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As Republican candidates for Congress batter U.S. stimulus programs, some company chiefs are stepping forward to defend corporate subsidies Congress enacted to help firms weather the downturn.
Ronald D. Boire, CEO of gift retailer Brookstone Inc., said a 2009 law that allowed companies to recoup taxes they paid in past years â??helped us get back on a growth curve. Instead of closing stores, we opened seven new storesâ? in 2010, said Boire.
The law allowed companies to use their current year losses to offset taxes paid up to five years prior â?? generating millions in tax refunds for companies like Brookstone.
The provision was part of legislation to revive the housing sector, not the $780 billion 2009 stimulus bill that has drawn the most criticism. But it is part of the broader set of stimulus efforts that some say the Democratic Congress isnâ??t getting enough credit for.
Brookstoneâ??s seven new stores translate into about 100 permanent jobs, Boire said.
The company this month announced it is renegotiating its revolving credit facility, cutting long-term debt by 20%. That also would not have been possible without the net operating loss tax break, said Boire.
â??The net operating loss provision was instrumental in keeping us on the right side of the bankruptcy precipice,â? said Allen Tilley, CEO of American Locker Security Systems, Inc. The Grapevine, Tex. firm sells locker systems to health clubs and amusement parks.
The firm, which employs about 100, got a tax rebate of $1.4 million under the program. The additional capital helped the company land a contract with Disneyland parks in California and Hong Kong, and boost payroll by $450,000, Tilley said.
Those companiesâ?? stories are a counterpoint to the more generalized economic doldrums.
And they are in sharp contrast to the prevailing message delivered by GOP candidates and some large business groups in this election season, which have painted the current Congress as an utter failure when it comes to job creation.
â??Billions in spending, mountains of foreign debt and countless regulations that Congress didnâ??t even read. The only thing missing? Jobs. We have to stop stimulus,â? according to an ad from Republican Florida Senate candidate Marco Rubio.
Ads from the U.S. Chamber of Commerce against Democrats have mostly shunned criticism of the stimulus bill, but have hammered Democrats on the jobs issue. â??We told [Rep.] Betsy Markey [D., Colo.] we needed jobs. Why didnâ??t she listen?â? one ad says.
For William McComb, CEO of Liz Claiborne Inc., the problem wasnâ??t the stimulus, it was that Congress lost focus on jobs after its initial efforts. But he thinks Congress should get credit for programs like the net operating loss tax rebate.
â??Because stimulus programs get a bad rap, itâ??s very important to reflect and say, this had an effect,â? McComb said in an interview.
Allen Sinai, chief of economic research firm Decision Economics, said the U.S. economy would have lost between 1% and 2% of economic growth without the stimulus. â??Weâ??d have been a lot worse off if we hadnâ??t done what we did,â? he said.
But he said the effort must be viewed as a failure overall because it didnâ??t bring down unemployment enough and it helped turned the debt into a major problem.
The net operating loss provision may have had healthy effects, but with a projected benefit of $33 billion in 2009 and 2010, it is still â??small potatoesâ? in the larger economic picture, said Sinai.
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As the old saying goes, THIEVES OF A FEATHER�������
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