Manufacturing has led the recovery since the recession ended in June 2009 and has created more net jobs than any other industry segment.\u00a0\u00a0 In other words, the manufacturing industry is the goose that lays golden eggs in the form of products for domestic use and export and the jobs it takes to produce them.<\/p>\n
In the June report<\/a> issued on July 1st<\/sup> by the Institute for Supply Management\u2122 Manufacturing Business Survey Committee, Chair Bradley J. Holcomb, CPSM, CPSD, said, “The PMI registered 55.3 percent, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector for the 23rd consecutive month. \u00a0New orders and production were both modestly up from last month, and employment showed continued strength with an increase of 1.7 percentage points to 59.9 percent.”<\/p>\n Dean Maki<\/a>, chief U.S. economist at Barclays Capital Inc., said, \u201cManufacturing is driving U.S. recovery\u201d when he spoke with Bloomberg’s Mark Crumpton about U.S. manufacturing and housing data and the outlook for the economy and Federal Reserve monetary policy.<\/p>\n The \u201cSeventh Quarterly Report<\/a>,\u201d written by the White House\u2019s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, was released on July 1st<\/sup>. \u00a0The report chronicles the economic impact of the \u201cstimulus\u201d in adding or saving jobs. \u00a0\u201cThe council reports<\/a> that, using \u201cmainstream estimates of economic multipliers for the effects of fiscal stimulus\u201d (which it describes as a \u201cnatural way to estimate the effects of\u201d the legislation), the \u201cstimulus\u201d has added or saved just under 2.4 million jobs \u2014 whether private or public \u2014 at a cost (to date) of $666 billion. \u00a0That\u2019s a cost to taxpayers of $278,000 per job.\u201d<\/p>\n This means that \u201cthe government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the \u201cstimulus,\u201d and taxpayers would have come out $427 billion ahead.\u201d<\/p>\n We need to be adding thousands more jobs than the 18,000 nonfarm jobs added in June, and the 25,000 jobs added in May to absorb the millions of workers that a 9.2 percent unemployment rate represents. Economists say that about 100,000 jobs are needed each month just to keep up with the normal growth of the labor force and hold the unemployment rate steady.<\/p>\n With this weak job picture, the last thing we need government to do is raise taxes or create new taxes to be paid on specific products, such as a tax on \u201cbiz jets\u201d and yachts.<\/p>\n While some business jets are converted airliners often used by celebrities with a large entourage or press corps, or by sports teams, they face operational restrictions based on runway length or local noise restrictions at smaller airports.\u00a0 Thus, there is emerging market for so-called “very light jets” and “personal jets, which are smaller and far cheaper than current models of business jets. \u00a0Many of the very light jets (VLJ) are used by the air taxi industry.<\/p>\n Cessna has developed the Mustang, a six-place twinjet (2 crew + 4 passengers) available for $2.55 million USD. \u00a0A number of smaller manufacturers have planned even cheaper jets, and it remains to be seen whether the new jet manufacturers will complete their designs or find the market required to sell their jets at the low prices planned.<\/p>\n Business jets and yachts represent companies in the aircraft and boat building industries that provide jobs for thousands of people.\u00a0 There are approximately 11,000 business jets in the worldwide fleet with the vast majority of them based in the United States or owned by U. S. companies. \u00a0The European market is the next largest, with growing activity in the Middle East, Asia, and Central America.\u00a0 Business and private jets are one of the high technology products that the United States exports to the rest of the world.\u00a0 Increasing production of these classifications of aircraft would help achieve President Obama\u2019s goal of doubling exports.<\/p>\n When you increase taxes on a particular product, it causes sales to drop, so if you increase taxes on business aircraft for all of the U. S. manufacturers, you would decrease sales for these aircraft and give an advantage to foreign aircraft manufacturers.\u00a0 Because of their low-volume productions and long lead times, new aircraft orders can take two to three years for delivery. \u00a0This results in a large pre-owned marketplace, with aircraft available immediately.<\/p>\n The loss of jobs wouldn\u2019t be limited to the aircraft and yacht manufacturers; it would affect their vendors, such as engine manufactures, avionics and electronics manufacturers, and interior manufacturers.<\/p>\n Large corporations such as Ford Motor Company and Chrysler have their own flight departments that manage all aspects of aircraft operation and maintenance.\u00a0 Charter operators own or simply manage all aspects of operation and maintenance of private jets for multiple clients.<\/p>\n Since 1996, the term “fractional jet” has been used in connection with business aircraft owned by a consortium of companies. \u00a0Costly overheads such as a flight crew, a hangar, and maintenance can be shared by the consortium.\u00a0 Fractional Ownership is commonly known in the industry as “time share.” \u00a0An individual or corporation pays an upfront equity share for the cost of an aircraft, such as 1\/4 of the aircraft price, known in the industry as a “quarter share.” \u00a0The individual or corporation is now an equity owner in that aircraft and can sell their equity position if necessary. \u00a0This entitles the new owner to 100 hours of flight time on that aircraft, or any comparable aircraft in the fleet. \u00a0Additional fees include monthly management fees and incidentals like catering and ground transportation.<\/p>\n President Obama may have forgotten that Congress tried to increase revenue by imposing a luxury tax on private planes and yachts once before. \u00a0In the 1990 deal between President George H.W. Bush and a Democratic Congress, yacht and private plane owners were the designated villains. \u00a0Yachts and private planes were, after all, owned by “millionaires and billionaires” who didn’t pay their fair share of taxes. Who could object to taxing these \u201cfat cat\u201d rich people a bit more? \u00a0So Congress passed a 10 percent luxury tax on yachts priced at more than $100,000 and on private planes that cost more than $250,000.<\/p>\n