The Hollywood stimulus; Update: Hollywood loses its pork; Update: Vitter opposed?

posted at 2:30 pm on February 3, 2009 by Ed Morrissey

During the Great Depression, Hollywood responded with feel-good musicals and inexpensive entertainment for a nation mired in economic distress.  The studios made money, people had a chance to escape their woes for a few hours at minimal cost, and private industry provided employment outside of the government dole.  They mostly stayed out of politics — mostly — and thrived without subsidies until World War II and the eventual economic recovery.

Now Hollywood, with its astronomical salaries and budgets, faces a new economic crisis.  What do they do?  Ask for a bailout from their political allies — and get it:

The Senate bill includes a tax break worth up to $246 million over 11 years for investors in bigger-budget movie projects that don’t necessarily qualify for incentives currently. The provision is backed by firms like the Walt Disney Co., and the industry trade group the Motion Picture Association of America, according to aides and lobbyists.

Broadly speaking, the Senate bill includes a one-year extension through 2009 of a provision enabling companies to write off 50 percent of the cost of equipment placed in service during that year, same as in the House Ways and Means version. But the Senate bill amends the definition of “qualified property” to include “certain motion picture film or videotape,” bringing the cost of the Senate provision to $5.32 billion, up from the House’s $5.07 billion version.

Companies that use the tax break would then forfeit the right to use the existing incentive, which allows companies to deduct 100 percent of production costs up to $15 million. That provision is backed by groups such as the Directors Guild of America and is aimed at keeping smaller productions from relocating to foreign countries; it was extended as part of the $700 billion financial rescue plan in October.

But a problem arises for pictures that cost $30 million or more, which the option to instead use bonus depreciation attempts to resolve.

So we are going to provide a $250 million tax subsidy to the motion picture industry?  This doesn’t employ anyone; it just gives an accelerated depreciation on equipment.  Nor does the entertainment industry need much help to achieve profitability.  All they need to do is produce better movies, and perhaps start reining in costs rather than seeking tax cuts for big-budget spectacles.

This isn’t a stimulus.  It’s a payoff for the political support Hollywood provides the Democrats. Worse, it looks like a way to give film producers a boost in extending the liberal message that really needs little prodding already from Tinseltown.

The Republicans have targeted this provision in an upcoming Senate amendment.  Let’s hope they succeed.

Update: A rare piece of good news.  Tom Coburn’s amendment to strip this provision from the stimulus passed, but just barely, at 52-45.  I’ll look for the yeas and nays to see which Democrats were too embarrassed to vote no.

Update: Below are the yeas and nays.  Note the lone Republican who voted to protect the Hollywood subsidy:

What the heck was David Vitter thinking?

The Democrats who supported the amendment, thus rejecting the Hollywood subsidy, are mostly moderates with a track record of some fiscal sense.  The most hilarious exception is Robert Byrd’s nay vote, belying his reputation as the Senate’s Pork King.  What happened — did the film industry refuse to rename the town Byrdwood?


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Thank you Senators Chambliss and Isakson

mindhacker on February 3, 2009 at 7:30 PM

Tommy & SWLIP – Isn’t this really about how the TARP I amendment only covered low-middle tier productions, and the studios were miffed so they want an equal deduction because the cost of HD equipment is about to drop and they’re looking to change the field to 3D before outside competition moves in?

For example, look at Summit and Walden. Now picture if Walden had produced Twilight using some of the new HD methods. That’s a massive profit on much lower costs. I know distribution is still a killer, but that’s on the cusp of changing, also.

IMO, this feels like Hollywood protectionism. The only problem is that if they don’t get the stimulus money, isn’t Barry just going to run it through an appropriations because comanies like UMG and TW are “too big too fail”.

budfox on February 3, 2009 at 8:33 PM

This is not a bailout. It is a tax cut to incentivize investment. Isn’t that what conservatives are suppose to believe in?

tommylotto on February 3, 2009 at 8:45 PM

Just so the folks arguing for this pice of the big pork pie, maybe it would help if you understood my take the process. They live in mansions and make films and produce music that describes America as the worlds woe and COnservatives and Christians mainly as the source of that woe. If I could convince the entire free Conservative world to boycott the entertainment industry and bring them to their knees so my 50 dollar evening out with my girl didn’t end up in the pocket of someone who hates us, I’d try.

Aside from that as rich as they all are, why would they even need a tax incentive? Why do they need any help at all? If this bill in any way shape or form is intended to help promote production of movies, it would entail saving a buck somewhere, somehow. Send that buck to the poor guy who can’t afford a movie out with the family and tell Hollywood to sell one of their houses to get up the scratch for production rental whatever costs.

hawkdriver on February 3, 2009 at 9:18 PM

hawkdriver on February 3, 2009 at 9:18 PM

Maybe with the fat tax break offered by this proposal good conservatives like yourself could afford to make films that would not otherwise be made. For example, this tax cut will save money for Mel Gibson when he makes “The Passion Part Two, The Resurrection” not just Michael Moore when he makes “Bowling 300 with Obama’s Unicorns”

tommylotto on February 3, 2009 at 10:04 PM

Thank GOD that douche of a RINO Voinovich is retiring. Not soon enough though.

midir on February 3, 2009 at 10:14 PM

Wow, both my Dem. Senators voted Yea.

Although I had to search the list; I wasn’t paying attention and didn’t realize Salazar had moved to a new position. I feel bad about not knowing that.

gekkobear on February 3, 2009 at 10:54 PM

tommylotto on February 3, 2009 at 10:04 PM

When you water the garden, even the weeds get wet. Sometimes you have to plow the whole thing under and start over.

hawkdriver on February 3, 2009 at 11:34 PM

Thank GOD that douche of a RINO Voinovich is retiring. Not soon enough though.

midir on February 3, 2009 at 10:14 PM

That doesn’t mean Ohio is going to get someone more Republican than him.

You’re going to get another Mike Turner at best, but it’s more likely to be a person of the Strickland & Brown cloth. They speak for the parts of Ohio that have only been able to get exposure in 2006.

It is looking good to see a bit of revenge happening for all the sins of the Ohio GOP.

sethstorm on February 4, 2009 at 5:50 AM

sethstorm on February 4, 2009 at 5:50 AM

I am hoping that by 2010 when Voinovich retires that people will realize just how destructive the Democrats have been to Ohio and the Country and will want some Republicans back in office. Of course, this requires the majority of voting Americans to have some intelligence which isn’t very likely.

In my opinion Voinovich is a disgrace to conservatism, and quite frankly I feel that if he is going to vote like a Democrat, what’s the difference between having him or someone who actually admits they are a Democrat.

midir on February 4, 2009 at 8:03 AM

ED! I can answer the Vitter “Nay” vote. I live in Louisiana.

Here is why Vitter voted to uphold the subsidy:

Louisiana is becoming a major player in the movie-making industry. We have tax breaks for them in Louisiana already in place at the state level and Vitter, wanting to keep that business here, is voting for more of that. As I write this, there is a movie being shot here in Shreveport/Bossier City.

We have seen unprecedented growth of the movie-industry in this area, and are currently seeing movie studios going up left and right.

So, though I dont agree with his vote on this, I do however completely understand his motive. Basically, he is “bringing home the bacon” with this vote.

I hope that helps you out on why Vitter did this.

TheHat on February 4, 2009 at 8:19 AM

I waited, and sure enough, bless my soggy ole soul, The Hat expained Vitter’s vote!

I would like to have TheHat’s indulgence to add this little something:

http://www.bayoubuzz.com/News/Louisiana/Politics/Louisiana_US_Senator_David_Vitter__Devil_Versus_Angel__8221.asp

You, see there are Two vitters. One stood against Hillary and one…Lord forgive my coarseness…well, remember a certain D. C. madam? Yes, indeed.

IlikedAUH2O on February 4, 2009 at 8:35 AM

“You can’t just listen to Rush Limbaugh Nancy Pelosi and get things done,”

mike_NC9 on February 4, 2009 at 9:05 AM

Tommy – I didn’t mean to insinuate the deduction was a bailout. My mistake. You’re right it’s an incentive, but it doesn’t make much sense. To use it you must have distribution within the same year of production. How many 100 million dollar productions can pull that off? That leaves projects above 30 million but under 100, which has been in a dearth for years. So I’m supposed to believe that this bill is going to create a reverse course on costs when there’s no sign of that in sight. I’m going to have to find the actual proposal.

budfox on February 4, 2009 at 9:11 AM

Louisiana is becoming a major player in the movie-making industry.
TheHat on February 4, 2009 at 8:19 AM

Last trip I took to New Orleans (March 2008), I watched a film being made in front of some hotel (I believe) on Royal. My best guess is the Hotel Monteleone. They had people in mock Swat gear, actors dressed as police, camera crew, etc. If I wasn’t on my way to present at the Conference Center, I would’ve watched for a while; it seemed pretty cool and they let us hang out on the corner and watch and take pictures, very easy in the handling the public. I always wondered what film that was though.

LastRick on February 4, 2009 at 9:26 AM

Update: Below are the yeas and nays. Note the lone Republican who voted to protect the Hollywood subsidy:

Not saying I know his reasoning or necessarily defending him, but movies aren’t only made in Hollywood. Louisiana has film incentives as well and attracts some production, so perhaps that had something to do with it.

CP on February 4, 2009 at 9:29 AM

I knew once Voinovich said he was going to retire that he would basically be a Democrat.

However now that someone explained Vitter’s reasoning, I believe that this was Voinovich’s reasoning as well. There are quite a few movies that have scenes in Cincinnati, Columbus, and I remember reading a couple of years ago that Dayton was trying to get more movies shot there.

So while I don’t agree with it, I guess I could see Voinovich’s reasoning on this one, especially given the fact that our other senator voted against stripping it out as well.

MobileVideoEngineer on February 4, 2009 at 10:12 AM

For example, look at Summit and Walden. Now picture if Walden had produced Twilight using some of the new HD methods. That’s a massive profit on much lower costs.

That’s assuming that Walden actually owned the HD equipment in your hypothetical. It’s much more likely that they would rent it.

Lord knows I’m not opposed to lower taxes. But incentives should be called what they are. And, when Hollywood asks for a tax break, consider my eyebrows raised. The people who run the motion picture industry are among the most hypocritical limousine liberals on the planet. They want all of us “little people” to pay more taxes even as they demand more for themselves. It stinks.

SWLiP on February 4, 2009 at 10:21 AM

I waited, and sure enough, bless my soggy ole soul, The Hat expained Vitter’s vote!

I would like to have TheHat’s indulgence to add this little something:

http://www.bayoubuzz.com/News/Louisiana/Politics/Louisiana_US_Senator_David_Vitter__Devil_Versus_Angel__8221.asp

You, see there are Two vitters. One stood against Hillary and one…Lord forgive my coarseness…well, remember a certain D. C. madam? Yes, indeed.

IlikedAUH2O on February 4, 2009 at 8:35 AM

AUH2O??? From PF? Is that you?…lol.

Add away my friend! Vitter can play both sides of the field cant he? I agree.

TheHat on February 4, 2009 at 11:12 AM

…I remember reading a couple of years ago that Dayton was trying to get more movies shot there.

MobileVideoEngineer on February 4, 2009 at 10:12 AM

Have yet to hear about that from any part of the media over there – have a quote?

sethstorm on February 4, 2009 at 1:26 PM

Vitter is representing Louisiana, and we’ve been getting tons of movie investment here.

TTheoLogan on February 4, 2009 at 1:26 PM

Bush had it 100% right when he stated that there are bigger problems than Osama bin Laden these days.

It’s about time we faced reality. We are fighting a defensive war against the adherents to a religion that decrees our death, a religion that declares genocide on the human race. There are enough adherents to that religion who take these provisions seriously that we’re fighting defense in a religious war against us.

Once we admit that we can start taking measures to discredit that religion’s ideology. Until then we’ll appear to win and continue to lose.

herself on February 4, 2009 at 5:53 PM

Oops – went to wrong message – sorry.

herself on February 4, 2009 at 5:55 PM

Years ago, Voinovich had a daughter involved in film. I remember her pushing for a state film comission and being involved with Sundance. Not sure what happened to her, but, with Ohio Repubs doing a major push for a state film tax break, I’m sure his vote had something to do with that.

budfox on February 5, 2009 at 8:55 AM

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