Is President Obama Really Calling the Bizav Industry "Bad"?

President Obama
President Obama
Thursday, October 18, 2012 - 10:45am

Virtually every industry and profession in America enjoys the backing of an association and its lobbyists. And it doesn’t matter whether those lobbyists represent funeral directors, textile manufacturers, dairy farmers or dental consultants–they’re all banging on Congress’ door with the same message: Our association’s members play a vital role in this economy, create jobs, provide important products or services and deserve every possible tax break.

Sometimes, the fervor of these lobbying groups results in messages that sound a bit fanciful, such as when the National Air Transportation Association encouraged President Obama and Mitt Romney to focus in their October 16 debate on “the invaluable services that the general aviation community provides to the U.S. and global economy now and moving forward.” Can you imagine Obama or Romney ever saying, “Before I answer that question about Afghanistan [or abortion or unemployment or whatever], let me just take a minute to highlight the invaluable services that the general aviation community provides”? Not gonna happen.

Still, I’m not surprised when business aviation associations issue statements like NATA’s. Lobbying groups earn their keep by vigorously promoting the interests of the professions and industries they represent. That’s their job.

Occasionally, though, their defenses extend beyond the fanciful to the slightly ridiculous. That’s what I think happened after the first presidential debate of 2012, during which Obama suggested that we stop giving tax breaks to companies that are doing well. As he has in the past, the president cited oil companies and businesses that operate corporate jets as examples. Regarding the latter, his comment in full was as follows: “Why wouldn’t we eliminate tax breaks for corporate jets? My attitude is if you got a corporate jet, you can probably afford to pay full freight, not get a special break for it.”

Judging by the reaction of the National Business Aviation Association and other industry leaders, you’d think the president had called everyone in bizav a crook. Based solely on the two sentences quoted above, NBAA CEO Ed Bolen said the president had  “disparaged” the industry, “completely mischaracterized” it, “vilified” it and “denigrated” it. JSSI chairman Lou Seno chimed in, calling Obama’s comment an “attack on business aviation” by someone who “does not understand how business is conducted, both in the U.S. and around the world.” Retired Cessna CEO Jack Pelton, meanwhile, said, “We cannot continue to be reflected by the president as an industry that is ‘bad.’”

Granted, this is a complicated issue–more complicated than the prose that typically issues from either lobbyists or presidential candidates–and nobody’s 100 percent right or wrong. On the one hand, it’s probably time for the president to find new examples of tax breaks that ought to be eliminated. Ending breaks for business aircraft–an apparent reference to bonus depreciation, which was part of the stimulus package Obama himself signed–wouldn’t exactly do much to deflate the national debt. And Obama does make inordinate mention of business aviation in this context, probably because research has shown “corporate jets” to be a phrase that conjures up the ultra-rich among undecided voters.

But Republicans have their catch phrases too, some of which also promote rather inaccurate images. And the reality about corporate jets is probably somewhere between what these undecided voters imagine and what the business jet industry wishes they would envision. As the editor who put together a special issue of Business Jet Traveler called “The Bizav Advantage,” I fully understand that business jets are not used primarily to transport the wealthy from playground to playground; they’re employed by lots of executives and middle managers to boost efficiency and productivity. But let’s get real. Off the top of my head, I can’t think of any poor people who own business jets–nor am I even aware of any struggling businesses that are out shopping for jets at the moment. The companies that are buying and operating aircraft in this or any other economy tend to be the ones that are doing better than most. In fact, studies cosponsored by the NBAA have repeatedly suggested exactly that. It’s questionable how many of these companies would actually forgo jet purchases just because the tax break went away.

Moreover, as I noted in a blog post last year, there are other reasons why the elimination of bonus depreciation for business aircraft buyers might not do significant harm to the industry or the economy. As BJT tax columnist Jeff Wieand has noted, for example, bonus depreciation could ultimately result in higher aircraft prices. Also, the companies that manufacture many of the business jets sold in the U.S. are based outside our borders. As such, a tax break for purchase of their aircraft does little to help the American economy.

All that said, sensible counterarguments exist and I can understand why some people believe corporate jet buyers should receive a special depreciation deduction. That’s a reasonable position. What’s not reasonable, it seems to me, is suggesting that anyone who disagrees about this is denigrating, vilifying and disparaging business aviation. Advocating elimination of an industry’s tax break is just not the same as calling that industry “bad.”

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Scott James
on October 25, 2012 - 11:12am

I'm glad someone in our industry had enough courage to take this position. Every industry I have ever been associated with always screams "gore the other guy, not me". If the country is ever going to move forward we must all share some pain.

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Mr Janne Oesterwall
on October 25, 2012 - 11:12am

Politicians & aviation never mix well. Aviation business should be totally kept aside all such talks & ideas. I accept a politician as passenger max. Absolutely nothing they should decide about.
Janne / White Light Air AB
ps, I like the guy but he should not focus so much on Iran

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Gayle Michener
on October 25, 2012 - 11:19am

Thank you for conveying a more rational reaction to Pres. Obama's reference to bizjets in the debates. I too make my living around the world of business aviation but the reactionary comments of our "alphabet groups" and individuals who really know better, were just irrational and a bit embarrassing.

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Vince Gilbert
on October 25, 2012 - 11:30am

I think you may have put any chances of repeating as the 2012 NBAA Gold Wing Award winner in serious jeopardy, but it was a very good article.

The language developed for the lobbying industry is meant to protect by polarizing, and so you have everyone on both sides of particular issues creating caricatures instead of being reasonable. I don’t see it getting any better because it requires all sides agreeing to be cordial. Also, the general public still enjoys sound bites as opposed to using the reasoning faculties.

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Joe Dini
on October 25, 2012 - 11:52am

A TV add by a person seeking office in the next election has a section directed at wealthy people not paying their fair share and shows a business jet in the background.

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Joel Brown
on October 25, 2012 - 12:01pm

Jeff- I commend you for having the courage to represent this rational and fair perspective. As another responder commented, it is "a bit embarrassing" that the GA industry takes such an exaggerated and vilifying perspective.

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R Jaeger
on October 25, 2012 - 1:03pm

I wonder how many of the people commenting on this article are pilots. If you are a pilot, you are probably in the middle class. How does attacking and taxing the Biz Jet industry create jobs for pilots and FBOs? This President has repeatedly attacked our industry with assaults on job creating corporations owning jets and Jeff Burger wants to defend this position? Give me a break.

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philip rushton
on October 25, 2012 - 1:17pm

see our blog on this
http://blog.aviatrade.aero/

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Bill Zimmerman
on October 25, 2012 - 2:26pm

Hi Jeff,

I have enjoyed your publication for many years even though I fly a B737 for American Airlines, and as such am not immediately involved with bizav.

You comments about the over the top backlash to the President's note that if you are flying a corporate jet you should 'pay full freight' I think misses an important point.

The President himself is flying Air Force One to campaign events. This wide body airliner was purchased, equipped and fueled by taxpayers, which said taxpayers are so swamped by overspending that 40% of the jet fuel cost is borrowed. The DNC doesn't pay 10 cents to reimburse taxpayers for trips that cost hundreds of thousands of dollars... per segment!

The US Government, of which Barack Obama is Chief Executive, is borrowing $4 billion dollars a day - extra and above its existing refunding needs.

Someone needs to point out that the President's rhetoric that the rich need to pay their fair share would only cut the deficit from 40 cents of every dollar spent to maybe 38 cents, assuming the 30% millionaire tax promoted by Warren Buffet were to become law.

That's not even close to a viable solution. The 'pay full freight' argument is just a distraction so the President can avoid making tough choices from his own massive overspending.

Our country has a spending problem, not a revenue - 'you should just pay your fair share and stop complaining about a little extra pain' - problem.

Greece, with a similar high debt problem, is now in its 5th year of recession, and its economy is 30% smaller than in 2006.

Those who think the US is immune from a Greece experience may need to brush up on economic history. I suggest the writings of Ray Dalio, founder of Bridgewater Associates, as an excellent place to start.

Another good source would be Ken Rogoff, a Harvard professor with extensive research on debt vs. growth across the centuries of history.

We have a spending problem in Washington DC, not a 'millionaires need to pay their fair share' problem.

Thanks for listening.

Bill Zimmerman

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A. Spitler
on October 25, 2012 - 3:55pm

Wow, Jeff; you make so many claims in this article that I disagreed with...I almost don't know where to begin. But seeing how others have posted responses on some points, I'll limit my opinion to the following quote:

"[The] companies that manufacture many of the business jets sold in the U.S. are based outside our borders. As such, a tax break for purchase of their aircraft does little to help the American economy."

Most economists agree that two-thirds of our economy is driven by consumer spending, which also affects taxation ("revenue" from the government's view). So to turn the economy around, it would make sense to promote consumer spending IN the United States. Your above-mentioned quote is akin to those who say: "Don't buy a Honda Accord, because Honda is a foreign company", even though the truth is Accords are built IN Alabama, Ohio, and Indiana. The workers who build Accords spend their money in the local community and that affects the US economy directly. Conversely, if business aircraft "tax breaks" (in reality, simply a beneficial depreciation schedule) are disallowed, then it's logical to expect fewer planes will be purchased and fewer factory workers paid (loss of jobs)

In 2003, I lost my aviation-related job. That significant life event taught me to empathize with others who lose their jobs.

I don't live in Wichita, but I sure feel for the many people who lost jobs subsequent to the president's very comments (which you defend). Let's hope your article isn't read by those people...

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Gil Wolin
on October 25, 2012 - 5:00pm

If this were an isolated instance, Jeff, I'd agree with you wholeheartedly. But it's not. It's part of a pattern as noted by others above, reflecting a consistant effort position business aviation as symbolic of the "1%" who, according to the President's rhetoric, fail to pay thier "fair share" of the taxes.
I was surprised at his choice words - this was, I believe, the first time he called them "corporate" rather than "private" jets since the campaign began.
His choice of descriptors is based on research condcuted by his strategists to determine which words would be most evocative for voters, and cause them to favor the President over whoever became the Republican nominee.
They tested "Private jet" vs. "Corporate Jet," and the former won hands down.
He believes, based on market research, that referring negatively to "private jets" will help motiviate his base and the undecided to vote for him.
Frankly, it's just mart marketing.
No, the trade associations and JSSI did not over react - they simply called him on yet another needless attack on our industry, demonize us simply to gain votes - no matter what the cost to the 1.2 million who live and work in general aviation.

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Amit Sydney Australia
on October 25, 2012 - 8:27pm

Only in America will a President that sends the nation broke, divide the country and destroy the economy and moral fabric of this great nation will have a chance of re elected.

We your friends from Australia, looking at the USA as a light house of the world, your President has destroyed the Office which he represent, created a class war and actively degrade the USA...not to mention his apology tour and meeting in Saudi, the Begazi murders/cover up and his disrespect to Israel (YOUR best loyal friend in the world).

Jeff - you represent business jet...you allowed your personal views to over come reality...you should look for another job.

I regret renewing my subscription just last week...through I own a few planes for BUSINESS use and pleasure.

A Hyster

Sydney Australia

No Avatar
Amit Sydney Australia
on October 25, 2012 - 8:28pm

Only in America will a President that sends the nation broke, divide the country and destroy the economy and moral fabric of this great nation will have a chance of re elected.

We your friends from Australia, looking at the USA as a light house of the world, your President has destroyed the Office which he represent, created a class war and actively degrade the USA...not to mention his apology tour and meeting in Saudi, the Begazi murders/cover up and his disrespect to Israel (YOUR best loyal friend in the world).

Jeff - you represent business jet...you allowed your personal views to over come reality...you should look for another job.

I regret renewing my subscription just last week...through I own a few planes for BUSINESS use and pleasure.

A Hyster

Sydney Australia

No Avatar
Martin Dourte
on October 25, 2012 - 8:46pm

Jeff, you have totally missed the point of the president's offhanded remark. And so did the alphabet lobbying groups. Obama knows (or should know) that eliminating the bonus depreciation will make absolutely no difference in his WAY over the top budget deficit. He was merely tapping into the mindset of ignorant voters who think "the rich aircraft owners" are the source of the nation's economic woes and, therefore, they should vote for him rather than those nasty wealthy people. It's simply that he was pandering to gain the votes of ignorant people. The alternative to the alphabet groups' response should have been to calmy point out how ignorant and irresponsible the president's remark was rather than crying out about an irrelevant issue.

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smith
on October 26, 2012 - 4:43pm

I can't believe Business Jet Traveler would allow this article. Talk about biting the hand that feeds you.

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Don Winden
on October 27, 2012 - 11:38pm

In the mean time they keep spending and spending. When are we going to hold the politicians feet to the fire. It is not a tax issue. It is a spending issue. The politicians can't get off the subject of taxing something or some group for more than 30 seconds. If they talk about spending cuts, it is something over a 10 year period, (which means it will never happen). Then they are right back to talking about raising taxes on some group. What part of "cut spending" don't they understand

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