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Tuesday, February 13, 2007

That Sound You Hear Is Your Built-In BS Detector

By Walter Moore, Chief Economist and Legal Analyst, L.A. Policy Institute.

Consider the following excerpt from the latest L.A. Times article on why you, the taxpayer, must chip in for the Grand Avenue project:

"The developer, Related Cos., says the $2-billion project, designed by Frank O. Gehry, is financially unfeasible without the subsidies.

"Early estimates put the tax rebates at $40 million over 20 years, but the legislative analyst's report estimated that the rebates could cost $66 million."

Do you REALLY believe that the "feasibility" of a $2 billion project hinges on $40-$60 million in subsidies?

Let's do the math together, one more time:

Forty million dollars is 2% of $2 billion.

Sixty-six million dollars is 3.3% of $2 billion.

So the Related Companies and City Hall want you to believe the difference between profit and loss boils down to a subsidy amounting to just 2% to 3.3% of the total investment.

And THAT, my friend, is why your BS detector went off. Ear-splitting, isn't it?


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