September 9, 2010

Dick Leinenkugel's guide to industrial bonds

WisOpines former candidate for U.S. Senate Dick Leinenkugel:
Industrial Revenue Bonds (IRBs) have wrongfully been targeted by U.S. Senator Russ Feingold as a "government loan" or a subsidy as part of an effort to attack his opponent, Oshkosh businessman Ron Johnson.
Mr. Leinenkugel then proceeds to describe the benefits which accrue to various parties through the effective administration of IRBs. Did anybody dispute that any of those benefits exist? No, they did not.

However, three pertinent facts remain unaddressed and therefore not denied by Mr. Leinenkugel et al's otherwise helpful commentary:

1) An industrial revenue bond is a government loan in the clear sense that it is a loan facilitated and administered through a cooperative undertaking of federal, State, and local government authorities.

2) An industrial revenue bond confers a subsidy on the loan recipient in the clear sense that the said recipient secures an interest rate of up to 2-1/2 percentage points below market — thanks to the aforementioned three-tier governmental cooperative effort.*

3) Ron Johnson says he wants the government to "leave [him] alone."

The latter is the crucial determinant for "attack" purposes. So where is the "wrongfulness" on the part of Feingold? Nowhere to be found.

* Had there existed a fourth tier of government** then perhaps Ron Johnson would have cheerfully helped himself to that one as well.

** Not counting Communist China.

1 comment:

Jud Lounsbury said...

The biggest thing is that the lender is not required to pay any taxes on the interest profits from the loans. This tax credit amounted to a tax expenditure of nearly a half million dollars in tax payer revenue.