Observations on the world today.

Saturday, October 09, 2004

Going Out On a Limb 

I am writing this post shortly after viewing last night's debate. I did not watch any of the post debate analysis, and I have not read any material on the Internet before coming to place this post. I am doing this as an experiment to see how close my guess is to the reality.

When the debate ended, one instance stuck out in my mind. I have been thinking about it and have formed a theory. It will be interesting to see how close my prediction is.

The instance in question is the moment when John Kerry announced to Bush that he (Bush) had formed a sub-chapter S Corporation for the purpose of selling lumber. Bush seemed surprised, and announced that it is news to him. He then jokingly asked Charlie Gibson if he would like to buy some wood.

Now either Kerry was mistaken or Bush doesn't know what businesses he owns. I am hoping that it is the latter, and have come up with a scenario to explain how this might be. Here is my theory.

During the Veep debate, while trying to portray John Edwards as a tax dodging lawyer, Cheney noted that Edwards had formed an S corporation for the purposes of evading his tax debt. Of course, as I understand it, this is not the value of S Corps. It is my understanding that S Corps are an option that some choose over sole proprietorship in order to protect their private property in the event a business deal results in litigation. If you sue John Edwards and win, you might take his home. If you sue John Edwards, Inc., all that you can get is the limit of his corporate holdings.

Thinking this might again come up in tonight's debate, Kerry's people did some research and learned that Bush is also incorporated. My theory is that after buying the Crawford Ranch and staging so many brush-clearing photo-ops, something had to be done with all the lumber. Note that there is a scene in F-9/11 of Bush hacking away at a log with a chainsaw as he speaks with a reporter. In my theory, Bush's people incorporated him to protect him and the ranch from liability and sold the lumber to nearby mills.

Kerry never had to use this tidbit as he had prepared to, but then Bush brought up Sub-chapter S corporations to make a totally bogus point. He actually suggested that such corporations are the bulk of small business hirers - a claim which is I believe wholly without merit. Kerry of course knew this, and pointed out to Bush that he himself has such an incorporation status and has never used it to create even one job. Probably Kerry thought Bush knew this fact, but as luck would have it, Bush did not and he foolishly went on to challenge it and to try to make a joke of it at Senator Kerry's expense.

I could be all wet, but man-o-man I hope I'm right.

UPDATE: It was reported that Bush did own a timber company, but the reporter has issued a correction.
President Bush himself would have qualified as a "small business owner" under the Republican definition, based on his 2001 federal income tax returns. He reported $84 of business income from his part ownership of a timber-growing enterprise. However, 99.99% of Bush's total income came from other sources that year. (Bush also qualified as a "small business owner" in 2000 based on $314 of "business income," but not in 2002 and 2003 when he reported his timber income as "royalties" on a different tax schedule.)
(Oct 9; CORRECTION: What we originally reported as a "timber-growing" enterprise is actually described on Bush's tax return as an "oil and gas production" concern, the Lone Star Trust. We were confused because The Lone Star Trust currently owns 50% of another company, "LSTF, LLC", described on Bush’s 2003 financial disclosure forms as a limited-liability company organized "for the purpose of the production of trees for commercial sales." So, Bush does own part interest in a tree-growing company, but the $84 came from an oil and gas company and we should have reported it as such.)
Ironically, the site which provided the bogus information that Kerry based his assertion upon is the same site, factcheck.org, that Cheney directed people to in the V.P. debate last week. However, in a new article, factcheck spells out that Bush actually does currently own stock in the company and the company does own 50% of a timber company.

Remember, the relevent part of the Bush gaff was that he didn't know that he owned part of a timber company. And the Kerry/Edwards people should be able to use this to their advantage. In fact, they have already begun.


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