Thanks to Ryan, Section 179

By Lloyd Graff

Speaker of the House, Paul Ryan

It looks like Paul Ryan, the new Speaker of the House of Representatives from Wisconsin, delivered the goods for manufacturers in the massive tax and spending bill released for public consumption on Tuesday.

The vital Section 179 allowing the depreciation of capital equipment to offset profits in a given year, up to $500,000, is in the package. The provision, rather than being good for only 2015, now has no expiration date. This will enable owners and managers to plan with some certainty and not have to scramble at year’s end to buy a machine or vehicle, which improves the company’s productivity.

Section 179 is extremely important to small companies, which may have the money to buy only one piece of necessary equipment all year – if they get the little push of a tax benefit. For the sellers of machine tools, the uncertainty of the last few years has played havoc with stocking decisions and forced all-nighters ahead of the Christmas holidays in order to deliver equipment before the end of the year.

The stupidity of waiting until mid-December to make a deal is apparent to both Republicans and Democrats. The pundits say that if John Boehner had remained Speaker we might have had a gunfight in Washington resulting in a government shutdown with both sides preferring suicide rather than being perceived as weak.

Paul Ryan is from Janesville, Wisconsin, a few miles north of Rockford, Illinois, once a machine tool Mecca with Sundstrand and Barber-Colman. Parker Pen used to make the T-Ball Jotter pen in Janesville. I think Ryan has some feel for the needs of manufacturers and the value of improving equipment in the face of world competition. I do not want to put a crown on Ryan’s head for passing Section 179, but just like a football coach or a baseball manager can set a positive tone in an unwieldy organization, a Speaker like Ryan, who is respected by Republicans and at least tolerated by Democrats, can move the ball.

I have been a fan of gridlock in DC because I thought it could prevent a lot of harm, but Section 179 is a case where gridlock would have been a killer.

It is early to predict the 2016 elections, but if the Republicans end up with an unelectable Donald Trump as the Presidential Candidate, yet manage to hold onto the House, Paul Ryan will be the clear leader of a Republican Party in shambles. I think that is a slightly hopeful thing for America.

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The Federal Reserve finally raised interest rates by a quarter point. We have been waiting for it for seven years, so many people see it as smart and inevitable.

I see it as dumb and unnecessary.

The economy is on the verge of a commodities crash recession. We have deflation in a large swath of the economy. Banks are loaded with cash, yet slow to lend. Unemployment is statistically low, but in reality, quite high if you look at the weak labor participation rate. The dollar is killing virtually every other world currency making American goods and services hard to sell. Europe worries about deflation, and we should too.

Wages, except for skills like programming, are stagnant. Janet Yellen, head of the Fed, wants 2% inflation. We are at 1.3% and rate hikes will flatten that number further.

The rationale she gives for the rate rise is that if we were to go into a recession, she would then have room to lower rates. Idiotic reasoning.

Raise rates and possibly cause a recession, so you can then lower them to fight it. Brilliant.

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Star Wars comes out today. Harrison Ford makes a cameo appearance. Hooray. I may see it when the crowds recede.

If you want to see a really good flick, I recommend Brooklyn, an amazing movie about an Irish immigrant to America in 1953, and her struggles with adapting, homesickness, and love.

I also loved Spotlight, about the three Boston Globe reporters who uncovered  the cover-up of child abuse by the Catholic Church in Boston.

I’m sure Star Wars will be fun, but for me it’s in a Galaxy too far away to get excited about.

Question: Has it been a good year for you financially?

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14 thoughts on “Thanks to Ryan, Section 179

  1. AvatarTHOMAS HOBAN

    Good to hear a Wisconsin boy did me good. I bought a couple machines to update my machine shop to the tune of 1/2 million, and was really worried that the 179 provision would not pass. Having a pretty good year because of the investment I would have been paying in quite a bit, but can now use that money next year to invest more in my company. When is the government going to realize investment in companies makes us more competitive and creates more jobs. Thanks mr. Ryan.

     
    +1
  2. Avatarallen

    I’m pretty sure the Fed’s move was motivated more by its perceived irrelevancy then by any measure of fiscal necessity.

    The Fed is a one-trick pony with it’s primary, perhaps only, tool being the influence it exerts over interest rates. Problem is, interest rates are governed by, among other things, the state of the economy which sucks all President Obama’s contrived statistics to the contrary not withstanding. This rate hike, at least in the minds of the governors of the Fed, re-established the relevance of the Federal Reserve and provides President Obama with some much needed diversion.

     
    +3
  3. Avatarx

    Best year ever. Sold the place and got out of it. It just starts to drive you nuts after 30 years. Best of luck to the rest of you, you will probably need it.

     
    +5
  4. AvatarJack

    Was having a pretty good year. Until recently, got word that the company I was partnering with on some long term work is closing up. So all the dollars I invested in time and equipment, it looks like was for nothing. At least the 179 passed, that helps some.

     
  5. AvatarRod Brower

    Great Year and now better as we do not have to send 39% of it to off to be squandered by a wasteful bunch of dysfunctional politicians.
    I hope that Mr Ryan has a successful tenure and our government starts to work for the people again instead of acting like a bunch of Jr High School girls having a cat fight.
    Happy New Year

     
    +1
  6. AvatarSeth Emerson

    Reference: “Contrived statistics” on employment. If, by some stretch of imagination, the Republicans occupy the White House in 2017. It will be interesting to see whether their “Bureau of Labor Statistics” changes the derivation method for the calculations. Unemployment numbers at 15%? It would certainly make the 2018 election interesting!

     
  7. AvatarJohn Ribic

    I like the Section 179, because it makes it easier to run my business. I do worry that it may cause excess capacity and eventually help to cause the next recession. At my company we have been using it to replace older equipment with newer technology, but the older equipment we trade in is still being used some where. If other companies are using the Section 179 to buy extra machines, just because they have extra money and they anticipate demand in the future, we could get into trouble at some point. We can only wait and see what happens, I do not believe there has ever been a period of time that has had so much excess stimulus for an extended amount of time.

     
  8. AvatarJohn

    Ryan is another two face politician blinding most Americans as a good conservative. Section 179 is a joke. I recall Obama saying that we need to support US manufacturing. If you survey all these two face jokers in Washington, manufacturing is their top priority yet their actions tell another story. Their mansions, their cars, all their petty stuff is made mostly overseas in China. If you want to be friendly to US manufacturing particularly small shops then get rid of all these taxes on small US shops including the import duty of 4.2% on new machining centers since the US no longer builds high end machines anymore.

    The budget that the house passed, a massive money give away of 1.1 TILLION insane dollars is a complete pathetic disgrace. When does the debt end, $20T, $30T $40T??? spend spend spend!!! That is Washington’s way. It’s all about money, power and control. These people should be proud of their disgrace behavior.

    Funny how Washington and the media calls Trump a clown and bullies him endlessly. The real clowns are in Washington. They can’t reduce the American debt, can’t run a post office, can’t balance a budget, can’t control our borders, screws up a health system promising to reduce cost despite so many fat and unhealthy people, can’t even take care of our vets, can’t manage a social security program, TSA is an embarrassment, our educational system is totally broken, my dog at home eats better meals then our school kids do at school and the list goes on and on and on.

    What a freaking mess this country is in from all these Washington duck heads quacking away the same old quacking tune all while having no clue the pain most Americans are going through today to make ends meet. And Hillary, she is a completely out of touch old lady who can’t control her own mentally sick husband.

     
    +10
    1. AvatarJoe Leslein

      I agree with John. We’re basically screwed, and the best spin I can think of is I’m actually glad I’m on the back 9. When all these twits that backed this administration have to face reality in several years it might become apparent. Nah, nobody even knows what is going on. People live in a disconnected fake reality. The ones paying attention will blame the other guy, and so forth and so on.

       
      +3

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