A Fast Break from the News

The nuclear-armed nut cases who run North Korea have declared a state of war with their southern neighbors and are threatening missile strikes on America, the European Union’s economy is staggering under so much debt that it has resorted to the outright theft of a member country’s private bank accounts, and there’s plenty more bad economic news even closer to home. Still, the big story around these parts is basketball.
Those plucky underdogs of the Wichita State University Wheatshockers basketball squad have somehow advanced to “Final Four” of the National Collegiate Athletic Association’s annual championship tournament, and suddenly all that other stuff has been rendered at least momentarily unimportant. The team’s black-and-gold colors are on display all over town, that ferocious-looking shock of wheat that is the “WuShock” mascot seems to adorn every other shirt, and everywhere citizens are greeting one another with the plain-spoken battle cry of “Go Shocks.” All the local media have found little time for anything else, with even a good bloody crime or car wreck relegated to a few seconds after the first commercial, and the locally-produced ads for the car dealers and electronic stores are also featuring some sort of ‘Shocker reference.
It might seem slightly quaint and perhaps even a bit parochial to an outsider, but it doesn’t seem to have done any harm and has provided a rather pleasant diversion from reality. Wichita was very much in need of one, too, as the times have been hard and the mood glum lately.
Although the unemployment rate here is lower than the national average it’s still far too high to satisfy this hard-working city, and the political trends are even more worrisome than the economic data. The mainstays of the local economy are corporate aviation, agriculture, oil and gas, health care, and the United States Air Force, none of which seem to enjoy the favor of the current presidential administration or the “progressivism” it represents. Indeed, corporate jet owners have become the epitome of capitalist decadence and a favorite whipping boy of the administration, agriculture is being regulated right down to the last dust particle, oil and gas are to be punished so that “green energy” might flourish, with our hometown’s arena-sponsoring Koch Industries being the arch-villain of them all, there’s Obamacare to deal with all those doctors and nurses, and the defense budget seems to be the only part of those trillions of dollars of deficit spending that can be cut. Nor do gay marriage, gun control, subsidized contraception, or any of the other great leaps forward being offered have much appeal to this very traditionalist town.
It sometimes seem that the brave new world being created by the liberal elites will have very little use for a city such as Wichita, which heightens the usual insecurities of a middle-sized city in the middle of nowhere. Being a city that provides the world with some of the best darned airplanes in the world, an iconic campfire lantern, top-notch carnival rides, gas for the ride home, the literal bread on the table, and a base full of crack airmen who can re=fuel a bomber on its way to bomb the hell out of anyplace on the globe that needs bombing doesn’t get the much national recognition or respect, so we’ll gladly take it if the local basketball team is the lead story on SportsCenter. Basketball is another thing we do around here, with the same sense of pride felt in all the work that gets done. The driveways and park courts are full of basketball when the weather permits, and he Greater Wichita High School Athletic League, known around this hoops-crazed state as “The City League,” has produced decades of top-notch players and teams. The ‘Shockers are part of the city, too, with all the mechanics and barkeepers and small businessmen keeping the team’s schedule posted on the wall, whether they went to the school or not, and almost everyone feels obliged to root them on even if they went to snooty old KU with blue blood tradition. Over the years the team has been pretty good, too, with a few good tournament runs and unhappy periods of futility thrown in, but they haven’t been this far since the long-ago days of All-American Dave Stallworth, still a beloved figure in this town, so the city’s momentary giddiness should be forgiven.
Wichita knows basketball well enough to know that the ‘Shockers are a long-shot in the next game. They’ll face the University of Louisville, which has rolled through the tournament and earned its berth with a convincing win over perennial big-time college power Duke University, and the odds makers will give our boys little chance. Anything seems possible, though, and at the very worst the hometown heroes made it to the “Final Four.” That’s quite a accomplishment, and one can hope that the good feeling will last long enough to help out with the inevitable return to reality.

– Bud Norman

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That Shrinking Feeling

America’s economy made a brief appearance in the headlines Wednesday, jostling for space on the newscasts with illegal immigrants, the latest gun-grabbing frenzy, and some predictable anti-homosexual aspersions cast during the pre-Super Bowl hype. The news was that the economy shrank by a tenth of a percentage point in the last three months of the past year, which is bad, so the media will likely let the matter drop soon.
It’s the kind of news that demands some brief acknowledgement from even the most reluctant reporters, though, so most of the press organizations immediately began spelunking for some heartening information that might be hidden inside in the dark cavern of the Commerce Department’s grim report. The decline was a “surprise” according to the headline writers, who always seem surprised when anything bad happens in the age of Obama, and the lead stories were quick to mention that it all means the Fed will continue to keep the money-printers working overtime. Most reports were also happy to prominently feature the Democrats’ view that this was the “best-looking contraction in U.S. GDP you’ll ever see.
A fellow named Paul Ashworth, the chief economist for Capital Economics, was able to make that claim without giggling because the report indicated that most of the decline was attributable to cuts in the defense budget and a decline in inventories. Both of these are a “one-off,” Ashworth contends, and thus the economy should soon be roaring back to its previously sluggish pace. The appointment of Chuck Hagel as Secretary of Defense is just the latest indicator that we haven’t seen the last of cuts to the defense budget, the drops in inventory investments and exports can’t easily be explained by any temporary circumstances, and the phenomenal 85.2 percent increase in dividend income that kept the decline from being much worse is also a “one-off” caused by investors trying to get ahead of the coming economy-slowing tax hikes, but Ashworth and his many re-Tweeters can be forgiven their incurable optimism.
If you’re not convinced by such happy talk, the Democrats have a back-up argument that it’s all the Republicans’ fault. White House press secretary Jay Carney helpfully explained that investors were frightened by the appalling spectacle of Republicans in the House of Representatives balking at the president’s prudent plan of massive tax hikes and endless deficit spending during the recent “fiscal cliff” negotiations, and he even blamed the defense cuts on those notoriously anti-military Republicans. The reason the Republicans insist on such shenanigans, Carney further explained, is to make sure that “tax loopholes remain in place for corporate jet owners.”
Carney was not asked to explain why Obama’s never-ending stimulus is still needed if the latest report indicates that the private sector continued to chug along despite a purported decrease in government spending, which is a shame, because we would have enjoyed hearing it. We’ll likely have to settle for more illegal immigrants, gun-grabbing, and Super Bowl hyperbole, and none of it will be quite so much fun.

– Bud Norman

Obama and the Jets

Here in Wichita, Kansas, the “Air Capital of the World,” where general aviation is the backbone of the local economy, we’re always alert to the news stories concerning corporate jets. For the past three and a half years or so the stories have mostly been about Barack Obama’s relentless war on the industry, so you can imagine our surprise upon reading that he’s now offering corporate jet builders a billion dollars in subsidies.

The new policy is apparently an unintended consequence of the protracted debate over the renewal of the Import-Export Bank. We assume it’s unintended, at any rate, as we can’t imagine that Obama has suddenly acquired a new affection for corporate jets or seriously hopes to curry favor with the bitter gun-and-Bible-clinging Kansans who build them.

The Im-Ex, as it is known to those in the know, was established back in the ‘30s to help finance the purchase of American-made products by foreign buyers, but has since acquired a reputation as a dispenser of corporate welfare, with the Boeing Company’s huge airliner business being by far the biggest beneficiary. The bank’s periodic renewal is usually a routine act of Congress, but this time around it faced stiff opposition from several of the more conservative congressional Republicans, who were backed by such free market advocates as The Club For Growth, as well as such aggrieved corporations as Delta Airlines, which believe the bank is unfairly supporting their competitors’ purchases of Boeing products. More centrist politicians from both parties still love such cozy arrangements between government and business, as do such organizations as the U.S. Chamber of Commerce, and even the most stridently anti-corporate Democrats had been brought on board, so the bill had considerable bipartisan support all along, but it wasn’t until the Im-Ex’s head honcho promised to sweeten the deal with money for makers of smaller planes that the bill finally won passage in the Senate.

Obama signed the bill on Wednesday, citing it as an example of the common sense legislation needed to improve the economy, but he didn’t emphasize the corporate jet subsidies. The GOP immediately took to the internet with a reminder that as a presidential candidate in 2008 Obama had promised to eliminate the Import-Export Bank and called it “little more than a fund for corporate welfare.” The Republicans also correctly noted that Obama had previously sought to increase taxes on jet ownership, and had repeatedly given speeches that used business jets as a symbol of wretched corporate excess and immoral income inequality. No explanation for the contradictions has been forthcoming from the White House, so far as we know, nor any indication that Obama has disavowed his previous policies and rhetoric.

There’s a reasonable argument to be made for Im-Ex, which makes loans that are routinely repaid, and even for its special relationship with Boeing, an important American company whose only global competitor is heavily subsidized by the European Union, but the Obama policy of bashing corporate aviation with one hand and lavishing it with a billion dollars from the other hand is simply incoherent. A smarter administration would seek to negotiate a multilateral end to corporate subsidies with the European Union, whose member countries might well be looking for something to painlessly cut out of their budgets these days, and to devise a simplified tax code and reasonable regulatory system that would make corporate jet ownership more and allow the industry to be profitable enough that it would have no need of subsidies.

At the further edges of the right and the left, from the Tea Party to Occupy Wall Street, there is a rare agreement that corporate welfare should be abolished, but both sides have their own reasons. The right hates anything with “welfare” in the name, while the left abhors any mention of corporations. Obama seems to have staked out a strange middle position that is pro-welfare, anti-corporation, and unlikely to be of much help.

– Bud Norman

Corporate Jets and the Common Man

The big story here in Wichita, Kansas, is the expected bankruptcy filing of the Hawker Beechcraft Company. It would be hard to overstate the devastating effect that such a move would have on the “Air Capital of the World,” where the venerable airplane manufacturer has been a mainstay of the local economy and a source of civic pride ever since the legendary aviation pioneer Walter Beech started his world-famous company here back in 1932.

Various reasons have been offered for the company’s financial difficulties, but the ones most often mentioned are the sluggish state of the economy and stiff competition from the rest of the corporate aviation industry, including such local firms as Bombardier Learjet and Cessna. Many Wichitans can’t help thinking, though, that it didn’t help one bit to have the President of the United States and many of his party’s congressional members demonize corporate jet owners and seek to make corporate jet ownership prohibitively expensive.

The rhetorical assault on corporate jets began in the early days of the Obama administration, when Chrysler and General Motors executives were widely criticized by some of the news media and several Democratic congressmen for flying in corporate jets from Detroit to Washington, D.C., to plead for a bail-out. The critics were all in favor of the bail-outs, of course, but apparently felt that the plan would be less offensive to an outraged public if the executives had been forced to endure a Greyhound bus trip in order to gain the money.

With corporate jet ownership thus established as the epitome of wretched corporate excess, Obama proposed eliminating several tax laws that made corporate aviation more affordable and began to feature corporate jet owners prominently in his speeches. He even went to far as to suggest that corporate jet ownership would cause students to lose college scholarships, dangerous storms to go unreported, and tainted food to poison helpless consumers.

It was all nonsense, of course, as the proposed changes in the tax code would have raised only $3 billion or so over 10 years, a mere pittance compared to the $7.2 trillion in deficits that Obama proposed to rack up over the same time span. That’s not counting the tax revenues that would have been lost if the corporate aviation industry were to go bankrupt, or the cost of unemployment compensation and welfare payments to the industry’s former workers.

Hawker Beechcraft might well survive after a Chapter 11 reorganization, but the process would be a humbling blow to Wichita nonetheless. People motivated more by envy than reason in other communities would possibly derive some satisfaction in the knowledge that those corporate jet-flying fat cats had suffered, but they should stop to consider the blue collar types whose welfare would also be adversely affected. They should also look around their own towns and cities to consider how much of their own local economies are dependent on the business of people who are flying in to make a deal.

– Bud Norman

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