisions.

 
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