The popular joke about Tesla founder and CEO Elon Musk is that every time his company reports another quarterly operational loss, he makes another high-profile speech about creating a human colony on Mars. After last week, Musk may need to consider making a series of such speeches.
Not only did Tesla report another quarterly loss last week, it reported its biggest single-quarter loss since starting business in 2009. Its Q3 2017 loss of $619 million almost doubled its previous record quarterly loss, which came in Q2 2017. That second-quarter loss barely exceeded the company’s Q1 loss of $330 million.
As if to heap insult onto injury, just a couple of days after Musk had to acknowledge his company’s worst financial quarter, the Republican-dominated House of Representatives unveiled its proposed tax overhaul for both individual and corporate taxpayers. While the GOP plan would lower the corporate tax rate on corporate profits to 20%, from its current 35%, that is hardly relevant to Tesla, which has never reported an annual profit in its history and in fact has only twice reported a quarterly profit.
Making matters even worse, not just for Tesla but for all other manufacturers of electric vehicles in the U.S., the GOP tax plan would repeal the existing $7,500 tax credit available to purchasers of these cars. This credit, along with similar credit and rebate programs available in the various states, has enabled EVs to be at least somewhat price competitive with gasoline and diesel cars. Were the credit to go away, it is very likely that sales of EVs would plummet, a reality that no amount of speeches or press releases about Mars could hope to offset.
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Today’s Campaign Update
(Because The Campaign Never Ends)
- Well, you know it’s a slow news day in Donald Trump’s America when the biggest story is the introduction by Republicans congress of their long-awaited tax reform bill. The bill has been ready for at least six months, but true to their goal of not getting a damn thing done during this calendar year, the GOP congressional leadership waited until the end of September to introduce it.
- This late introduction date – for which there really is no justification at all – naturally produced grumbling among some members of the conservative Freedom Caucus about the “aggressive time frame” left in the year to get such a massive reform of the IRS tax code done. So, the stage is already set for the December press conference of Paul Ryan and Mitch McConnell telling everyone that they just ran out of time this year, but don’t worry, they’ll promise to come back in 2018 and really, truly get the thing done. Yeah, sure, just like Obamacare, right?
- Through a contraction of the various tax rates and a doubling of the standard deduction, everyone gets a bit of a tax break in this plan, except for those making more than $400,000 per year, who get stuck with an actual tax surcharge. Naturally, Democrats rushed to the microphones and Twitter and Facebook to squeal that the plan is…wait for it…wait for it…A TAX CUT FOR THE WEALTHY! I swear I don’t make this stuff up.
- Of course, in Democrat “logic”, such as it exists, this is true, since the Democrats consider anyone who makes more than about $100,000 per year to be “wealthy”. Given that the goal of the plan is to get more money into the hands of those in the lower and middle class, people making between $100,000 and $400,00 do get a tax cut under the plan. Thus, the whole “tax cut for the wealthy” rhetoric from the party of demagoguery.
- The plan would also lower the tax rate for – gasp! – evil corporations in the hope of stimulating the economy. Man, the Democrats haven’t even gotten started demonizing that aspect of the proposal. Nevermind that the U.S. has by far the highest corporate tax rate of any developed country, costing our country millions of potential jobs that now simply go overseas, lowering tax rates for evil corporations presents Fauxcahontas and Chuck Schumer and Bernie Sanders with prime demagoguery opportunities, and that is not something they will meekly pass up.
- So, it’s going to be a long fall and winter filled with hyper-partisan rancor. There is nothing progressives hate more than a healthy, growing economy. I’m not kidding. If you think otherwise, you don’t understand progressives.
- There can be no doubt the GOP proposal would indeed stimulate economic growth in a very big way. The key stimulus-producing provision is one that would allow businesses of all kinds to deduct most capital costs during the tax year in which they are incurred. Currently, such costs must be recovered by depreciating them over 5 to 30 years, depending on the asset that is being depreciated.
- President Trump has often talked about wanting to pass his own economic stimulus package. Well, there is really no need for a separate stimulus bill if congress were to pass this one. The ability to deduct capital costs would be a stimulus plan in and of itself, and unlike the Obama stimulus, which was basically wasted on expanding government employment and wasteful programs, it would stimulate real infrastructure expansion, and create millions of real, private sector jobs.
- So of course the Democrats hate it. They hate anything that would grow the private sector, especially at a time when the government sector is being systematically reduced by a Republican administration.
- But the dirty little secret is that the establishment Republicans really don’t want to pass this bill, either, which is why they’ve waited so late to introduce it. The positive side is that the President does want it, and he won’t be shy about publicly pounding on Democrats and Republicans who work to kill it.
- Just as we have seen President Trump reveal the Democrats and their progressive voters to be perfectly fine with NFL players disrespecting the national anthem and American flag this week, in the coming weeks we will see him speak very frankly about the real reasons why the Democrats and recalcitrant Republican swamp creatures don’t want to pass a meaningful tax bill.
- It will be a target-rich environment for verbal kill shots, and we all know how the President loves that.
Just another day in Donald Trump’s America.
That is all.
Today’s Campaign Update
(Because The Campaign Never Ends)
- Well, the news media covered for him as long as they could, but the news finally came out yesterday that Senator John McCain’s “surgery for a blood clot above his eye” that would only have him absent from the Senate for a week turns out to actually be an initial surgery for a very aggressive form of cancerous brain tumor called Glioblastoma. While we will no doubt continue to see “optimistic” reports from doctors about the Senator’s condition, the truth is that this is a very, very grave situation. I won’t pretend to be a fan of Senator McCain – I’ve often mocked him as The Senator From The News Media, and found his behavior while George W. Bush and Donald Trump were serving as Presidents to be inexcusable. But many consider McCain to be a national hero, and few human beings have fought and survived against the brutality that he has suffered during his life. I wouldn’t wish his current battle on my worst enemy. Godspeed.
- Let’s talk about congressional Republicans. A year ago today, Republicans in congress were possibly the single most-detested part of the ruling class in Washington, DC. They had, as a group, made more false and failed promises to voters over the previous seven years than almost any such collective group of politicians in American history. They were headed at that point for a thrashing at the voting booths, with “experts” and polls indicating the GOP would lose its Senate majority and could possibly lose the House as well, if Hillary Clinton defeated Donald Trump in a landslide in the presidential contest.
- But a funny thing happened on the way to electoral disaster: Donald Trump ran what was certainly an unconventional compaign, but one that was also a rousing success. The media-promoted and projected Clinton landslide became a crushing defeat for her, and it also bailed the GOP congress out, allowing the Party to retain control of both houses of congress.
- Suddenly, congressional Republicans were back. Contrary to the prevailing “wisdom” among DC “experts”, it wasn’t the GOP that was falling apart and doomed to ultimate destruction, it was the Democrats. And it wasn’t just in Washington: the results of the 2016 elections gave the GOP control of 2/3rds of the nation’s governorships, 2/3rds of the nation’s legislative chambers, and the Party was about to cement a narrow, 5/4 conservative majority on the U.S. Supreme Court with the confirmation of Justice Gorsuch.
- Even better, the election results presented congressional Republicans with a golden opportunity to redeem themselves, to repair their stained reputations by finally, at long last, keeping their collective word to repeal and replace Obamacare. They had an opportunity to cement their majorities and build on them in the upcoming 2018 mid-terms if they could also pass a strong tax reform bill, and demonstrate to the American voters that the GOP could indeed be an effective governing party.
- And that, of course, is where it has all fallen apart. Since January, under the utterly ineffective leadership of Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, the congressional GOP has done nothing to repair its image, little to keep its promises, nothing to prove to the American people that it deserves to be the majority party in the national legislative body.
- Worse, the GOP congress has proven that its repeated votes to repeal Obamacare while Barack Obama presented a certain veto were nothing more than cynical political theater, and meant nothing at all. It is now obvious that liberal senators like Lisa Murkowski and Susan Collins have no desire to do anything about the Obamacare disaster at all, and that Mitch McConnell has no ability or real desire to exert control over his senate caucus on this issue.
- If you want proof of that latter contention, realize that McConnell, if he really wanted to get to a majority vote on Obamacare, could be threatening Murkowski with the loss of her chairmanship of the Senate Energy Committee or Collins with the loss of her coveted chairmanship of the Senate Homeland Security Committee. Nancy Pelosi and Chuck Schumer have no qualms about resorting to such measures to ensure their troops march in lockstep when they need votes. By refusing to do so, McConnell proves that he is simply not serious about the Obamacare issue.
- To this point, the GOP congress has looked like an old Keystone Cops movie, with members running in all directions, showing no discipline, having no leadership, resolving no issues of import. If this continues, then Republicans will go into the 2018 midterms once again sporting the status as the most hated subset of the DC ruling class.
- And this time, they won’t have Donald Trump to bail them out.
- Having said all of that, I still believe that the Senate Rs will somehow get to 50 votes on a flat repeal of Obamacare with a 2-year window before it recesses in mid-August. I believe this because they have almost all voted to do this in the past, when a veto was ensured, and it is in their political best interest to repeat that vote now that a repeal would be signed. If they can’t even do that, then those members who refuse to repeat that repeal vote had better start looking for something to do in their post-senate careers.
Just another day in disastrous Republican congress America.
That is all.