Thursday, September 2, 2010

2010 Election Cycle

The midterms are almost upon us, and the latest polls show Republicans overall ahead by 10%. As it stands now, Dems will probably keep the Senate majority (51 to 49) but the House is up for grabs. This is sad news indeed. And to be honest, I don't entirely understand the reason why Republicans are favored. So here is my post about why Dems are better than Republicans for the future of this country. (But mostly it's me being really mad).

The economy and jobs situation in the US is still pretty shitty. Unemployment rates are high, banks that profited from the bailout aren't lending, corporations are turning a profit but not hiring. Little guy on the street gets screwed. Surely this is bad, but has everyone forgotten WHY we are in this mess???? Did we forget the Bush tax cuts and pointless wars that depleted the treasury? Did we forget the deregulation of the banks that allowed this entire subprime-mortgage/housing bubble, economy-downturn thing to happen in the first place?

The bail out and taxes deserve their own little paragraph. Republican's bailed out the banks (upper class). Democrats bailed out the car industry (middle class). Bush cut taxes for the rich (still in effect!), Obama cut taxes for the low/middle class AND is trying to cut taxes for small business which the Republicans in Congress are blocking. And don't even get me started on all the shit the Republicans blocked these past few years, including health coverage for 9/11 rescue workers! And they are upset about a community center!??!?!?

Here is a little list of the Dems major accomplishments lately from USA today:

-- American Recovery and Reinvestment Act: The $862 billion "stimulus bill" invested in transportation and energy projects, tax cuts and education grants.

-- Affordable Health Care for America Act: The law $940 billion in the first 10 years will create new health care exchanges, expand insurance coverage to 32 million people who have gone without, close gaps in Medicare prescription-drug coverage and forbid insurance companies from rejecting people for pre-existing conditions.

-- The HIRE Act: A jobs bill that provided $18 billion in tax breaks for small businesses to spur hiring and $20 billion for transit and highways programs.

-- Auto companies bailout: Billions of dollars in government loans to struggling Detroit automakers Chrysler, General Motors and GMAC.

But it adds to the deficit people complain! Where were your complaints when Bush was waging a ludicrously expensive war in Iraq for NO REASON???? And it was off the books too! The 3 trillion dollars, that's TRILLION DOLLARS spent by using emergency approrpriation bills rather than putting it on a budget. That's 12 billion a month in Iraq, 16 billion a month if include Afghanistan. And why? Because Saddam Hussein oppressed his people? Do the oppressed people in Sudan, North Korea and Iran not count? Shall we go around liberating everyone? And why is it more important than the unemployed of THIS country???

Then there is the whole Obama is a Muslim thing, or he respects Muslim people more than he does his own citizens (latest Newsweek poll says most Republicans believe this shit). Can someone tell me why this belief is so popular? I mean obviously I know why, because of our brain washed fox watching population who think that what Glenn Beck and O'Reilly tell them is fact. Sure Obama tried to mend relations with some Muslim leaders after we killed over 100,000 Iraqi people for NO REASON, but that's just good manners really.

So someone please tell me why we would want to go back to the days of reckless spending, invasion of privacy (Patriot Act anyone?) and endless cronism that was the Republican majority rule?


Catherine said...

when it comes to reckless spending, this administration has taken the prize. the stimulus package was a giant pile of pork-- if it had worked, unemployment wouldn't be around 10% like Obama promised us it wouldn't be--and Obama has, in less than one year, TRIPLED the national debt. TRIPLED! Bush didn't do that. not even close in his 8 years. the Healthcare bill is garbage
The mortgages got so bad because the banks were forced, by the liberal democrats, to give people house loans that should never have happened in the interest of "fairness." such as someone who only makes 30k/year getting a loan for a $500,000 house. then surprise surprise, they can't make the payments and everyone gets screwed. The tax cuts for the rich are still in effect because i think somewhere someone realized that the rich pay the poor. that is the way of life.
that is why the republicans are ahead. though as a Tea Party supporter (for now) i can say they aren't any less culpable of their mistakes and we won't support them if we continue to see fiscal irresponsibility.

Paulina said...

This is fantastic actually, because I can see where some of the misunderstandings get started.

1) On Obama's deficit: Clinton left office with a surplus $130 billion. Bush left office with a budget deficit of $1.4 trillion. Current deficit $1.8 trillion? An increase of 22%, but not tripling.

2) On the causes of the mortgage crisis. I don't think that the community reinvestment act of 1977, which I think your are referring to, is really at fault, though there is some debate on that of course. I do think that deregulation by the Bush administration carries considerable blame. The 2004 security and exchange commission permission for banks to self regulate for example. Clinton is also to blame with the Commodity Futures Modernization Act of 2000, I'll give you that, but republicans just made it worse, not better.

3) Health insurance - this is a matter of opinion and ideology. I do think that it sucks that people will be forced to buy insurance, but in the long run I think this will be really good for our country.

DCE said...

Paulina, that "$130 billion surplus" was a projected surplus brought about by creative bookkeeping, using cash accrual rather than value accrual to make the books on Social Security 'balance'. The money was never really there and the surplus never existed. (The CBO has those figures for you.)

Bush's last budget was not actually his. It belongs entirely to the Congressional Democrats and Obama. How is it I say that? Simple: The Democrats buried Bush's last budget by using the old "continuing resolution" to keep the government funded until after Obama took office. Bush's last budget was not signed by him, but by President Obama. And that budget was $600 billion in deficit, not the $1.4 trillion you've stated. Bush's total deficit for his eight years in office was just under $1.3 trillion, including the costs of Iraq and Afghanistan (which were both small percentages of the deficit). Obama blew past that number in his first year.

And the deregulation to which you refer took place during the Clinton Administration, not the Bush Administration.

In and of itself, the CRA did not cause the mortgage problem. It was how it was later interpreted after a number of lawsuits (including one filed by Obama on the behalf of ACORN and a few other organizations). After the suits banks were 'encouraged' to give shaky loans or suffer fines and other indignities because they were obviously being racist rather than financially prudent.

Never mind that many of the NINJA loans and sub-prime loans weren't issued by banks but by mortgage brokers who quickly dumped them after taking their commissions. Those buying the loans had no idea about any of the financial qualifications of those to whom the loans were issued because in the past the banks were the only entities to issue mortgages. With the help of the Clinton Administration (and the law suits) that changed and brokers and other nominally non-financial institutions could now issue loans. That left the mortgage market wide open for fraud and the crooks used the opportunity to steal billions...and they weren't even from Wall Street. It didn't help that Fannie Mae and Freddie Mac securitized those loans, making them seem legitimate when they were nothing but toilet paper.

To pin this all on the Republicans and/or Bush is deluded at best and disingenuous at worst. Everyone, especially Democrats worked very hard to make it happen because, quite frankly, none of them were competent enough to understand what it is they were doing and they were too stupid to listen to the people telling them it was a bad idea.

Paulina said...

DCE - I feel that we disagree on two fundamental points.
1) Who caused this recent decline in US economy, which is responsible for both the current high unemployment rates and the high budget deficits, which are high in part due to stimulus spending by both administrations, and...
2) What needs to be done to make it all better.
Actually I don't know if we disagree on the latter. Certainly I feel that taxes need to be raised, which will include the expiration of the Bush tax cuts. Also the wars in Iraq and Afghanistan need to come to an end. But with all that, we are still in deep shit as America is not really generating enough revenue. I would favor a push for green technologies, something that is both beneficial to the planet and can be an innovative market that the US could compete in. Perhaps there is something else that we could export... Do you have any ideas?

As to who is to blame, we'll have to differ. You blame Obama's lawsuit, I blame large corporations such as Goldman Sachs. I also blame Clinton and Alan Greenspan, and the Commodity Futures Modernization Act for not regulating the derivatives trade. Bush had 8 years to do something about it and didn't. I think Republicans tend to place to much faith in the free market, when in reality the unregulated capitalism is really a recipe for disaster (one that socialism has to come and clean up after). So I guess I'm basically with Keynes, and you are with Friedman on this one.

The irony is that Obama is too moderate for me, especially when it comes to regulation, yet I find myself having to defend him. And no matter what he does, I place far more trust in his abilities to turn the country around than I would any Republican.

DCE said...

I did not blame Obama's lawsuit. I said it was but one of many lawsuits that changed the interpretation of the CRA.

Goldman Sachs got sucked in by the Mortgage Backed Securities packaged by Fannie Mae and Freddie Mac. They didn't perform their due diligence. That's true of a lot of investors and investment banks because MBSes had always been considered a stable investment in the past.

In regards to raising taxes, I can say with confidnce that raising them in the midst of a recession will do far more damage than you realize. How do I know this? History.

The last time taxes were raised during a recession this bad (the mid 1970's), the tax increases killed GDP growth cold, investment capital dried up, and the recession which had been slowly ending came roaring back. Interest rates skyrocketed as did unemployment. The recession didn't end until Reagan cut taxes, which in turn freed up capital that fueled on of the longest economic boosts in American history.

Need another example? During the Great Depression, both Herbert Hoover and FDR raised taxes which had the unfortunate side effect of prolonging and deepening the Depression. Pulling that much money out of the economy for make-work solutions (i.e. stimulus) caused the Depression to drag on, with unemployment reaching over 25% and investment capital disappearing, which in turn caused the GDP to fall.

Am I saying a tax increase right now will cause another Depression? No. But I am saying it will end up stalling any economic recovery.

Do we need any more stimulus? No, because the first two efforts failed miserably. Bush pushed through a $136 billion stimulus package with the help of the Democrat controlled Congress. It didn't work. So Obama decides to try again, spending 4 times as much money was Bush did - money we don't have - and ended up with the same result. Did he really expect anything different?

And I must disagree with your claim that America isn't generating enough revenue. The government doesn't have a revenue problem. It has an expenditure problem. The American people are not an ATM the government can tap anytime it feels like it needs more money. It has to watch its spending just like everyone else. If you or I were as spendthrift as the government we'd be in prison for theft and fraud.

The government doesn't have a blank check to fund every Leftist dream coming out of Congress. It has to live within its means. It hasn't done so for a long time, and the present resident of the White House is making all the previous Presidents look like skinflints in comparison. To paraphrase Bill Clinton: "It's The Spending, Stupid!"

It isn't up to the American taxpayers to pay for the government's wasteful and out-of-control spending frenzy.

Paulina said...

Actually cutting taxes has been shown to be more damaging to the economy than spending reduction during a recession. That is because tax cuts tend to affect the higher-income families, decreasing their saving, but not spending (since higher-income families tend to have a "lower propensity to consume".) Lower income families however, who do most of the spending in the economy, and most of it locally, do not benefit from tax cuts but do from government spending programs. And interesting article about it here.

It's interesting you bring up the 70s. Here once again we had a long and costly war, and an oil 'crisis'. Reagan's TEFRA tax increase was something like one of the largest peace time tax hikes in history, and economists still argue that deficit spending helped pull the country out of that recession by 1984. As for prolonging the Great Depression, I think it was the slow down in deficit spending that slowed down the recovery, but then again, as I mentioned before, I'm with the Keynesian economists on this one.

Incidentally, Bush's stimulus bill to bail out the banks was something like $700 billion, in addition to his $140 billion stimulus package. Sure Obama then did a similar package, but don't tell me Republican's don't believe in spending. And I would rather have seen the banks fail and the money go to lower income families anyway.

Lowering taxes doesn't help anyone. The Bush tax cuts have been in effect for 10 years and where is the economy now? Not that I want people paying through the nose, I'd like wealthy people to enjoy their wealth, they have earned it after all. I like to think of it as letting the lower income people pay less. Natural selection is all fine and good but I just can't in good conscience let fellow human beings starve or go cold or sick just because they are born stupid or lame and can't provide for themselves as well as I do for myself. But I'm a bleeding heart liberal and all that.

DCE said...

The 'bank bailout' was nothing like the stimulus because the banks had to pay it back. In fact, most already have.

Paulina said...

A fisking my DCE: It's wicked long but worth the read. Obviously, I can't disagree more, except when it comes to Clinton's role in repealing the Glass-Steagall Act. Bummer, now I'll have to write a long ass response.