A couple of weeks ago I asked in a blog whether or not you would like President Obama to come to IMTS. As expected, I got a solid response of Obama bashers, but my suspicion now is that Barack actually read the blog (we used to shoot hoops in his backyard together—just kidding), because he ended up deciding to come to the show in a big way.
His Cleveland speech, in which he proposed 100 percent write-offs of capital investments made from September 8th through 2011, is potentially an enormous present to our industry. He one-upped the Republicans, who are focused on the “Bush Tax Cuts” which primarily affect high earners who cannot shelter income, a relatively small number of folks.
If the 100 percent one-year depreciation becomes law, as I suspect it will early next year, it will be a catalyst for a major bump in machinery and equipment spending, assuming business continues to improve in manufacturing.
The knee-jerk Republican opposition to the Obama proposal will give way to sane thinking after the election. My guess is that this sop to business may signal Obama’s move to the center. It’s very similar to what we saw from Bill Clinton in 1994 when Newt Gingrich’s “Contract With America” brought a Republican Congress, which ironically may have saved the Clinton Presidency.
My suggestion to Barack is to raise the ante and propose a five-year, 100 percent write off which will enable big and small companies to get the cash flow to buy equipment and hire people.
Question: Is Obama moving towards the center?