At a town hall meeting in Elkhart, Indiana on Monday, President Obama said this: “You can’t get corporate jets, you can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer’s dime,” in reference to companies who have received TARP bailout money, specifically Wells Fargo. Now Las Vegans are in a tizzy over the very real impact the President’s words are having on their local economy.
Wells Fargo received a $25 billion infusion last year from the U.S. Treasury; The company just canceled an event it had been planning to host its top mortgage officers this month at the Wynn Las Vegas and the Encore Las Vegas, “a meeting and recognition event for the hard-working team members;” Wells Fargo maintains that it did not plan to fund the conference with taxpayer money.
Goldman Sachs, which has received $10 billion in federal bailouts, also recently canceled a planned event that was to be held at Las Vegas’ Mandalay Bay; The company had to pay a $600,000 cancellation fee and will now be holding the conference in San Francisco, which has more expensive hotel rooms and higher average airfares than Las Vegas.
On Wednesday the Las Vegas Convention and Visitors Authority announced that State Farm has also backed out of an event that would have delivered 11,000 room-nights for Las Vegas.
Las Vegas hosts more than 22,000 meetings annually that directly sustain about 43,000 jobs and generate an estimated $8.5 billion for the local economy.
Las Vegas has been one the hardest hit cities in this recession, with Nevada’s unemployment rate at over 9%…the highest it’s been in over a quarter of a century.
In 2008, Nevada’s gaming revenues fell by nearly 10%, the largest annual decline in the state’s history, which has precipitated a decline in gaming tax revenues (off by nearly 23% from a year ago), thus causing the state government to cut back dramatically, even threatening teachers’ salaries.
Mayor Oscar Goodman of Las Vegas sent a letter to the President on Tuesday asking him to apologize and that he “refrain from calling out individual cities” as unworthy of the taxpayer’s dime, saying it could cost his city money and jobs. Karen Gordon, president of a destination management company says “[Activity Planners in Las Vegas] had about six major groups cancel,” and that “Las Vegas and the entire meeting and incentive industry is being unfairly portrayed in a negative light.” Gordan is justified in her frustration, having already laid off three employees of her small business that arranges transportation, decor, entertainment and more for events. Brenda Anderson, CEO of the Society of Incentive Travel Executives points out that the revenue from these conferences “goes to the hotel clerks, the bus boys, the taxi cabs. When meetings are canceled there is a ripple effect.” MGM Mirage spokesman Gordon Absher said that the President’s comments had “wildfire potential,” and that “right or wrong doesn’t matter in this case. It’s the perception that serious business can’t come to Las Vegas. It’s not only deadly wrong but deadly dangerous for what we do here.” Senator John Ensign of Nevada said in a written statement: “This is ridiculous. This is what frustrates the American people. I’ll shoot this straight–what Goldman Sachs did was purely a phony public relations gimmick, but it’s not fooling anyone.”
Ed Canaday of Goldman Sachs says that saving money is “not the driving reason behind [it’s decision],” but rather “the decision to relocate the conference [to San Francisco] is based on our best efforts to operate according to the requirements of the new landscape of our industry.” In other words, because we took bailout money the federal government now gets to dictate how we do business…and has the power to make our lives a living hell if we spend money on anything they deem unworthy. Paying a $600,000 cancellation fee in addition to the more expensive costs of holding the conference in San Francisco will certainly cost more money, but hey, the President gets to sound really tough when he says that companies shouldn’t waste tax dollars in Vegas.
What is happening in Las Vegas is a microcosm of Obama’s affect on the overall national economy: I contend that our president is a danger to the economy. In an effort to portray the private sector in an adverse light he is continuously calling out companies, particularly any who have received TARP money, for “excessive spending.” AIG was criticized last fall for spending $440,000 on a retreat for top-producing insurance agents. We’ve heard plenty about corporations being berated for the use and purchase of private jets. Did you know that Kansas is one of the nation’s centers of aircraft manufacturing, and that a reduction in aircraft orders could cost jobs in the industry? Merrill Lynch came under fire for office remodeling. You know, when money is spent remodeling something, it puts people to work. It actually helps the economy because contractors and designers have to be hired, and furniture and decor must be purchased. Does the President really understand how the economy works…how jobs are created? Excessive spending IS GOOD FOR THE ECONOMY! (Not excessive government spending, which necessarily requires taking money out of the economy first…money that could be better spent by you and me to stimulate the industries of our choice).
I think that Obama does understand how the economy works, but he hopes that we don’t, and that his charged rhetoric will make us angry at the private sector (which we are all a part of) and more apt to go along with his version of “stimulus,” which is really just a deeper concentration of power within the federal government.
In any case, his rhetoric is certainly working in one sense. Whether or not Obama is trying to bleed jobs in the process, his words do have consequences that we all must bear. Major corporations have become fearful of spending money. Bank of America announced on Tuesday that it has canceled all employee-incentive trips. Las Vegas is certainly feeling the brunt of it. This doesn’t only apply to big corporations, though. Does constantly hearing that we’re headed toward “catastrophe” make you want to invest money? Does hearing that no matter what we do the economy is going to get much worse before it gets better make you want to spend money? Does the constant bashing of the all things capitalist in this country make you feel comfortable about expanding your business? Obama’s economic pessimism is becoming a self fulfilling prophesy, and he says that “only the federal government can break the vicious cycle.” I say that the federal government, including the president, is perpetuating the viscous cycle!
NOW I WANT TO KNOW WHAT YOU THINK! Vote in my poll, post a comment, or do both!