Why The Fiscal Cliff "Deal" is Spelled P-O-R-K

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After narrowly missing the fiscal cliff, the President went out of his way to thank the Senate and Congress for getting things done.

Granted, it wasn't an Academy Award speech, but it could have been given the performance he delivered as he congratulated everybody from his "extraordinary" Vice President Joe Biden to Harry Reid, Nancy Pelosi and even Speaker Boehner.

It was quite a spectacle really, but puuuulleeeassssse…now for the back- room details.

Behind the scenes, there was plenty of f-bombing, poison pilling and grandstanding leading up to the deal – and that was before the members of Congress and the Senate actually got serious with their usual ultimatums followed by earnest- looking sound bites and posturing.

And for what?…

According to Washington, they not only prevented the nation from going off the fiscal cliff, but also did lots of good things for America. Whether that's true or not depends on your perspective.

Given the fact taxes have increased for 77% of Americans thanks to payroll tax changes, and another $4 trillion stands to be added to the deficit, that's debatable.

But what gets me really riled up is the amount of pork contained in the bill.

For a bunch of lawmakers who were supposedly so busy and so involved in "negotiations," they were remarkably productive when it came to special interests.

Take a look at what else was packed into this sausage according to various sources including Fox News, ABC, the Washington Post and, of course, the US government itself:

  • $46 million for motor speedways that allows NASCAR track owners to deduct everything from the bleachers to concession stands and track maintenance, too – zoom, zoom;
  • $199 million worth of tax breaks for rum makers and rum production – big liquor must be sponsoring the post- deal parties or cocktail hours on the Hill considering that's a $13 per gallon kickback;
  • A 10% tax break for everybody who buys an electric scooter or car up to $2,500 max – evidently Oregon, Washington and Nevada didn't get the memo. All three states are looking to add additional per- mile taxes for anybody who doesn't stop at a gas station. So much for fuel efficiency incentives;
  • $15 million in tax breaks for movies filmed in America and $20 million if they're filmed in low- income regions. According to US News, that's a "Hollywood incentive that costs the country about $430 million to maintain." Remember to say "cheese" when you send in your taxes;
  • $59 million in tax breaks for algae growers who are trying to turn green slime into bio-fuel. Seems to me that if it were viable technology, the government wouldn't need to "invest" but would be content to spend hopelessly large sums of money via contracts instead – remember $400 hammers? Or Solyndra?
  • And finally, my personal favorite, a $9 billion tax break for big banks and manufacturers related to "active financing." Never heard of it? Don't feel bad. Active financing is a special transaction tax break that specifically allows multinational companies to avoid paying U.S. taxes on foreign earnings if those profits resulted from "actively" financing a deal or activity on foreign soil. Not surprisingly, big businesses claim it helps them be more competitive abroad which is why – ta da – it's been extended for another year, even though the special provision which was enacted in 1997 was never supposed to be made permanent. – Guess it's good to capitalize on a loophole you helped create, eh fellas?

More Fiscal Cliff Madness

And it doesn't stop there.

The bill contains all sorts of other things, like a provision to subsidize coal on Indian lands in the interest of alternative energy, and an extension that enables tax-free financing for the redevelopment of lower Manhattan, now euphemistically called the "Liberty Zone." Originally intended to be a 9/11 reconstruction tool, it's resulted in high- rise luxury apartments and even, according to the Washington Post, Goldman Sach s' new headquarters.

Cracking down on tax cheats who are already in prison, tax breaks for taking mass transit…they're all in there.

All of this is patently absurd. No, scratch that…it's an unmitigated disaster and no wonder. According to Utah Senator Mike Lee, they only received the bill six minutes before voting on it. "Not one single senator who voted for this bill had read it," he observed.

Perhaps they're taking a cue from the Nancy Pelosi school of management when she quipped that we needed to pass Obamacare to "find out what's in it."

It's disgusting.

Sadly, if you think this is entertaining, stay tuned. I can hardly wait to see what our leaders will cram into the debt ceiling debate 60 days from now.

By the way, you want to read the 153 Page American Taxpayer Relief Act of 2012 as it's formally known for yourself, click here

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About the Author

Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and Strike Force, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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  1. mike | January 7, 2013

    it's no wonder that Congress gets a very low opinion rating from the people…..Congress should have a low opinion of themselves as well……Pelosi is the worst……along with the voters that put her in Office

  2. Peter | January 7, 2013

    When I went to school, we talked about "Polish parliament". Seems like the House is taking over that title :)

  3. peter x | January 7, 2013

    Fiscal Cliff
    nah re-name that as ?

    Fistfull of Sshit !!

    situation normal,

  4. michael winkelman | January 7, 2013

    why didn't you mention the loans for Goldman Sachs?

    • David J | January 7, 2013

      Tell me about the loans Michael I am very interested.

    • Ron | January 7, 2013

      This paragraph mentions the tax free loans that Goldman Sachs took advantage of:

      The bill contains all sorts of other things, like a provision to subsidize coal on Indian lands in the interest of alternative energy, and an extension that enables tax-free financing for the redevelopment of lower Manhattan, now euphemistically called the "Liberty Zone." Originally intended to be a 9/11 reconstruction tool, it's resulted in high- rise luxury apartments and even, according to the Washington Post, Goldman Sach s' new headquarters.

  5. Edouard D'Orange | January 7, 2013

    Pathetic, but par for the course in Washington these days. Very few care, and those that do are labeled the crazies, like Tea Party.

  6. Ian | January 7, 2013

    Living outside the US but taking an interest in US politics I find the legality of PORK provisions bizarre. It does not happen in most other legislatures. Bills for national policy and localised provision are kept separate by the Speaker's office, the latter are given time set aside for non-national subjects. Since it is evidently distasteful to most Americans I cannot understand why Congress does not abandon the practice.

  7. Lawrence Fessler | January 7, 2013

    I do not mind the 2% increase in social security as long as it goes in there and stays in there. As the rest off things go every federal employee including state employees like police officers and teachers should take wage reductions and pay for health insurance like the rest off us and live on medicare like we have too when they retire I had too take a cut in my pay and benefits and this should include politicians too

    • f dickinson | January 7, 2013

      this is an overlooked fact and obviously would reduce the budget us "real" tax payers (who work in the private sector and all we now have for retirement is social security and what we can megarly scrimp and save after taxes for retirement). And in Florida our state, local government employees – inclucing teachers – during there last 5 years of employment receive 5 years of retirement income paid to them when they retire in lum-sum (i.e say, $50,000 per year x 5 equals $250,000 cash) – and don't put a dime into it, either!

  8. larry | January 7, 2013

    Why no comment on the tax CREDIT for the maintenance of of railroad rights of way?? Pool little companies. RAILROADS!

  9. Roger Charlesworth | January 7, 2013

    It would make sense to pass a bill that ensures that only ONE topic is contained in the bill, in line with its title. This is just like having a file called "miscellaneous"…you never know what is in it.

  10. jim | January 7, 2013

    The whole pack should be fired .the so called once proud republicns.they are all pathetic.its time to fight to take our country back from this fascist oboma who isis an arab puppet.wake up america.Congress should impeach .obummer for his numerous crimes

    • Jack | January 7, 2013

      Jim
      You have a writer who agrees with you:
      Peter Schweizer has written a book entitled THROW THEM ALL OUT — How Politicians and their Friends get Rich off Insider Stock tips, land Deals, and Cronyism that would Send the Rest of us to Prison.
      An informative read.

  11. John | January 7, 2013

    The system is broke and it is to late to fix it. it might be time to leave this country while I can.

  12. David | January 7, 2013

    If I heard right the bill also includes the extension of the current farm bill-this bill and farm bills of the past have resulted in the wealthy entering into the buying of farmland and engaging in farm operations(large farms and large confinement livestock operations)-money goes to where it is best treated and that is and has been the farm program. Under the current program which basically dates back into the 80's and a time of cheap grain the government leases out up to 33 million acres of farmland at tax payer expense of course. The management of these 33 million farmland acres is controlled by the big money "bird hunters" lobby(quite expensive)(clovers, wild flowers, you name it anything that will draw a bird-LOL). Problem with this if it does not work-the country had more birds when the land was farmed and was tax revenue producing instead of a tax burden. Just one more example the stupidity of government-problem now is the farm program has taken the situation to the point that no young person unless they are wealthy can enter farming due to high capital costs and we now have an aging farm operator population in excess of 60 years old!!!!!

  13. Werner | January 7, 2013

    Keith,
    Thanks for this analysis, highly instructive for a non US citizen nor resident, but certainly also for US citizens and residents. As such I have not got any say to it, but frankly, it scares the hell out of me. How would you expect any sensible foreigner to trust the US government/parlamentarians? I fully insist on that qualification, because I just cannot imagine the average US citizen to be as dishonest as that. Mind you, in other countries it will hardly be better, but hardly worse either. Europeans in their majority and Japan are certainly just as bad, not to speak of the BRICS.
    As for myself, I shall refrain from investing any additional dime to my portfolio, no matter how small it is. Thank you for helping me safeguarding my resources.

  14. joseph gottfried | January 7, 2013

    get all the pork items to congress to delete them in a new bill. most are ridiculios and would save over billion dollars. signed joe gottfried.

  15. Henry Walker | January 7, 2013

    How do we find out who put each item of pork into the bill? Our only hope of stopping some of this distribution of taxpayer monies is to publicize the names of our elected representatives who indulge in this scam.

    • Steven P Haver | January 7, 2013

      On any rational understanding of Parliamentary Procedure and the Constitution, the answer must lie "somewhere" in the Congressional Record and/or thomas.loc.gov. I don't claim actual knowledge of how to do the research . .

    • Dave Hester | January 7, 2013

      Henry:
      Pork is inserted by each state rep trying to garner brownie points from local
      pet projects. Problem is it's done by both Dems and Repubs.

    • Diane Queller | January 7, 2013

      There was a letter to the editor in my local paper that listed all these pok items- were did he get the info and why doesn't the news media report this????? I want to know who voted for them–not that it will do any good, right?

  16. Doug | January 7, 2013

    Keith,

    Please explain the Hollywood incentive statement.
    How does it cost 430 billion to maintain?

    • Gordon Garvie | January 7, 2013

      Went through my mind too,that's one hell of a lot of money,we know some films gross a couple of billion, though 430 billion seems ludicrous.
      44 billion would pay off Australia's debt,pass some our way.
      Is the 430 billion for the year???

    • Patricia | January 7, 2013

      It said $430 Million, not billion.

  17. ejanssen | January 7, 2013

    thanks for the update ,

  18. Gordon Garvie | January 7, 2013

    Seems to me there are a lot of workers in the states who are going to do it hard while a certain part of the population taking advantage of the situation.
    Remember though if it was not for people as myself,ie employing people, there would be a lot more on the unemployed list.
    We do need tax breaks to move forward and grow,no good working your life away for a 2 dollar retirement when you have spent your millions on a dirt road going nowhere.
    America is a great nation,the people must work together and stop wanting more for less no matter what politics drum up.
    No wealthy No work,take your pick,or hold the shovel,no dig no grain.

  19. Lee White | January 7, 2013

    My 1st ex-wife operated the family credit card under similar rules. Instead of "Spend the credit card instead of the money" she decided to "Spend the credit card AS WELL AS the money". When that system failed, she wanted me to get a second job to pay the bills. Oh, by the way, she was a stay at home mom.
    This political system works fine as long as everyone works FOR the people. Given the fact that most of this administration and this Congress are NOT working for THE PEOPLE, rather working for Special Interest Groups, I believe it's way past time to take our government back.
    Regardless of statements denying this, Socialism is alive and well in Congress. Socialism never worked in Europe, ask Hitler, Stalin and others. America cannot, and will not stand with Socialism at the helm.

    • DD | January 7, 2013

      Lee – America has been a socialist country for many decades, it just hides behind this Capitalism charade and besides there is good and bad in both systems. I personally would like to see a system in place that if you do not contribute via money, or holding a job down, being a good citizen etc., etc., then you cannot get anything out (but there are always a few exceptions). The trouble with socialism imo is that it allows all the leaches to jump on board and take w/o having contributed and to me that's where socialism fails.

      Read "The Creature from Jekyll Island" by G. Edward Griffin.

      • Gary | January 7, 2013

        DD- How does the advent of the "Federal Reserve System", which began on Jekyll Island, have to do with your position on socialism ?
        This system is the cause of the dollar loosing over 85% of its value and the "Feds" beginning.
        As Ron Paul has said many time ,"We need to get rid of the feds and allow our countries economy to return to the true form of Capitalism "

        • Jim | January 7, 2013

          Gary- The Federal Resevre System is a central bank, a part of the global banking system and the form of government in which a central bank operates in matters not. The politicians work on behalf of the Central Bank and it's interests i.e. large global corporations. Most Americans won't take the time to figure this out……..we are slaves in this current system.

  20. Hank Miller Sr. | January 7, 2013

    My copy of the US Constitution has the House as the origionator of all Federal spending. I'm told that much of this pork was removed, although some was replaced by different preferred pork But the net result is a much lower total.

    BTW, How big was the growth of the National Debt (percentage wise) under Ronald Reagan. His results are the reason I'm no longer a registered Republican.

  21. Cynthia Beasley | January 7, 2013

    What I'd like to know is how in this world do we stop this kind of shananagans from continuing to happen? Doesn't anyone but John Q Public taxpayer care what is going on?

    • Gordon Garvie | January 7, 2013

      I would like to answer your thoughts with the answer,Since the Sheriff of Nottingham till today,Earls,lords,and the well to do have ravaged the poor,squandered the money on Gold buildings in the name of himself,and his Ego,Governments do not Govern,they are TOLD.
      Since August 18th 1815 a voice said,,,,,I care not which puppet on a string rules Commonwealth or Empire.He who controls the British monies supply,controls the British Empire and i control the British Money.Worth looking that date up!

  22. Gordon Garvie | January 7, 2013

    I also believe Goals should be a 12 hour a day work place,kilning bricks for the government,take away all their privileges including cigarettes,can't do the time,don't do the crime,most treat goal as a rest village,making paper planes.
    They should also have to give blood monthly to also pay their way,the world needs it,yes some have diseases,well don't take theirs.
    Blood works out at over 2,000 a litre,Australia alone is a 1.5 billion dollar industry on 630,000 litres.
    Diversification is necessary world wide,not just the States,and when we fall off the Fiscal Cliff we will need blood:)

  23. Julio Cárdenas Avilés | January 7, 2013

    Between heaven and earth there is nothing hidden, whenever it comes time to pop the pus, very well hidden to begin the healing of American finance. With that infection could hardly succeed, unlike health was increasingly less. In God We Trust, which has allowed the truth to come to light … The truth liberates.

  24. H. Craig Bradley | January 7, 2013

    PEOPLE AND INSTITUTIONS DON'T WANT TO CHANGE

    Face it, Congressmen are "debt junkies" and consumers are looking for any reason to borrow and spend, as well. Its our culture, until something forces a change. Such an action-forcing occurance might be a future debt crisis or outright default by the U.S. Government. Then we have to change.

    • Jack | January 7, 2013

      Things will never change in the good ol' USofA until the government reduces expenditures on their military. There is no reason for the USA to have over 700 military installations throughout the world, spending more than $500 billion a year on its military. I read somewhere that the US taxpayer spent more on air-conditioning at these military sites in one year than all the money spent on NASA. I'm not sure which is more important.

    • Gary | January 7, 2013

      Hang in there, it's coming sooner than you think

  25. Julio Cárdenas Avilés | January 7, 2013

    When the USA has the flu to Latin America gets pneumonia.

  26. Gordon Garvie | January 7, 2013

    Politicians are over spending in Australia,a ridiculous amount of Government spending on ridiculous projects,and 300-400 thousand now for each pollie pay packet.
    Gina Reinhart bought in 29 billion and paid 6 million in tax,Twiggy Forrest about the same,Rio Tinto about the same,BHP Biliton about the same.
    I earn 180,000 or over and i pay 47 cents in the dollar,tough here in Australia.
    This is the cry of the people in Australia,and politicians say to us tighten your belt.
    Since Labour has been in power we went from 16 billion in the Black into Red of 44 billion,in 3 years.
    Our Army the cold war,says our Pollies,tax was made to keep our country safe,then why are we in Afghanistan,this brings Americas extra Trillions of dollars debt aiding to the fore front.
    Some one some where is making money.Who is it.

  27. Gordon Garvie | January 7, 2013

    I Thank you Money Morning with all my Heart.
    Only the second time i have written in,apart from tonight's off the chest thoughts.
    If it was not for your amazing up front truth of the goings on in the world i would never have invested in Silver Bullion.
    I say to all who write in and do not write in,grab silver while you can.Soon it may be out of your reach.
    One day it will go up in real value and retirement and security for you, your children and your children's children will benefit.
    Money Morning your the best.
    Love you Heaps.:)

    • Jack | January 7, 2013

      I can't believe that anyone with your lack of monetary savvy, your lack of realistic values concerning our future, etc. could be making $180 thousand a year.
      What is your opinion on climate change? Anything new on those fires that are raging in Oz?
      If you plan on staying there i would suggest you look for some arable land with an aquifer where you and your family can settle. Oh, and get yourself a large arsenal as well.
      Cheers, mate.

  28. Chris | January 7, 2013

    There is no stopping this. Even the republicans are seeing how well al this spending works for the socialists so they're joining right in and there's nothing we can do about it. We've tried to vote them out but there's just too much buying of votes going on with our tax money. This election proved it, the majority are takers and they voted to take the money from the makers, who will always be in the minority. Nothing left to do now but get out of the tax base somehow and let the progressive socialists take the country into the debt quagmire that is dead ahead. Remember to teach your children about capitalism so that someday we can have a fresh start down the right road again.

  29. Chris Michael | January 7, 2013

    And to think… these are our "elected" officials who were elected to represent "us"

  30. Lori Smith | January 7, 2013

    Those banks have been paying obama off for years including this year so I'm not surprised. Notice none were charged after the meltdown? These are the same people who want sat on O's Commission SS that want the SS age raised and chained CPI even though people pay for that themselves so the record high underfunded pension plans they have can be changed.

    Financial Fraud Conviction Scorecard:

    Bush: 1300+, Clinton: 1000+, Obama: 0.0 (+/-)

    http://dailybail.com/home/convicted-bush-1300-clinton-1000-obama-00.html

    Let’s start with the numbers. Why is a first term Senator pulling down almost $300,000 a year from Goldman Sachs, Lehman Brothers, Bear Stearns, Fannie Mae, Freddie Mac, AIG, Countrywide Financial, and Washington Mutual? He has not even completed his fourth year in the Senate and received a total of $1,093,329.00 from these eight companies and their employees. (all data from OpenSecrets.org).

  31. M L | January 7, 2013

    If the folks inside the 'beltway' can give 'the hollywood' liberal gang such a hefty price incentive; why don't the rest of us impress the same representatives to ask each one involved in those million dollar plus return on the movies to kick back a 23.8 percent of gross proceeds to help defer what they received in the incentive? We can use that percentage as compared to the increase in capital gains thanks to the the fiscal cliff tragedy and Obamy-careless!

  32. dourdan | January 7, 2013

    Honesty is such a lonely word

  33. CFH | January 7, 2013

    Aside from the relative few that are "informed" about poitical and economic happenings in America, and concerned with the future, the majority of our citizens are "sheeple" concerned only with food and water, like the sheep in "The Alchemist". "Oh, no!" the sheep in America say. "No more twinkies… well at least I still have my Wally world where I can still buy tons of unnecessary stuff… and enough beer to keep me blotto." Why do you think alcohol is relatively inexpensive? It's so that we can easily afford it, to dull our senses…
    Those that say change is unlikely are correct, yet there is hope. The change will have to come in the form of a "peasant uprising", though. The powers that be are careful to only take from us just enough; right up to the line of a revolution, but no more. If the millions of sleeping and unaware will wake up to the knowlege that we are nothing more than tax generating human resources (like being a human battery in "the Matrix") we might get out of the pit we're in. Until that happens, more of the same is all a person could expect. Getting off the grid (tuning in, and dropping out) is about the only way I can think of to regain some personal freedom. Be a slave if you can live with that, but know that is your fate. Smart cattle would just jump the fences.

  34. Jonny K | January 7, 2013

    You all need to watch "Zeingeist: The Movie"
    and Collapse for that matter,

    it way worse than you all think….

  35. Arlington | January 7, 2013

    It amazes me how duplicitous and hypocritical you Republicans can be! Where were you and where was your concern when George Bush was running up 10B of the now 16B deficit, mostly on two ill advised wars, all of which were started under false pretenses. There was not a grunt from you bunch of right winged hypocrites! Neither did you say anything when wall street was deregulated and allowed to rape the american public by created all sorts of paper "wealth" all of which disappeared in a puff of dust and smoke when reality was brought to bear, which was inevitable. You persist with the nonsense about the wealthy 2% creating jobs when it has been repeatedly proven that this is patently false and is not reflected in the economy. It is the middle class that creates jobs, not the wealthy 2% as the Republicans would have you believe. Instead of the 112th congress focusing on working on fixing what was wrong with the American economy, as they were elected to do, instead they made getting rid of Obama their entire focus over the last 4 years. The American people showed their displeasure by re-electing whom is their obvious choice and sent the Republicans a message that they are not prepared to tolerate more of the same in this next term. The delusional right wing nuts apparently have not gotten the memo, but they will, come the next mid term elections when many of them will be sent packing and when the American people will put those who wants to get the people business done back in office.

  36. H. Craig Bradley | January 7, 2013

    President Obama sold out to the U.S. BANKS early on.

  37. Doris Kelsey | January 7, 2013

    No worse than the BLM (Bureau of Land Management) warehousing feral horses to the tune of 80 million a year until they die and rot in their pens instead of processing them (their meat is worth 40 million) and feeding some of the millions of people who are starving.

  38. Bill | January 7, 2013

    We have run up the debt limit each year Obama has been president. It will happen again. He is only interested in spending. President Kennedy said "ask not what your country can do for you, but what you can do for your country." Obama is the opposite "ask not what you can do for your country but what your country can do for you." Entitlement mentality. Thomas Jefferson said our democracy will fail when people can vote themselves benefits. We are there. As Romney said, he could get 47% of the voters because they are on the take from the government.
    It's sad we have our government "leaders" voting on bills they have not read. A long time ago my Dad's advice was don't sign anything you haven't read. You would think elected officials would at least do that. Pitiful example of leadership, they should all be fired. They would in business.

  39. Sammy | January 8, 2013

    A nation where the individuals eat their own crops, plow their own fields, and build their own houses from their own timber could care less if a dollar bought a piece of straw or a Cadillac.

  40. Roger Molina | January 8, 2013

    We are in a very sad but neccasary time in our country. The shit must hit the fan for everything to be exposed . . . our country needs real leadership. Congress needs to be wiped clean. Matter of fact, the entire system needs to be restructured . . . . what a mess…….

  41. Keith Fitz-Gerald | January 8, 2013

    Thanks everybody for the time you spent both reading my article and the thoughful responses you've posted to me and to each other. Even though there are many perspectives on this issue, the fact that we can come together and voice our differences makes Money Morning what the government apparently isn't…a place to communicate.

    Best regards and thank you for being part of the Money Morning family,

    Keith :-)

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