Update: Click here for the most recent jobs statistics.
I posted an article last month that compared the unemployment rate under President George W. Bush with the unemployment rate under President Obama at that time. I felt compelled to publish this article because some left-leaning sites were comparing Obama’s first two years and four months in office with Bush’s last and worst economic year (the above chart shows the most recent incarnation of this narrative).
In light of yesterday’s jobs numbers and the fact that both liberals and conservatives have been using my charts in flame wars, I decided to continue the tradition and post an update.
In May, the private sector added 83,000 jobs in the fifteenth consecutive month of private sector job growth. Again, this is moderately positive news. At least the country had a net employment gain. However, it is also important to note that the U.S. Bureau of Labor Statistics revised last month’s private sector employment gains of 268,000 down to 251,000.
More bad news is that the seasonally adjusted unemployment rate actually ticked up in May from a whopping 9.0% to an even worse 9.1%. This number is 1.8 percentage points worse than President Bush’s last full month in office in December 2008.
Furthermore, the unemployment rate only accounts for the percentage of the unemployed who are actively seeking employment. It does not include people who have given up on finding employment.
Both the Bush and Obama presidencies have been marked by a steady decline in the labor force participation rate. The labor force participation rate measures the number of people in the labor force as a percentage of the total working-age population.
Therefore, the unemployment situation is even worse than it appears, because it does not account for people who have been forced to exit the labor market because they can not find jobs.
Putting the Numbers into Perspective
President Bush’s overall record continues to look far better than President Obama’s to date. Over President Bush’s presidency, the private sector created a net 141,000 jobs. Surprisingly, this number includes the 3.78 million private sector jobs lost in 2008.
In contrast, under President Obama’s administration, the private sector has still lost a net 2.91 million private sector jobs. If I blame Bush and Clinton for the January 2009 and January 2001 numbers, respectively, the private sector would still have lost 2.07 million private sector jobs under the Obama administration.
Again, the point of this argument is not to assess blame on either administrations’ policy. It simply puts the numbers into perspective.
For every job that the private sector created under George W. Bush, the private sector eliminated ~21 jobs under Barack Obama. While the private sector job outlook has improved recently, the economy still must create 2.91 million private sector jobs to break even.
The country still has a long way to go to restoring full employment and the President is running out of time. According to The New York Times, no sitting President since Franklin Roosevelt has won re-election when unemployment was over 7.2% on election day.
And President Obama is no FDR.
I don’t know what “left leaning” sites you’ve been referring to (they’re not ones that I visit), but comparing Bush’s record with Obama’s 2 1/2 years in office is ludicrous. The best comparison is between Obama and FDR in their years, after each inherited a disaster from his predecessor (and one could easily point out that FDR didn’t inherit 2 wars, a fast-growing deficit, a hostile and totally disfunctional Congress, and a massive loss of tax revenues). You’ll find that FDR didn’t immediately fix unemployment either–it took many years and WWII before the US fully recovered from the Great Depression. Likewise, it will take years to rebound from the Great Recession, and unemployment is likely to remain high for some time no matter who is in the White House. I think Obama has been disappointingly timid in dealing with the economy and far to willing to cave-in to his critics on the right. However, anyone who feels compelled to defend W’s record needs to take a long vacation (and some strong medication).
My takeaway is that Keynesian economics only works to stave off disasters, but is completely inefficient at sustaining a growing economy. The government is too big and consumes too much. The unemployment numbers reveal that what Obama is doing is not working much like what FDR did before WWII.
It is like pouring a giant bucket of water into millions of empty buckets. Some water will land in buckets, but a huge percentage will miss the target. Monetarist theory on the other hand seems to help smooth the cycles, but does not seem to be all that helpful in a crisis. Maybe there is something after all to this Austrian school of economics.
I like what you have to say here Sean- this is a well balanced comment.
Have you read Bruce Bartlett? I just finished his “New American Economy” and he says essentially the same thing you do- except for your last statement about the Austrian school.
You can see the Austrian school economics in practice around the world. Places like Rwanda and Uganda have small governments yet they suffer from their own brand of ‘serfdom’.
Look, I’m not advocating bare bones government. What I am advocating is a government that is near its long-term trend, which is ~18% of GDP. We are currently at ~25%, a level we haven’t approached since World War II.
Plus, choosing two unstable countries as archetypes of a libertarian system is a bit disingenuous. It’s like arguing that Greece embodies the “successes” of Keynesian economics.
I would be interested to learn if you’ve ever actually read anything written by J M Keynes. There are two halves to his practice, of which only one is ever discussed. One is that in good times there can not only be no deficit spending, but a surplus must be saved and banked against bad times. When the economy tanks, then the money is used to create jobs that a crippled private sector cannot. Bertrand Russell once said of Keynes that he was the most brilliant man he had ever met, and that he felt slow and stupid in his presence. That is a statement worth noting.
That intervention is required to be massive; far more massive than FDR or Obama dared to attempt. The only true Keynesian intervention in history was in Germany in 1934 by Hjalmar Schacht. The Nazis wanted to legitimize their government by demonstrating that they could fix the nation’s economic woes. Schacht’s program ended the Depression in Germany in 18 months, and made a lot of people in the US and UK start to think that maybe they really WERE the wave of the future. Schacht was dumped as soon as he’d fixed the problem, and Goering took over – ruinously.
“That intervention is required to be massive; far more massive than FDR or Obama dared to attempt. The only true Keynesian intervention in history was in Germany in 1934 by Hjalmar Schacht. The Nazis wanted to legitimize their government by demonstrating that they could fix the nation’s economic woes. Schacht’s program ended the Depression in Germany in 18 months, and made a lot of people in the US and UK start to think that maybe they really WERE the wave of the future. Schacht was dumped as soon as he’d fixed the problem, and Goering took over – ruinously.”
You actually raise an interesting point. What did the Germans produce during this period? I’m assuming they embarked on a massive rearmament program, which they demostrated to devastating effect in the Spanish Civil War (1936-1939) and then in Poland in 1939. That said, I don’t know the full history behind Schacht’s program, and would be interested in learning what his stimulus looked like.
If his program did involve a massive expansion of Germany’s armament industry, so did FDR’s. The problem with these programs is that they aren’t sustainable for long periods of time. However, there is always plenty of economic activity for companies when one destroys two nations like Germany and Japan.
At the end of the day, I think stimulus programs are necessary if they are channeled to building infrastructure that helps the economy in good times. Stimulus programs that focus on entitlement program — not so much.
Really no need to study Germany, as their model (both economically and politically) is so much different than the U.S. It would be like using Monopoly rules to regulate banks (wait a minute…. nah, would be the same).
However, you can compare, both intent and outcome, the FDR Model and Hoover Model. The comparison would give you more factual data to consider as opposed to the current speculation and rhetoric noise.
On the other hand, for most discussions these days, facts have nothing to do with the thought process. Most research gathers just enough facts to justify a particular position (i.e. big government is anti religion, contraception is…., republicans are really anti deficit regardless of what the record says, democrats have no scoundrels…..).
Unfortunately, history is not on the side of spin doctors.
All fair points, Hutch.
Reaganomics traded our middle class in for a handful of new billionaires. Since the 80’s we now live in an America where home ownership, sending 2 kids to college and being able to afford out of pocket healthcare are all totally inaccessible to the large majority of people. So if you recommendation is to just pour that giant bucket into an even bigger bucket – well, that didn’t work in America any better than it does in the 3rd world countries who practice the same strategy.
The middle class grew faster under Reagan than any other time in American history, and the poverty rate actually went down for the first time since the idiot liberals declared war on poverty, causing it to skyrocket. Face it, the only thing liberal grow is poverty, and millionaires. This is why the number of children living in poverty has over doubled since the democrats took over in 2007, the number of food stamps has over tripled, and the richest 1% on average has doubled their net worth.
Are you sure you have the facts correct about the cause and effect of Deficits, Poverty and Wealth or does that even matter anymore? Want my objective (not liberal or conservative – just facts, if that matters) assessment for the cause of the current condition of the U.S.:
– Two wars financed by debt for 8 and 10 years respectively (counting hidden costs > $2 plus Trillion Dollars of DEBT.
– Tax cuts financed by DEBT for 10 years now,
– Outsourced U.S. jobs and off shore investment to create robust “Middle Class” economies for China, India… and who pays for the roads, bridges, dams… that need repair, probably more debt
– An unregulated finance world that creates no value except paper wealth, and drove this country to the brink of disaster (8 Trillion equity lost by homeowners alone to say nothing of the tax dollars),
– Health Care that is 36 in the world for effectiveness and Number 1 for costs (August 2000 to August 2010 has seen healthcare inflation rise 48%) – long before the Obama Care illusion
– Last but not least the Free Market joke – there is no free market, lobbyist jobs are to make sure the “Free Market” gets every tax break, loophole, and subsidy to enjoy the “Free Ride” (Corporate Welfare) – hate to disillusion everyone but there is no Free Market – it costs us taxpayers a fortune to provide “Free Ride”
I have a few questions.
1. Of the 2 trillion in debt from the war, how much of that was spent on US companies and their employees, as well as the service men and women? It was not just dumped out at sea right?
2. Tax cuts by debt? isn’t debt only created by a tax cut when spending is not cut as well? Who’s money is it in the first place?
3. Outsourced jobs only come from competative markets, if you want to pay top dollar cost for items we could become isolationist and ban all exports and imports. How far would your dollar go?
4. Would roads bridges and dams be afforded when money is spent on that and not a million other programs that the government has no right to be involved with?
5. Was it unregulated finance and the pressure to loan to those whom had no business getting loans? Until pressure with threats of lawsuits banks would loan based on several items an ammount that a person would be more than likely meet payment on. If discrimination was involved that should have been delt with. It was not 100% but was not too bad either. What was Fannie Mae and Freddie Macs role?
6. Health care like education when it is spent the wrong way leads to high cost little results. The 36th in the world is bunk when you break down the studies and look at items they are using. The rise in cost can be attributed to many things, Insurance doctors have to pay has gone up drastically, technology with the computer age and research (private industry I might add) have made huge steps in medical care in the last 20 years. Federal and state regulations that all those from EMS to the hospital have to comply with. Do you think that may raise the cost?
7. Free market. Well the anti free market purist would say government do everything.
Tell me what house I need and every aspect of how it should be built based on what you feel my needs are. Tell me how to get from point A to point B based on what you feel my needs are. Tell me what job I should have based on what you feel my capabilities are. Tell me what I should eat based on what you feel my needs are. Tell me what items I should have in my life based on what you feel is best.Tell me what healthcare I can get based on what you think I deserve. Mostly PUNISH me when I stray from anything you say government. Is that better?
So this is an example of Rational Republicans: Money spent on war and tax relief is a good thing – even finance by debt?
What war has been “funded”? Who does the money belong to the people who earn it or the government? Your answer shows how short you are on ideas and original thoughts and cant leave the Obama drone talking points paper when you have to give real answers..
Sorry, you are right (really right) Iraq and Afganistan were for free – there was no funding just Social Security IOU’s.
Three years after Obama took office – and after $4 BILLION IN ADDITIONAL SPENDING! – and there are still MILLLIONS more unemployed now than when he began!
Also, the monthly unemployment rate has been HIGHER EVERY SINGLE MONTH than when Obama was inaugurated.
It’s simple, It’s Euro-Socialism vs. True (not crony) Capitalism.
If you like what’s happening in Greece, you’ll LOVE an Obama 2nd Term!
Comparing Obama to FDR is hilarious.. Obama wishes he was 1/2 the man FDR was. Not even close. More like Jimmy Carter. Just like Jimmy we cal only hope he is one and done.. A liberal who has lost complete faith in Obama and his gang elitists.
SO your saying Obama enharited a dysfunctional congress. Well I do not know where you where when he came into office he had both the House and the Senate in his pocket and their failed policies are what lost them that congress.
I think the dysfunctionallity is more appropraitely called a Super Majority and Philibuster not a simple majority in your pocket !! Review the rules when you get a chance.
FDR came into office with the recovery of the great depression,and if not for his decision to enter ww2 we would not have seen recovery for years to come,Reagan came into office after the disaster of Jimmy carter,massive unemployment,huge budget deficet and the hostages in Iran,when push came to shove,Reagan got things done,when the air traffic controllers went on strike,he did not pull a move like Obama and cater to the unions,he fired all the air traffic controllers that were on strike,he showed the true colors of the U.S.,he said the United States does not negotiate with terrorists and that was that,Reagan also got shot while in office,he never once said we needed gun control,Obama sees a school get shot up and says we need gun control.Muslims blow stuff up everyday and we are told not to judge all muslims by the acts of a few,but some screwball shoots up a theater and now we need gun control
RE: “Reagan came into office after the disaster of Jimmy carter,massive unemployment,huge budget deficet and the hostages in Iran,when push came to shove,Reagan got things done.”
You need to get your facts right. Unemployment peaked at 10.8% under Reagan. Many things happened during the cArter administration that weren’t under his control. But Carter appointed Paul Volcker, who was responsible for the reagan recession, as well as the Reagan recovery. Reagan was mostly along for the ride except for his huge stimulus p[ackage financed with deficits. Sound familiar? Reagan’s stimulus was made up of tax cuts and pork for military contractors while Obama’s was made up of tax cuts and mostly infrastructure spending. Obama has gotten a lot done. GM and Chrysler Live. Reagan only had to rescue Chrysler. OBL is dead.
RE: “when the air traffic controllers went on strike,he did not pull a move like Obama and cater to the unions”
What move are you talking about where Obama catered to the unions? Who went out on strike on Obama’s watch?
RE: “he fired all the air traffic controllers that were on strike”
As well he should have. Obama, following up for Bush 43, imposed huge concessions on the UAW in the automaker bailouts. He imposed parity with the transplants.”
RE: “he showed the true colors of the U.S.,he said the United States does not negotiate with terrorists and that was that.”
Have you forgotten Iran Contra? You seem to have a case of selective memory.
RE: “Reagan also got shot while in office, he never once said we needed gun control.”
Date: Sun, 21 Jul 2013 17:08:43 +0000 To: email@example.com
The data show in the first graph that the economy was tanking during the last of the Bush administration, and further that recovery started in the Obama Administration. That is all the data you need to tell that what was being done was effective– the stimulus and other measures to stop the economy collapse. Now the recovery is coming to a halt because the stimulus money is becoming less available affecting employment negatively. The gap is not being made up by private industry which is sitting on huge reserves of cash and have extraordinary profits. The investment bankers are speculating with money from the FED and not investing in our economy.
The stimulus was not big enough— the same thing happened with the stimulus of Roosevelt after the Great Depression. The Republicans let the air out of the recovery then, as it was not until the stimulus of WWII that the economy got back on track. The GOP put the brakes on the Roosevelt recovery package. And, they have done the same with this recovery. They have done absolutely nothing to stimulate job growth, but they have done a superb job of talking us in to a “cannot do” and the government cannot grow jobs attitude. This is a huge lie to the American people by the GOP. What is needed is another stimulus, concentrating on infrastructure, and to fund it, the Bush tax cuts needs to be repealed for those over 250K and loopholes and gifts to corporations need to be closed. If we listen to what the GOP wants, we will be returning to the America of 100 years ago for most of our children and grandchildren.
I agree that things would have been much worse without the TARP or the stimulus. However, the stimulus is like giving someone a shock after they go into cardiac arrest to revive them. To continue to give them shock therapy after they’ve been revived is insane. Similarly, a stimulus seems best for emergencies but is not effective to sustain a longer term and healthy economy. The rationale is that when the government decides where money goes, it makes incredibly inefficient decisions. Take its Federal loan guarantee program for instance. In the advanced vehicle program the government spent over $400k per job and the bulk of the jobs saved went to companies like Ford that haven’t innovated in 30 years. Why? Political cronyism. When the government chooses winners, politics plays a big part as labor unions likely did at Ford.
The stimulus got us out of a hole, but it hasn’t improved the overall employment picture in two and a half years. More people are now unemployed today, than when Bush left office in 2008. This fact is indisputable.
Massive tax increases and more spending will only serve to crowd out private investment. The Administration’s anti-business climate is also making the private sector more reticent to hire employees because of the Administration’s regulatory uncertainty.
The bottom line is that the country needs more regulatory certainty, moderate taxes increases for everyone, and less profligate spending to get our economic house in order. Another stimulus would result in a downgrade of US debt and continued high unemployment. It’s the last thing this country needs.
Considering where we stand with the current deficit, would adding another 1 trillion to it really make an impact? What if the government could negotiate with mortgage lenders and debtors to, at a reduced rate, buy down some of the debt burden, either home loan or credit card debt, so that more Americans could regain their trust in credit related transactions? Basically what I’m asking is, should the political establishment considered simply giving the money directly to the debt ridden citizens of this nation to pay down the debt – which would have then transferred that money into the same institutions that ended up with bailouts in the first place? Would this not have generated better results than bypassing the engine that keeps the economy going? It seems to me that we missed a great opportunity to redistribute resources in a way that would have kept more people actively involved in the marketplace…not just the bankers and maybe that’s why Americans are amassing on Wall Street.
“Considering where we stand with the current deficit, would adding another 1 trillion to it really make an impact?”
And there’s the rub. Inflating the dollar to get out of debt can only work for so long. At some point our creditors will call their cards and interest rates will spike. I honestly don’t think the country could get away with any more borrowing. That said, I could be wrong. Investors continue to flee to Treasuries for safety, so we haven’t quite reached that point yet.
“What if the government could negotiate with mortgage lenders and debtors to, at a reduced rate, buy down some of the debt burden, either home loan or credit card debt, so that more Americans could regain their trust in credit related transactions? Basically what I’m asking is, should the political establishment considered simply giving the money directly to the debt ridden citizens of this nation to pay down the debt – which would have then transferred that money into the same institutions that ended up with bailouts in the first place? Would this not have generated better results than bypassing the engine that keeps the economy going? It seems to me that we missed a great opportunity to redistribute resources in a way that would have kept more people actively involved in the marketplace…not just the bankers and maybe that’s why Americans are amassing on Wall Street.”
You make a good point here. I think the TARP was well-structured, as it was profitable for U.S. taxpayers (if you remove GM, which isn’t a bank). That said, I think your solution would have been a better use of stimulus dollars than certain portions of the ~$800 stimulus bill. Additionally, I wouldn’t support it so that Americans could regain their trust in credit related transactions — most Americans knew what they were getting themselves into, and if they didn’t, shame on them. However, I would support it because it would help quicken the pace of deleveraging that the economy is currently going through.
Bush and Reagan and Bush didn’t mind tripling the deficit for tax breaks. America didn’t seem to mind it very much then either- it shouldn’t mind raising a trillion or 7 trillion (the actual TARP bailout cost- thank you FOI act and thank you Bloomberg news) to invest in America.
The stimulus was a bailout of the States – local governments that created/saved 3 million jobs. It prevented massive unemployment- like the TARP did. Even Rick Perry asked for stimulus funds- more than once. In fact since 2001 Rick Perry has been asking for Federal assistance so often it amounts to a letter to DC every 4 days. But enough about that guy. I mention him because he’s the most vocal Stimulus denier/hypocrite.
It was public spending that revived the Hoover/Republican mess. We need more not less. It’s disingenuous for a party who saw new record deficits and expansions of government to suddenly feign concern about spending and deficits. Remember Bush squandering the Clinton surplus. The surplus Republicans insist they created- well regardless- it was immediately squandered-
That’s another point. Republicans taking the credit for the surplus, and then squandering it. Reagan exploded the deficit, his VP Bush did also. Clinton raised taxes on the wealthy with the intention of bringing down the deficit- it’s all over his speeches- and the Republicans shutting down the government in a showey flash (without changing actual tax policy) try to take credit. Clinton/Gore leave for just one year and BAM more deficit spending- just like the 80’s except without the fiscal sensibilities Reagan had of actually raising revenues when needed.
I agree that both parties have been awful when it comes to deficit spending. Our current President, for instance, has added more debt to the country’s balance sheet per year than any other president in history.
Sean – I am looking for honest rational thinking – this statement is totally misleading. It is designed to blame rather than discuss. Discussion would consider the subject of Debt and all the contributing factors, instead of “Our Current President”. A challenge: Name one Republican President that has not increased the budget deficit (and consequently the National Debt0 by large percentages – with the last one being the all time champion for percentage increase and will hold that title for a while.
Its not just the current debt thats the problem its the unfunded liabilities that must be met as well. Social Security alone is at estimated 17.5 Trillion Medicareparts A, B and D are even worse. So the extra Trillion you tack on with these liabilties looming looks like something you will never be able to pay back.
“Unfunded” Liabilities is the correct term. The government owes Social Security 2 plus Trillion that has been borrowed to pay for Wars, Tax relief, Loopholes… little wonder Republicans want to “restructure” the programs. Also just a little tidbit: Social Security and Medicare contribute over “40% of total government revenue”receipts each year.
Its sad you know so little. There was no money in social security to borrow. Do us a favor and head back to camp Obama look up the history of social security and medicare, and your tidbit is totally wrong since they both rely on todays workers contributions for payout, why do you think we had to borrow more to make the payments last time. There is no account making money like a 401 k. It was long like this before a 10 year 2 trillion dollar war ever started. A couple questions for you. How many workers supported a retiree on social security when it started and today? How long was life expectancey when medicare started( what it was based on) versus today along with what was the average medical bill?. You have no source for your 40% government revenue from social security and medicare, I do have one thought. Only 53% of Americans pay any taxesthat are not refunded and the top fifth over $100,000 per year pay 70% of all taxes (NPR April 14, 2010). So unless you bring some noted sources with you no need to reply.
Sorry I am not as smart as you but I thought that Social Security self funds (called FICA) itself every year and has from the beginning. But if you say so or it is onTV, I guess it has to be true.
Though your response may ‘sound’ educated… in fact, you lack knowledge. Did the unemployment get a lot worse after Obama came into office. Yes, you are correct in that statement; but you lack the understanding of why. Simply put, the brakes had not had time to take grip. When Bush left office, our economy was in a free fall and had no where close to hit bottom. To think that ANYONE can immediately hit the brakes is proprosperous!!!! Now, slowly but surely, we are starting to see the effects of the measure taken when Obama came into office. Thankfully.
Since my response “lacks knowledge” please enlighten me on why nearly 3 years is not enough time for “the breaks to take grip.” The most recent unemployment number was 8.6%, which looked like an improvement on the surface. Yet it was down primarily because 315k people left the labor force, many of whom just gave up looking for jobs. The country has had an unemployment rate of greater than 8% for 34 months.
Since I “lack understanding”, when in your enlightened opinion are Obama’s policies going to start working? Three more years? Seven years? While the impact of the stimulus was to reverse the trend of private sector job loss in the short term, the President’s domestic policies seem to have otherwise resulted in a rapid expansion of our national debt with little to show for it.
As General Gordon Sullivan used to say, “Hope Is Not a Method.”
Republicans blaming Obama for the job losses he inherited from the Bush administration is like an arsonist who sets his own house on fire complaining because the fire department couldn’t get there fast enough to save it.
You might want to revisit the chart. As of December 2012, there have been a net 1 million or so private sector job losses during the Obama administration. It’s all very nice to rely on colorful analogies like arson, but quite another to ignore the fact that Obama has been in office for three years now, and had control of Congress for two of those years. Blaming the last guy for every economic ill may have been acceptable for the first year, but now it just ignores reality, and is a self-serving and partisan argument.
Very well put.
You are right on the money, Peter 777…very well put! Obama needs to point to the chart and say, “the Republican policy of no stimulus would have meant that the unemployment trendline would have kept going down. All the jobs created during the Bush years were temporary jobs based on the housing bubble. And that bubble was the result of too little financial regulation. Along with the housing bubble, Bush lowered taxes while putting two wars on the nation’s credit card. Now, Republicans are saying that lower taxes and even less regulation will create jobs again. It didn’t work last time and it won’t work again. Companies are sitting on piles of cash and not making investments because consumer demand is so weak. And consumer demand is weak because of the high unemployment rate. The only way to create permanent jobs is for the government to make investiments in education, training, infrastracture and new industries. And to do that, the richest Americans have to pay their fair share in taxes.”
Add to your facts that under Republican control, as they were reducing regulations on business, they were increasing them on Americans by hamstringing our ability to regain financial organization with the BAPCPA. That was yet another billy club to the knees of the consumer. This whole bubble was carefully orchestrated to further concentrate power, from this bankruptcy protection for the elites, to the supposedly quickly put together TARP…these were expectations built upon expectations.
“Add to your facts that under Republican control, as they were reducing regulations on business.”
True, but they also reduced an important one under Clinton too – namely the repeal of certain provisions of the Glass-Steagall Act, which effectively removed conflict of interest prohibitions between investment bankers servinb as officers of commercial banks. Additionally, I believe for the most part, that we have too many regulations in this country. The failure was not for lack of regulation, but for lack of enforcement of existing regulations. Furthermore, banks created these exotic instruments to get around existing regulations. For instance, if you can’t find a way to get a AAA credit rating on debt that government rules that required Freddie Mac to issue to subprime borrowers, you find a way to package them so that they can get a AAA rating.
“This whole bubble was carefully orchestrated to further concentrate power”
I disagree here. Remember the context of the 2000s. Within 3 months of Bush taking office, the speculative tech bubble burst and the country went into recession. Within 5 months of that, the country received a massive exogenous shock from the 9/11 attacks. The Fed deliberately pursued loose monetary policy to help ease these shocks. The resulting low interest rates then fed a second asset bubble in the housing industry — a housing bubble that both parties had in their interest to feed. The bottom line is that there were a lot of players here, as well as a lot of greed stretching from the innovative, enterprising, and greedy banker, to the poor and greedy subprime borrower.
As a fiscally conservative independent, I’m having an fun time reading many of the responses – but am acually liking the OP. It is obvious many people have very little training, and those with economics background have very little real world background. Thus, it is always difficult to sort out facts from partisan numbers.
There are a couple of things to note, and as someone who has worked with thousands of small businesses over the years (directly with business owners) and can base my deductions on dealings with them, as well as non-partisan numbers…it seems that many forget the economy WAS heading into a free fall actually by the fall of ’99. Bush inherited a recession (we won’t get into the cause of it for this discussion), attempted to legislate financial reform immediately in the spring of 2001 – which was shot down by the DEMOCRATS immediately (primarily the East Coast ones in bed with Wall Street). People always like to blame the GOP for Wall Street, when in reality, looking at both individual and company donations – it is fairly well split amongst both major parties.
Bush then had to deal with 9/11 and the subsequent tax cuts did ease the mind of the small business owner who was uncertain of the demise of the economy after 9/11. I don’t have my numbers with me, but something like 55 continuous quarters of growth – and other than an unaccounted for insurgency and then subsequent mismanagement of the wars, we would have likely seen even greater success.
The reality is that TARP was needed, as quick as the wave hit (literally 2 weeks from having food disappear from store shelves), but the stimulus was misguided and ineffective. The current administrations constant threat to increase taxes, which would affect small business owners – the vast majority of business in our country, did not put them at ease and thus they are still waiting to see what will happen. Going back and looking at smaller recessions with natural recoveries, the current administration is now, 3 years later, taking full PR advantage of the easing of taxing threats which slowed last fall.
People need to get away from the emotional dealings.Those who believe supply side economics doesn’t work, don’t understand how a business expands/reduces their workforce. The difference between macro and micro economics makes everyone an expert, and the reality is, we – the people – have allowed this government to expand beyond all reasonable means.
Keep up the good posts and the number crunching, there are those of us with deductive reasoning capacity and lovers of data who enjoy reading rational thought (although those irrational posters are very entertaining 😉
Craig – We certainly need to get away from tired cliches and emotional dealings.
You state as an opinion (and your are indeed entitled to your own opinion, but not your own facts!) that ” we – the people – have allowed this government to expand beyond all reasonable means.”
Now, the government you refer to is presumably Obama’s, however facts tell a different story: Note that according to the NY Times, as of January 2012, “government employment is down 2.6 percent over the last three years, compared to a decline of 2.2 percent in the early Reagan years. That is a record”.
Yes, government spending may be up overall as a consequence of the recession and the benefits needed to prevent social collapse but government is shrinking and will certainly shrink more. However keep in mind that there are crucial functions that government can perform that benefit businesses at all levels. I am in the ‘business incubation business’ and most of my clients welcome any help, logistical or otherwise, that government, local or federal, can give them. You may forget that no business owner at inception is earning anything like $250,000 a year, but once successful, all I have encountered are eager to ‘give back’. That’s not socialism – it’s common sense !!
OK, I will again attempt to persuade you to utilize your own power of deductive reasoning instead of relying upon a newspaper. The entire premise that government has gotten smaller is not factually correct. I suggest you go to http://www.census.gov/govs/apes/ and do some very simply analysis. Actually, it doesn’t even take analysis, as the word “bigger” constitutes a larger amount than previously.
From the U.S. Census Bureau, if you click on the downloadable charts and simply look in the number of employees (first column on the left), you will see that it has risen each year. Not substantially, but it definitely has not been in the negative as suggested. In fact, more people were added in 2009 and 2010 (the last year the data is available for) than for many years prior to that. Please don’t confuse your “facts” with desired facts – it is not intellectually honest.
When the 2011 numbers are released, there may be some drop, but it will have to show they lost over 200K government jobs in 2011 alone to get to the numbers stipulated.
No matter which side of the political fence you sit, one cannot ignore that the number of federal government employees has been higher during the Obama (and Clinton) years than during the Bush years – although it is not about a comparison, it is simply about whether the article was written correctly, or to attempt to steer the audience in a preconceived direction.
Craig – Apologies for not specifying that the numbers refer to Federal, State and Local government and together, their size has indeed shrunk during President Obama’s tenure. You may argue that this is an unfair comparison but on observing the fire crews battling the huge High Park fire along the Front Range in Colorado, the boundary between local and federal funding is indeed a vague one. The same also applies to road projects and pipelines where a relatively small amount of Federal stimulus can help facilitate significant and badly needed infrastructure improvements to the advantage of small business.
However your response does indeed highlight one important point: how can reducing the size of government help increase jobs, improve the lot of small business and expand the economy? It certainly is not helping in Europe, so why should it work here? Paul Krugman (Nobel Laureate in Economics) argues that deficit spending is a requirement to help end a recession and austerity is precisely the wrong medicine. Only the Tea Party seems capable of ignoring that logic!
In addition, your mention of an increase in the size of Federal government during President Clinton’s tenure seems a bit churlish since he was the only president in recent years to have developed a surplus! Note that if we currently had full employment, the present deficit would be negligible.
However, I admit that much still needs to be done and much work performed by government at all levels is horribly inefficient. On reflection, it may well be the ill-defined boundaries among various levels of government that contributes to the inefficiency 🙂
“However keep in mind that there are crucial functions that government can perform that benefit businesses at all levels. I am in the ‘business incubation business’ and most of my clients welcome any help, logistical or otherwise, that government, local or federal, can give them.”
Hi Iain, I’m also in that space and would say that you need to emphasize the word “CAN” in that first sentence. Yes, they can perform functions that benefit business, but having been involved in three separate SBA/SBDC’s and various other programs that attempt to help small business, I find there to be a huge difference between the help that’s pretended to be offered and the help that’s actually received.
My guess would be that your involvement is to help small businesses make sense of that mess? If so, kudos. 🙂
Clinton did agree to repeal of the Glass Steagall Act but that was to appease Republican Obstructionists. I don’t believe it was an orchestrated disaster, though many watchdogs were warning what would happen.
Republicans tend to blame all deregulation on Clinton, but the balanced budget they’re happy to take credit for (though unable to do it without Clinton or his tax policies).
The Bush years are one big excuse for Republicans.
Clinton started his term with record debt and deficits. He set out to fix them- and did.
Bush inherited a surplus- and whether or not you agree it was a surplus there was a zero deficit- and whether you want to even argue that point- the deficit was at the lowest point since Reagan.
Obama inherited the results of Faith based economic policies. At least the Reagan Bush team understood Supply Side Economics. Bush just gave tax cut after tax cut and unfunded mandate after unfunded mandate. Left markets unregulated- the results- a catastrophe.
Neither Gingrich or Romney have a different approach than what W did- and even if they wanted to go pure Reagan- it’s nothing new. We don’t suffer from stagflation or low unemployment now- if we did- maybe heavy Monetarist policies would work.
We’re in what’s closer to a depression- and we need to consider alternate ways to raise revenues like the VAT most of Europe uses to pay for it’s great societies- or we spend as Keynes encouraged us to do. Remember- in the early 30’s before the massive spending that got us out of the depression- we still suffered from record debt.
Austerity and control is what should have happened during the Bush years. Now we’re too far gone for that. Obama has overseen large spending, and as I’ve said before- had he inherited a budget surplus like W did – he wouldn’t have had to rescue the nation from the results of failed policies and a lost decade.
If Obama had even inherited merely record debt and deficits as Clinton had- we’d be in better shape but Obama inherited something far worse than any President since FDR. He inherited a grossly mismanaged economy, and a citizenry with more hatred willing to blame him for their problems than have the sense to see cause and effect.
As I read so many of these responses, I wonder if people truly understand the difference between a BUDGET surplus and the NATIONAL DEBT? While Clinton did enjoy an annual budget surplus after moving back to the center and working with a Republican controlled Congress, at no point did he have a zero balance on the national debt. In fact, there are some very good numbers out there showing that the national debt still did increase during the presidency of Clinton.
Luckily, being non-partisan, and educated in deductive reasoning, it is much easier to see through the fog of emotional partisan and uneducated opinions. Stick to the facts people, and maybe you’ll learn something.
Eric what is “fair share”? How much will that collect? What are they paying now? What will the government do with the money it collects?
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You should note that 1/3 of the stimulus went towards tax breaks in order to win Republican support. Except for the payroll tax reduction, this was a complete waste that did not generate any job growth. A better program would have been to create a jobs program similar to the Emergency Employment Act (aka CETA), which was done under Nixon. This was very successful in putting lots of unemployed people back to work immediately. I know this personally because I got a job in it when I couldn’t find work after graduating from Harvard and facing 10+% unemployment rate.
Regarding the NRLB dispute with Boeing, I agree that Big Labor has been an impediment and needs a shakeup. It shoots itself in the head too many times, for example by opposing work rules that give managers more flexibility. However, the argument that the answer to our woes is “right to work” laws doesn’t hold water either. Lamar Alexander gave the Republican weekly address yesterday and claimed that states with right to work laws are attracting jobs and growing. He forgot to look at his own right-to-work state of Tennessee, which has an unemployment rate of 9.6%, .5% above the national average. Likewise, South Carolina, another right to work state, also has an unemployment rate of 9.6%. When comparing all right to work states with union states, the unemployment rate is slightly lower (by about .6-.7%), but this is largely driven by rural, non-industrial states like ND, SD, DB, AR and the few big oil states (TX, OK). Comparing apples to apples, many union states like NY, PA, MA, NJ actually have unemployment rates well below the national average. So, obviously doing away with unions doesn’t automatically mean higher employment, but it automatically mean lower wages, i.e. it ain’t the unions that are causing our economic travails.
I agree that the answer to our woes is complex and that transtioning to right to work states will not solve our economic problems. But you have to admit, that it will certainly help. Imagine if the NLRB wins this dispute. The results would be disastrous.
Lower wages are better if it creates more jobs. According to the New York Times, wages are 19% higher in states without right to work laws. This may seem better for laborers, until you look at a supply and demand curve. By forcing businesses to pay hire wages, they hire fewer people.
Anyway, I am no expert on Jobs legislation. I am willing to hear out different proposals provided they cost little, create jobs and grow GDP.
Lower wages are better for businesses who are already making enormous profits from slashing salaries and benefits. Lower wages are not better for the actual worker, no matter how many jobs they create. You’re rationale makes it seem like you support all pay dropping to sweat shop levels so companies can hire even more sweat shop workers.
Lower wages are even better for small business that would not otherwise hire people because of the expense. If you force businesses to pay higher wages, they will simply hire fewer people.
This is supply and demand 101.
So how much are you willing to pay for a shirt?
You are comparing 8 years to 2 years. Can do you a chart for William Clinton and G. W. Bush? I think that would be a better comparison. Also, your chart shows that the US was already on a free fall. You can’t just turn the ship around and undo what Bush did in his 8 years in office.
I agree that you cannot turn the ship around on a dime, but after two and a half years, you have to start holding the President accountable and stop blaming his predecessor. If the country were at 7.2% unemployment, that would be an accomplishment for President Obama. However, the country is at 9.1% unemployment vs. 7.8% in January 2009. This is an abysmal economic environment by any reasonable measure. It would be unfair to put all of this on Obama just as it would be unfair to blame Bush entirely for the financial crisis.
I agree that comparing 8 years of Bush to 8 years of Obama would be ideal, but the data simply does not exist yet (and at this level of unemployment, it may never exist).
I agree with Frank. Comparing 2.5 years to 8 makes no sense. Wasn’t the Bush budget still in effect until July 09? Also, the Bush tax cuts were still in effect so I don’t see the comparison as valid.
But remember, some folks on the left started the argument by comparing Bush’s last year in office with Obama’s first two. I simply wanted to show the full record to keep the debate fair.
Easy- compare 8 years of Bush to 8 years of Clinton.
If you have the courage compare Presidents as far back as Hoover- but at least as far as Reagan.
W inherited a surplus and relative peace and prosperity.
Clinton inherited record debt and deficits.
Obama inherited record debt and deficits and an economy falling off a cliff.
One thing I don’t understand is why Jan. 09 is counted under President Obama. The majority of the month had Bush as CIC.
Because both Presidents were in office that month, the distinction is arbitrary. There are a number of ways one could do this. I just decided to end with Bush’s last full month in office.
That said, I included a calculation later in this article to account for this arbitary choice by pinning the January 2000 and 2009 numbers on Bush to be fair to both sides.
That’s not fair at all. I don’t even think it was arbitrary but a conscious choice to make Obama look worse.
You’re right Yuri.
I’m still in disbelief that South Carolina would elect a jerk like Jim DeMint to any office.
Within a month or two of Obama being elected, he proudly told the world his mission was to bring down Obama. Not wait and see how Obama would do things, but work toward his failure from the beginning. For a crowd that puffs and blows about patriotism, top Republicans rarely show it.
Most people, even those of limited intelligence, want to watch how the new guy does. What college or major league coach began a new job, with people that could do something about it, have gone around saying they’re going to bring the new coach down.
Bush’s last budget actually ran until September 30, 2009. That’s the government’s fiscal year and about the time the infrastructure spending in the Recovery Act kicked in. Obama’s tax cuts and aid to states for education, unemployment and Medicaid made it’s way into the economy almost immediately in the spring of 2009. My local suburban HS district got a couple hundred thousand dollars which they applied to repaving a parking lot and some other needed one shot building repairs. Go to Recovery.com and look up the expenditures from the ARRA. There’s a reason there’s been no GOP outcry about fraud in the ARRA, the rightwing rationale that when the government decides where money goes, it makes incredibly inefficient decisions.only applies to administrations like Bush’s that don’t believe in oversight and favor crony capitalism. See Iraq and Hurricane Katrina for evidence. My only complaint with Recovery.gov is that in my zip code at least (run by Republicans) they show no jobs created for most of these projects. The ARRA obviously wasn’t intended to create permanent jobs, no limited plan like this does. What it did do is keep 3.6 million people working during the worst of the recession. If we’d put the whole $787 billion into actual stimulus, aid to states and infrastructure projects instead of useless tax breaks for hiring to private businesses who had no use for more employees the benefits to the economy would have been broader and longer lasting. Possibly long enough to tide us over til the construction market recovers. Even Jon Huntsman thought so in 2009.
When it comes to the efficiency of big government, I think both sides are equally incompetent. The incentives are simply all wrong. If you don’t spend all of the money in your budget as a government agency,you lose it the next year. Therefore, there is no reason to be efficient.
Given my interest in clean energy, the U.S. Federal Loan Guarantee and Grant programs are classic cases of governent kleptocracy and inefficiency. For instance, Ford received ~80% of government funding as part of the Advanced Vehicle Technology Program with ~80+% of the jobs saved or created going to Ford. Ford hasn’t innovated in 30 years, yet they somehow mysteriously got the lion’s share of government funding. I wonder if union lobbying had anything to do with it. The $500+ million dollar loan guarantee to Solyndra was another government disaster. The companies solar cells cost ~8x the industry leaders. Yet some government bureaucrat decided that company should receive tax payer dollars.
I have mixed feelings on the stimulus. I think without it, things would have been worse. That said, I think it is a fairly crude tool to help grow an economy. In essence, its great for shock therapy but terrible for reabilitation.
So what do you think would have actually worked better?? What would you have done differently that would have been more effective?
An excellent question that most Republicans cannot answer intelligently. Hopefully my response will suffice.
I would still have implemented the stimulus, but I would not have wasted all my political capital on Obamacare, which had the effect of decelerating job growth. I would instead have passed a jobs bill that closed tax loopholes for corporations, but that decreased the overall corporate tax rate to encourage more hiring and production in the U.S. The jobs bill would have also included a massive tax subsidy for businesses that hired U.S. employees, to stimulate hiring. Furthermore, I would be encouraging and further expanding offshore oil production to reduce the bite of higher energy and food costs for consumers.
If the government would just stay out of the free market and let the chips fall as they may, in the short term yes people would be hurt, but then the strong companies survive. These companies buy out the failed businesses for 25 cents on the dollar, create new businesses and hire more employees due to the lower startup costs and investment costs. Tax base increases and wallah, the economy flourishes once again.
Tarp was a big mistake, let the giants fail. Stimulus was a big mistake, just give the money back to the people and let them infuse their cash directly into the economy. That way would have prevented the “Cronism” of Obama’s administration by feeding the funds back to their union buddies with union jobs.
Wake up people, the government only feeds their special interests with your money so they can stay in power.
Look at the Great Depression- the government acted too little too late and people lost their life savings.
If we – as you say ‘let the chips fall where they may’ the 401k’s from baby boomers- set to retire soon, would have been devastated. I’m sure even Bush before the crisis would tell people he agreed with you but thank God even he knew better.
Also unemployment over 30% for an extended period? I think you’re taking Hayak and Mises too seriously and the reality of the economy too lightly. Others have said the same thing because they have the luxury of distance and not much sense of gravity.
Smaller third world Governments are free from Government restraint- and also tend to be taken over by Warlords and Religious zealots. Hayak is like Marx- it sounds great on paper, until people see the actual results- which is why in this day and age mainstream economists don’t take them seriously- or at least not as religiously as Libertarians do.
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Well, I have to say, this is a more rational discussion than almost anywhere else on the net. However good journalism requires that the publisher decline to answer comments. It’s unfair as the rest of us can’t keep going back and forth. That said, however…
Reagan started supply side economics and trickle down economics. GW Bush accelerated it. After 8 strong years of lowering taxes under GWB, we had one of the worst recessions in history. Simultaneously, GW removed any protections we had in place to keep trade fair and jobs here. So the corporations NEVER took their lower tax bills and created jobs here – they pocketed the money and off-shored the jobs because they could get labor in India and products in China for pennies. How patriotic! Now those same corporations are sitting on trillions of dollars and paying their executives obscene amounts of money. Yeah, those GW and Reagan policies really paid off! Add to that the cost of a few (fraudulently started) wars (and I blame Dems equally for those) And now you blame the big O because he can’t turn it around in a couple years? It took over 10 (almost 15) years to recover from the Great Depression, and back then, there were actually some people on the Right who were interested in creating a strong country. Now we have an entire party of corrupt policicans bought and paid for by corporations who will sell their whole country down the river for money and power. And this is rubber-stamped by 5 equally corrupt Supreme Court Justices. We’ve all been sold out by the right and anyone who defends them is either woefully ignorant of the facts or very uneducated. If we have “free-markets” then tell me why oil companies reap immense amounts of profit quarter after quarter and we still give them tax breaks? Did you know that in general, 80% of the top 100 largest corps pay no taxes (last I looked). They don’t seem to be putting that money into creating jobs HERE!
Thank you, Mark. I am trying to keep both sides engaged with the debate.
“And now you blame the big O because he can’t turn it around in a couple years? It took over 10 (almost 15) years to recover from the Great Depression, and back then, there were actually some people on the Right who were interested in creating a strong country.”
President Obama has a part in the mess. His policies have failed. Unemployment is still rising and businesses are not spending or hiring because regulatory environment is so uncertain.
The President is clearly not solely responsible, but what he is doing is not working, and continuing to blame his predicessor almost three years after the fact is no long acceptable.
Some historians have argued hat the Great Depression lasted so long precisely because of FDR’s policies.
Both sides are to blame. Blaming the right exclusively for the country’s problems is a bit too simplistic. The Bush tax cuts are part of the program, but runaway entitlement spending pushed by Democrats is the other side of the coin. Until this country addresses both, we will get no where.
Sounds as if Mark is a democrat…hmmmmmmmmm?
I mean Shawn 🙂
Have you seen the new Figures Sean? Obama has already created more Private Sector jobs than Bush lost- nearly 2.7 million. Sounds like his policies are starting to work.
Talk about a Lost decade!
Bush and his policies led to the worst job creation record in 50 years.
And Bush had 8 years in office! 6 of which with complete party control of Senate and the House (not to mention the Supreme Court)
Blaming Obama for Bush’s failures is getting tougher every day, because every day Obama’s record is improving.
Pretty soon the only valid complaint will be his debt increase- something that Republicans since Reagan have had record debt increases themselves, without a Clinton to validate their policies with even a shred of success.
Of course Obama adds jobs when you start counting 10 months into his Presidency. You might want to cite a less biased source.
Unemployment is at 8.6%. It was 7.8% when he started in “Bush’s hole.” It seems to me the hole has gotten deeper since Obama took over.
Of course job loss continued after Obama took over, although it slowed remarkably once the stimulus was passed. Just how quickly should Obama have been able to stop it. The job loss was accelerating. One year isn’t fast enough for you? What did RW icon Ronald Reagan do with the unemployment HE inherited.
” Continuing to blame his predescessor almost three years after the fact is no longer acceptable.”Why ? Because you said so ?
Like typical Republicans, you make grand pronouncements of things that you probably couldn’t do any better on yourself.
Up the blog, you listed things you would have done differently. Great . Did you factor in that the Republicans would have voted no, on everyhing you suggested, simply because you were black and represented the other party ? That’s how Jim DeMint and Mitch McConnell vote.
Just yesterday, or the day before, house Republicans voted down the two month tax decrease, eventhough the senate, and senate Republcans voted to pass it..
As an interesting aside, some 200 presidential scholars have recently put your man George W. at 4 up from the bottom of the list of presidents, meaning only three have been worse in our history. By the way, Jimmy Carter is considerably ahead of Bush, UP the list. I’m sure that some historians argue that FDR’s policies were what caused the depression to last as long as it did.
George Bush said tax cuts for the wealthy would create jobs, the same as Reagan said. They did not either time. But here we have Republicans still trying to use trickle down, although we watched it fail for eight years, just recently. If it works so well, we should have had 100 % employment when Bush left office, rather than the longest freefall downward in our history that began, way before we even knew Obama would be a candidate, for the office. Then there was those statements “they will greet us in the streets with flowers; it’ll be a cakewalk; Mission accomplished.”
Frankly, after watching Reagan’s trickle down fail, I wouldn’t have dragged it out again, even with a new coat of paint.
From the figures I find at the bureau of labor statistics, Obama’s administration has created more jobs, than the net total Bush created. Bush created 3.3 million during the first part of his terms, but lost 4.4 million, giving him a net loss of 1.1 million, which are the worst figures of any president serving a 4 year term, since they started keeping records during Harry Truman’s presidency in the ’40s
“Continues to blame his predecessor?” Is that your way of describing that Obama would like it to be acknowledged that he inherited an economy accelerating into Depression. You call that “blaming.” I say you would like that conveniently forgotten.
Then you want to conveniently say that a Republican could have fixed things more quickly. And that 3 years is a long time to fix such a FUBAR. Talk is cheap.
I have posted a link to a scholarly study of previous periods of unemployment, including the Reagan era. This shows that even the Repub icon RR didn’t turn around unemployment instantly, even though what he inherited was nothing like what Bush laid on Obama.
“Did you factor in that the Republicans would have voted no, on everyhing you suggested, simply because you were black and represented the other party ?”
Sigh. Your argument is that Republicans oppose Obama because he is African-American. Aside from the usual old saw that because Republicans don’t blithely accept big government policies they must be racists, please prove your charge of racism. You cannot because it a fatuous argument, and nothing but the usual Democratic race-baiting that does nothing to move the country forward.
“Did you factor in that the Republicans would have voted no, on everyhing you suggested, simply because you were black and represented the other party ? That’s how Jim DeMint and Mitch McConnell vote.”
Now remove the absurd blanket charge of racism, and you make a fair point here. Some Republicans have been doing nothing but obstructing this president. Yet, it seems no different to me than how the Democratic Congress obstructed President Bush in the midst of a war (they opposed it after they voted for it). The “war is lost” comment by Senator Quisling Reid comes to mind. The last thing a soldier in combat needs is a Senator at home telling him that all his efforts are lost. It is, of course, the first thing the enemy needs.
“From the figures I find at the bureau of labor statistics, Obama’s administration has created more jobs, than the net total Bush created. Bush created 3.3 million during the first part of his terms, but lost 4.4 million, giving him a net loss of 1.1 million, which are the worst figures of any president serving a 4 year term, since they started keeping records during Harry Truman’s presidency in the ’40s”
I have no idea where you are getting these numbers, nor what your methodology is. However, they are wrong. Bush lost 653,000 net private sector jobs, while Obama has lost 1.26 million according to the lastest BLS numbers. I posted them in the latest incarnation of his unemployment post here (https://reflectionsofarationalrepublican.com/2011/12/02/bush-vs-obama-unemployment-november-2011-jobs-data/), where you can see exactly how I arrived there. To say that net positive jobs have been created during the Obama administration is simply wrong. That’s not at all what the official data shows.
“As an interesting aside, some 200 presidential scholars have recently put your man George W. at 4 up from the bottom of the list of presidents, meaning only three have been worse in our history. By the way, Jimmy Carter is considerably ahead of Bush, UP the list. I’m sure that some historians argue that FDR’s policies were what caused the depression to last as long as it did.”
What’s your point? The argument here is about Obama, who has been in office for three years and who had a solid Democratic majority for two of them. He inherited a mess to be sure, but his efforts have done little to get us out of this mess. He inherited a “mess” with a 7.8% unemployment rate. The unemployment rate is now 8.6%. All I am asking for is an unemployment rate below 7.8%. To me, that is an objective sign of improvement. And THREE YEARS is not instantaneous. It is a long period of time. How many years does he need to show even a little progress? It is time he accepted his own share of the mess.
Again, Sean, you deserve kudos for the rational argument between your readers and from yourself.
I’ll just say, to some extent, I agree with you. Although I see big money as the root of all evil in this country and I connect the Republicans to it, the Dems ARE partly responsible. Not, however, with Social Security. SS has been characterized as an “entitlement” but it’s not – we all pay for it during our lifetime. Does it need tweaking? Sure, but in this case, you can’t throw the baby out with the bathwater. “Reform” of these programs are nothing but a money grab by the billionaires who want more dough and don’t give a gnats ass about retirees. Besides, if there was no SS and Medicare and other programs like it, what would happen to the zillions of indigents and dying people it would put in the streets and in hospitals? Who would pay for them? If you say no one would have to, what would be the cost to our society?
So to make one last point and not belabor the argument, here’s how I see it. And by extension, I THINK this is how Dems see it:
You can create economic policy that favors either the wealthy or the middle class. If you put more money in the pockets of the wealthy (through tax cuts/breaks) they’ll just buy $16,000.00 umbrella stands (ala: Dennis Koslowski – or was it John Rigas?) as historically, the wealthy have done nothing but tried to live a more opulent lifestyle – with a few (percentage-wise) exceptions. They’ve proven this over the last 25 years. It’s all about “he who dies with the most toys wins” and screw everybody else. To prove my point, I ask, “what great edifices have been built in the last 25 years? Great architecture in buildings is mostly gone. You want to see amazing testaments to man’s accomplishments? Look back to what humans built, up until about 1980. Walk down the streets of Boston or New York or Washington D.C. if you want to be amazed. Who builds stuff like that today? And when they were erecting those hand-crafted artworks, where did the steel come from? The concrete? The architects? Made in the U.S.A., my friend, not China (who couldn’t care less about the quality of the products they’re sending us).
On the other hand, create jobs in the U.S. by making it too expensive to move them overseas and by taxing the “speech” out of corporations who use the U.S. to make their trillions then move off-shore to get BIGGER tax breaks. THAT would create employment here and when the middle class has money in their pockets, they can’t wait to spend it. Then who benefits? The wealthy and their corporations, the middle-class and the lower-class that the middle-class donates their extra money to in the form of charity. How can you give money to charity when you have to decide between paying for food for a family or a mortgage?
In the former case, everyone from the middle-class on down drowns (as we are seeing). In the latter case, a rising tide lifts all boats.
When Obama became president the economy was in a free-fall. Bush and his cohorts created the conditions that led to a further implosion of the economy and to even greater unemployment during the first year that Obama was in power. It is totally disingenuous on your part to assign blame for the unemployment figures on Obama during 2009, especially when Bush’s last fiscal year (his economic policies) runs late into the summer. During Bush’s presidency the private sector lost jobs and if you include the figures for 2009 his record would be utterly abysmal. It is almost comparable to Hoover’s record. We are not growing as we should be under Obama but at least we are growing. Bush inherited an economy from Clinton that had created over 20 million jobs and was already paying down the national debt and he left an economy in disarray with almost 8% unemployment, as opposed to an economy with 4% unemployment that he inherited from his predecessor. And the national debt grew from 6 trillion to 12 trillion during his eight years in office. So much for tax cuts creating jobs! This is the lie that we hear all the time from Republicans. Tax cuts create jobs. They do create jobs overseas when the super rich buy their luxury, which mostly come from abroad. The sad story is that almost 700.000 jobs were lost during Bush’s year presidency, our national debt imploded and his policies created the catastrophic conditions that Obama and the Democrats inherited. Please, blame those who deserve to be blamed for the economic quagmire in which we find ourselves.
“And the national debt grew from 6 trillion to 12 trillion during his eight years in office.”
That’s not true. The national debt was at $10.6 trillion when President Obama took offce on January 20, 2009. At that time, the US debt rating was AAA. Now it is AA+. When Bush took office, the national debt stood at $5.7 trillion. When he left, it was at $10.6 trillion, which is roughly a $4.9 trillion increase over 8 years, or about $0.6 trillion a year. In contrast, during Obama’s 928 days in office, debt inreased from $10.6 trillion to $14.6 trillion as of 6 August 2011. This implies a $1.5 trillion increase in the national debt, on average, each year. The bottom line is that President Obama is adding debt at a rate over 2.5x the rate President Bush added debt. These are the facts, and they are indisbutable.
“It is totally disingenuous on your part to assign blame for the unemployment figures on Obama during 2009, especially when Bush’s last fiscal year (his economic policies) runs late into the summer.”
So who gets credit for the $787 billion stimulus bill, which President Obama signed into law on February 17, 2009? Was that a Bush economic policy? It’s only close to an additional $1 trillion in debt.
“Bush inherited an economy from Clinton that had created over 20 million jobs and was already paying down the national debt and he left an economy in disarray with almost 8% unemployment, as opposed to an economy with 4% unemployment that he inherited from his predecessor.”
Well his predecessor also had the 2000 stock market bubble to buoy tax revenue, while Bush had the following economic shocks: 1) the 2001 recession, 2) 9/11, 3) Hurricane Katrina, and 4) the 2008 financial crisis. Of course unemployment was higher.
“The sad story is that almost 700.000 jobs were lost during Bush’s year presidency, our national debt imploded and his policies created the catastrophic conditions that Obama and the Democrats inherited. Please, blame those who deserve to be blamed for the economic quagmire in which we find ourselves.”
There is no doubt that President Obama inherited a tough economy. That said, HE HAS HAD OVER 2.5 YEARS TO DO SOMETHING ABOUT IT. HE OWNS THIS ECONOMY NOW. Unemployment has been above 8% for 30 months. His policies simply are not working. It is time for him to stop blaming his predecessor for our current mess and take responsibility for not improving the situation.
Obama’s economy is improving.
He’s added 2.7 private sector jobs in three years- the same amount Bush Lost.
I think most Americans will consider the circumstances when the only negative Obama has left is record debt. Reagan left record debt, Bush left record debt- the economy wasn’t even in freefall. As a percentage of GDP FDR added far more debt because the economy was in freefall. W left record debt also. It’s biased to look at debt in just one way- Economists look at debt in several ways and by every metric Obama is handling this crisis admirably. Until debt overtakes 125% of GDP as it did under FDR and similar circumstances, then Obama’s still making a silk purse out of the Bush disaster.
Here’s the link showing that Obama added as many jobs as Bush lost- so far- and his term isn’t even over yet. it’s getting better every day. If Congress and local governments weren’t firing public employees the overall number would be even better.
Sean, you should also mention that President Bush’s Fiscal 2009 Budget, while still adding to the debt, was essentially doubled by the current administration before it was passed in March of 2009. Most people like to cite numbers without knowing dates, which causes a big problem.
Additionally, you have to take away some of the payback that has been credited to the current administration, when it correctly should be applied to the administration that caused the policy. Thus, the spending difference actually gets quite substantial in the current administration’s term.
It is funny coming back to read these very biased, yet factually void posts by people who do not take the time to look up information themselves. They neglect to understand that the Bush administration attempted to pass financial reform legislation in the spring of 2001, but it was killed by both GOP and DEM Congresspeople (primarily all the East Coast Fat Cats protecting their interests). Then came 9/11….a devastating fiscal disaster, which is the initial cause of huge debt.
What people neglect to see, is that the previous administration saw many months of continuous economic growth. Unfortunately, even they will admit that they had no information (and there were Dems on the Senate Intelligence Committee as well) suggesting the scope of the insurgency that was to occur in Iraq. Without the prolonged presence in Iraq (which is debateable if we should have went in at the time), the war actually stimulated the economy for a number of years.
But again, people like to blame what they don’t understand (like the Bush Tax cuts). It is like when they attempt to blame Reagan for his tax cuts and the ballooning debt, but don’t understand the legislative disaster when the Dems went back on their agreed spending cuts (so he got the tax cuts, and THEY refused the agreed upon spending cuts – thus creating a larger gap than was intended).
People need to get beyond party affiliation and look at what happens by both sides and how that has affected our country over the past 20 years.
If the Republicans had been honest during the Bush years and funded the tax cuts, Medicare D, and the wars, it would have made a huge difference. But Cheney (based on Reagan, who campaigned by promising a balanced budget but ran up a huge debt) announced that deficits don’t matter. Obama inherited all that plus an economy going down. It was difficult to pass the legislation necessary to fix them, as one minority Republican would threaten filibuster. The most important things have been passed only because they wanted to go home for Christmas!
There is no doubt that Republicans deserve some blame for the 2008 Financial crisis. That said, President Obama has had nearly three years to improve the economy, yet unemployment is nearly two percentage points higher than when he took office. It is time for Democrats to take their share of responsibility for an economic policy that is clearly failing.
Obama’s already created as many jobs as Bush lost.
(You’ll kindly forgive these data points for starting the math in October and ending the math in September- as is SOP rather than Jan)
Again- if Obama had inherited a surplus- as W had, rather than a lost decade- we could expect better results.
We haven’t even gotten into the military successes of this President. Only 2 top level Al Qaeda even remain and he didn’t need a decade of Haliburton to do it.
Sean – there IS doubt that the Republicans deserve blame for the 2008 financial crisis. It was caused by the banking meltdown, and the subsequent lack of credit. People really do not understand how devastating things really could have been if some action – as bad as it was written – were not taken to save the failing banks. Fannie & Freddie were a big problem, AIG, the whole lot of them…and people literally were maybe 2 weeks from having huge lines in the grocery store and not being able to buy food on the table….or have only a fraction of money left in their accounts if there had been a run on the banks.
The financial meltdown was not caused by an administration, it was caused by years of neglect and mismanagement.
Regarding the unemployment, it isn’t really that difficult to explain what happened, what is happening, and what wil happen if they actually know and understand how the vast majority of business in the U.S. (small businesses) work:
1) The financial meltdown caused panic, which subsequently lead to the credit crisis in the fall of 2008.
2) I said at the time that if Obama was elected, you would see small businesses letting many people go quickly to try and stop the bleeding and wait what policies his very far left talking campaign was promoting. Of course, we saw what happened, and while many jobs were lost essentially because of the financial meltdown, many could have been saved if he had not instantly threatened to add tax policies to those business owners. Essentialy, the 10% of people in the middle of the political spectrum voted themselves out of a job (and numbers demonstrate more people affiliated with the democratic party lost their jobs compared to republican affiliates).
3) The current administration went on the offensive to continue the class warfare campaign, demonizing capitalism as well as business owners. This is a sign of very poor leadership, and subsequently, was demonstrated as companies downsized and became more efficient.
4) Ignored the economy and moved on health care, which is going to cost companies even more money. Ask a number of small business owners why they are making profits and not hiring – they have seen the paperwork and bureaucracy that is going to take effect in 2013 and many are waiting.
This administration has really just demonstrated their lack of understanding of any leadership. They could have remained silent on taxes, and then taken credit for the natural recovery which automatically follows such a dramatic economic event. Unfortunately, they didn’t remain quiet, and their rhetoric has actually caused businesses to wait out expansion to see if they will lose any tax writeoffs (let’s say the Section 179 deduction for buying capital equipment – which usually signifies additional hiring in personnel as well). The slower than expected recovery (a natural one, based on historical data, would be much further along at this point) is completely attributed to the rhetoric and policies of THIS administration.
If Romney were to win (who has shown interest in removing the mortgage deduction on 2nd homes), I believe that next spring would show a huge upswing in hiring. People budgeted this year to buy, but aren’t sure and are holding off. They will budget again for next year, and if they know their taxes won’t increase, and the significant costs of Obamacare are removed, all these people who have been making profits the past 2 years will start their spending/hiring spree.
First you said Obama’s policies have had 2.5 years to fix this mess, then that turned into “nearly three years”. Many people have commented that Bush’s fiscal policies didn’t end until Sept 30. Now that actually IS “nearly” Oct; so we’ll just say from Oct 2009 to Aug 2011. Now, I’m no mathematician, buuuut isn’t that less than two years? Wouldn’t you consider a period of time, especially one that has been brought to your attention several times in this discussion, an “indisputable fact”?
And since Jan 2011 he’s had a Republican controlled House held hostage by a bunch of Tea Party lunatics (most of which have openly admitted their sole purpose as elected representatives is to “take Obama down”), so most would argue we can’t really count that time period. As they’ve fought tirelessly to extend Bush Tax Cuts, cut “entitlements”, and negotiate a Debt deal that your buddy Boehner said included 98% of what he wanted.
So on the left side of your chronological logic, that only leaves us with 12 months. One year to turn around the worst recession this country has seen since the Great Depression?
“Many people have commented that Bush’s fiscal policies didn’t end until Sept 30. Now that actually IS “nearly” Oct; so we’ll just say from Oct 2009 to Aug 2011. Now, I’m no mathematician, buuuut isn’t that less than two years? Wouldn’t you consider a period of time, especially one that has been brought to your attention several times in this discussion, an “indisputable fact”?”
No we won’t say Oct 2009 to August 2011. President Obama was elected in November 2008 and became President in January 2009. He (not George W. Bush) signed a $787 billion stimulus bill in Feburary 2009, among other bills. To blame George W. Bush for all the activity and rule-making of a government with both the executive and legislative branches controlled by Democrats during the first nine months of Obama’s Presidency is absurd.
“And since Jan 2011 he’s had a Republican controlled House held hostage by a bunch of Tea Party lunatics (most of which have openly admitted their sole purpose as elected representatives is to “take Obama down”), so most would argue we can’t really count that time period.”
Your logic here is particularly interesting. Your contention is that since the Democratic Party did not control one House of Congress, the President holds no responsibility for the tough economic environment. The same logic, applied to President Bush, would conclude that since Democrats controlled both houses of Congress in 2007 and 2008, President Bush cannot be held accountable for the last two years of his Presidency. I think this logical conclusion is patently absurd, but it is perfectly logically consistent with your argument.
I’m perfectly willing to give Obama a pass for 2011, if you give Bush a pass for 2007 and 2008.
Not willing to do that? I rest my case.
Man! That seersucker bow-tie, I’m sure you rockin’, must just be spinning out of control! I was mostly being sarcastic. Unfortunately that’s not effectively conveyed through a text-only medium, and for that I apologize. The point being, I (like most of the other people commenting on this thread) found your concept of a realistic recovery time line for an economic crisis like we’ve never experienced before, just as ridiculous as you found my comment.
Just under two years, nearly three; I look at the BLS Chart and see his Stimulus helping, and think it needed to be bigger, while I’m sure you think it should have never happened. I think you’re unfairly targeting Obama for not fixing the aftermath of a collapse that happened on Dubbya’s watch fast enough, and you see it differently. As interesting of a place as your mind appears to be, I want out. I’m not going to convince you, and you’re not gonna convince me.
My apologies. I completely missed the sarcasm, but I see your point. My key frustration is that 2.5 years into his Presidency, Obama is still blaming everything on his predecessor. George W. Bush certainly shares much of the blame as does the Democratic Congress from 2006 – 2010. My main point is that at some point the President needs to take some responsibility for the fact that the environment has not improved and is starting to get worse again. Furthermore, some of his policies helped (i.e., the Stimulus), and some hurt (Obamacare, Offshore Drilling restrictions, etc.). The bottom line is that the President policies end up being a net negative, which is why I believe we are still in this mess.
“Just under two years, nearly three; I look at the BLS Chart and see his Stimulus helping, and think it needed to be bigger, while I’m sure you think it should have never happened. I think you’re unfairly targeting Obama for not fixing the aftermath of a collapse that happened on Dubbya’s watch fast enough, and you see it differently. As interesting of a place as your mind appears to be, I want out. I’m not going to convince you, and you’re not gonna convince me.”
John, I actually agree with you that we needed a stimulus. A $1 trillion drop in demand is something that needs aggressive action. Otherwise you fall into a depression. That said, I view a stimulus as a short-term solution. It’s kind of like using a defibrillator to revive someone after a heart attack. You need it to bring the person back to life, but it does no good after the person is back on their feet. I also agree that hiring appeared to accelerate right around the point when the stimulus passed. That said, you can’t stimulate forever as the cost of borrowing the debt you need to fund it will ultimately work against you. I personally think the stimulus was massive, but probably the right size.
That said, the same hiring acceleration that nicely appears to coincide with the stimulus, also appears to have happened right after the President passed the Healthcare bill, only the trend was in the opposite direction. Hiring actually decelerated from 70,000 jobs per month to 6,000. My point is that while a President is not the sole arbiter of what happens to the economy, he can do things to muck it up. The stimulus, in my view, prevented the bottom from falling out of the economy, while the Healthcare bill was a major distraction from the core problem in our economy: jobs. It may have even set things back (I’ve blogged on this extensively, but it is a bit like arguing that FDR’s policies made the Great Depression worse or helped America out of it).
Anyway, I hope I didn’t scare you away. 😉
Sean why dont you answer Mark when he states:
“Reagan started supply side economics and trickle down economics. GW Bush accelerated it. After 8 strong years of lowering taxes under GWB, we had one of the worst recessions in history. Simultaneously, GW removed any protections we had in place to keep trade fair and jobs here. So the corporations NEVER took their lower tax bills and created jobs here – they pocketed the money and off-shored the jobs because they could get labor in India and products in China for pennies. How patriotic! Now those same corporations are sitting on trillions of dollars and paying their executives obscene amounts of money. Yeah, those GW and Reagan policies really paid off! Add to that the cost of a few (fraudulently started) wars (and I blame Dems equally for those)”
Further the crux of the right-wing argument is that if you let the Bush tax breaks expire, it will hurt the job-creators. But as Mark has noted and most educated people know, the corporations are sitting on record-profits, are taking tax-breaks and ARE NOT creating jobs here. Still playing coy with us Mark you know the score. The right-wing is conspiring to let the economy tank so that they can get Obama out of the white house, simple as that.
If I did not respond to Mark, my apologies. Sometimes I get distracted from time to time. 😉
I think the economic crisis was a long-time in the making due to policies of both parties. Loose monetary policy during the Bush Administration, coupled with Democratic mandates for expansion of home ownership to poor and minorities drove a housing bubble in the middle of the last decade. When the bubble collapsed the country found itself in a balance sheet recession, which takes longer to get out of than typical recessions.
Regarding low taxes, I think you are confusing personal income tax breaks with corporate taxes. The fact is that the US corporate tax rate is still the first or second highest rate in the world. American businesses hire workers overseas for two reasons: 1) they are cheaper and 2) taxes are lower. The Bush tax cuts have nothing to do with this.
Additionally, low income tax rates did not cause the recession any more than Democratic entitlement programs like SS. That said, they both contributed to the deficit. The only way out of the deficit problem is to raise taxes on everyone and cut spending. You need both.
The reason corporations are sitting on record profits is two-fold. If they try to repatriate it in the US, they lose 40% immediately to taxes. Additionally, corporations aren’t seeing strong demand. You can tell that because many companies are issuing dividends and buying back stock rather than making new investments. These corporations aren’t evil. They are just allocating their capital in places they think they can generate the highest returns.
It is always easy to create a narrative blaming the “evil” other for the nation’s problems. Unfortunately, the causes of our current economic malaise are far too complex than that.
Sean thank you response. Lets begin by tackling your reasons for the recession. I agree with you about loose monetary policy being a major contributing factor. I believe that the deregulation that occurred under Clinton set the atmosphere for irresponsibility by both parties. A carefully regulated market-place should be able to safely expand to the poor. Your inclusion of minorities in your analysis is faulty and cast suspicions on your paradigm. To make it clearer, there are minorities that are not poor and are home owners with good credit and standing. Of course there are some that are poor and have bad credit. Such is the case in the white community as well. So, yes there was an effort to include more POOR people (and not for charitable reasons but rather chasing a profit), it was poor people as a whole and not poor AND minorities. We can excuse this miscue to inconsistencies with nomenclature.
Moving on: I did not confuse personal income tax with corporate tax. The wealthy in this country ARE the people in control of corporations. So therefore they successfully lobby in and control D.C. for their interest in total: corporate tax breaks and subsidies (exxon with record profits actually got a US Tax rebate!!) and for continuing the bush temporary tax breaks for the wealthy that were meant to expire. You claim that the US corporate tax rate is 1 or 2nd highest in the world. This argument is faulty on multiple levels. First off you fail to acknowledge that the US market is the most profitable. In other words corporations can and do make way more money than they can in the Germany or India, for example. Second I have not found any sources to confirm your claim (perhaps because you are putting it into too much of a simplified way). Furthermore the share of corporate taxes is lower than in similar countries: Take an important example, corporate taxes as a percentage of a countries GDP. The US corporate taxes comprise 1.8% of our GDP. Canada 3.5%, GB 3.6%, Japan 3.9%, France 3.5%. Corporate tax as a % of total taxation, US 7.1, Canada 10.4% Japan 13.7% Federal taxes have shifted in scale from corporations to individuals: For example if you look at corporate taxes as a percentage of federal revenue in 1955 (our golden age) 27.3 compared to 8.9 for 2010. If you compare combined individual income and payroll taxes as percentage of federal revenue you get 58% 1955, 81% 2010.
Your claim that corporations strong arent seeing strong demand is silly and transparent. Every educated person knows that trickle down economics has not worked. People arent buying because they are UNEMPLOYED. Companies have US tax payer dollar incentives to higher folks but they are not. Companies need people to have jobs in order for them to make money to buy products. You know that.
Another point that I would like to make to you and people of your ideological brand: These companies have agreed to do business in the US, many calling themselves “American” companies and use US taxpayer resources (roads, general infrastructure) they MUST abide but the rules and regulations of the US. Regardless of what the tax rate is, they are making profits off of the american people, getting subsidized by american tax payer dollars, they have a RESPONSIBILITY of paying their taxes! That they are taking american money off-shore further destroys the US economy because it takes those dollars out of circulation. These companies have showed themselves to be anti-american by sitting on profits, offshoring US jobs, not hiring US workers, leading the attack against unions (which fight for liveable wages), leading the attack against public employees, dumping money into politics.. i can go on but wont.
Finally, when a institution, be it a govt or a corporation, puts money (profit) over people, that is evil in my book (and in most people’s book).
I thank you for your time.
Your point that corporate taxes as a share of total US taxes are lower than many other countries is not inconsistent with my point that the United States has one of the highest corporate tax rates in the world. The reason US corporations pay less as a share of total US taxes is because they take advantage of tax loop holes and they produce most of their products in other countries, where they must pay the local tax rate. The way to solve this problem is to lower US corporate tax rates, but simplify the tax code to reduce loopholes. Simply forcing US corporations to pay more taxes puts them at a disadvantage to their foreign competition. If they lose market share due to higher cost structures, they will have to cut headcount to better compete.
Your point that People are not buying products because they are unemployed is perfectly consistent with my point that demand is down. Demand is also down because employed consumers are cutting back as well.
You may think corporations are evil. I simply see them as rational decision makers. I see unions as an anachronism that sow the seeds of their own destruction because they operate irrationally. For instance, unions are suing Boeing because the company created 2,000 new jobs in a right to work state. Seems pretty selfish and irrational to me.
To your point about putting profit over people as evil. Admittedly, it is not a perfect way to run things, but it is the best amongst the other alternatives. Nothing in life is free. Soviet Russia tried a system that guaranteed everyone’s basic needs, and it predictably collapsed under it’s own weight. People need incentives. Remove them and misery follows.
The problem is that the corporations are making their rational decisions based upon the knowledge that they can continue to buy a government that will not make them responsible for the negitive externalities they are causing. History has shown that the removal of reguations to provide certainity to corporations and the failure of enforcing and updating existing regualtions has resulted in the banking crisis, the gulf oil spill and many of the other huge problems facing this country and has been a complete failure. This rationality is certainly not an efficient use of the available resources but the corporations remain unconcerned as the externalities do not effect them or their owners to any greater extent than anyone else and the huge profits more than make up for any damages they suffer.
While not updating existing regulations certainly contributed to the banking crisis, I would argue that government’s failure to enforce current regulations is an ever larger problem, particularly in the Gulf oil spill. Some regulations are necessary, but the government frequently oversteps and does something stupid. For example, forcing businesses to account for every $600+ expense in the Obamacare Bill made no sense whatsoever (Congress is actively working to reverse this ridiculous provision). At the end of the day, a careful balance must be maintained.
I am not sure that I agree. The oil rig was not even up to as built safety specifications let alone the any inovation created after the rig was built. All along the same time when the industry was doing there best to obtain favorable treatment from the agency who collects the royalties from the corporations for we the people. I think that proves my point about externalites.
If congress would have been less obstructionists during the health care debate they could have created a better solution to the problem. Other than the untruths that were being spread during the debate over health care one of the main arguments against it was the failure to account for tort reform. Why would the opposition to the bill go to the mat on an issue which is a tiny fraction of the problem other than to keep the status quo of huge profits for the health care corporations by allowing them to worry less about saftey and more about profits while demonizing trial lawyers based upon a few frivolous lawsuits. A problem that could be dealt with elsewhere. I am sure there are problems with the bill as it is a complicated problem, but to debate the issue based on its page count is ridiculous.
“I am not sure that I agree. The oil rig was not even up to as built safety specifications let alone the any inovation created after the rig was built. All along the same time when the industry was doing there best to obtain favorable treatment from the agency who collects the royalties from the corporations for we the people. I think that proves my point about externalites.”
David, I don’t disagree with you that corporations sometimes produce negative externalities. That said, I don’t always think more regulation is the answer. My point is that had government enforced existing regulations, the Deep Water Horizon incident may not have happened.
On healthcare, I think the biggest issue with the bill is it is arguable that it will actually reduce costs. Furthermore, it likely increases the cost to hire employees. Before the bill passed, hiring was accerelating at about 70k jobs per month. Afterward, this rate dropped to about 20k per month. While I agree that tort reform is a small percentage of healthcare costs, it still should have been addressed. That said, I agree that debating an issue on page count is absurd. Though I also think “passing a bill so you can find out what is in it” is also a complete abdication of Congressional responsibility.
Sean – Technically, tort reform would have a very large impact on healthcare costs, which is a very detailed discussion not for the faint of heart 😉 Tort reform is also necessary for many other areas, as we have runaway litigation that is the most rampant in the world.
If people want a universal healthcare/single payor system (like some countries a fraction of the size of the U.S.), they do need to understand that if you implemented a system like that of France, or the Netherlands, or whomever may be your particular choice – unless you take away the litigation aspect, you will not have physicians who have huge debt from school, huge tail insurance (currently over $200K in the state of CA), and make $40K/year (similar to some of the Scandanavian countries often used as examples).
Our fanatical obsession with blaming someone and litigation, while considered by many as the best legal system in the world, will actually be a substantive cause of our eventual demise.
The Pelosi statement is another talking point that is an empty argument. It’s kinda how laws are written. Congress puts together the major legislation which provides the framework and then writes the regulations to implement the law which is an ongoing process. Its also an argument that is a distraction and not helpful in solving the problem.
The costs savings are based upon economies of scale which seem to work very well for insurance companies or else they would be in other businesses. There are too many levels of the health care industry in which profits are made that do not affect the overall quality of care provided. I am sure that inefficiencies will be created by governmental involvment but weather these will exceed the profits being siphioned off by profiteering. The fact that medicaid and medicare can not negotiate prices for durable medical equipment and drugs is unbelievable which should be fixed before anyone talks about cuts and or increases in the retirement age. Additionally, the government would have set the money collected aside instead of “borrowing it” to keep taxes artificially low the problem would not have been as big as it is.
Its funny when it comes to health care, global warming, and evolution the jury is still out and more studies must be performed but Iraq having WMDs well that is whole different story. I try to follow the money to determine the motivations behind law makers as opposed to take their word for it and unfortunately the press and advocates on both sides do the opposite.
I would agree with you that the best part of the healthcare law is the individual mandate, because it helps eliminate adverse selection. I also think Medicare should be able to negotiate drug costs. That said, forcing employers to provide healthcare or face a $2,000 fine is a bit heavy-handed. It will encourage small businesses to keep employees below 50, and encourage larger organizations to cancel their private healthcare policies altogether, because paying the fine will be cheaper. This ultimately will lead to more Americans getting healthcare from the government, and hence higher costs for the government. Having been the recipient of government-run healthcare as a military officer, I can assure you that the quality of care does not remotely approach that of the private sector. Of course, I hope I am proven wrong, but what government program do you know of that has ever come in under budget?
I also don’t think it is fair to lump healthcare into the same bucket as evolution or global warming. Everyone agrees that healthcare is a problem, but neither side seems to have a good solution. I agree with you that it is frustrating that the religious wing of my party ignores science when it comes to evolution and global warming. That said, I would not compare them to WMD in Iraq. Intelligence is never 100% perfect. That said, people who claim Bush lied simply don’t know the facts. I was in the military when I helped train the 3rd Infantry Division for the invasion. We created a scenario for the unit that involved the use of chemical weapons in the Karbala Gap. We were “certain” Saddam had them. It turns out we were wrong, the UN was wrong, and Republicans and Democrats in Congress were wrong. Furthermore, the UN has never been able to account for what happened to the WMD it inventoried in Iraq in 1991, and their disappearance in 2003.
Hindsight is 2020.
Thanks for your service and it is very important for the troops to be prepaird for anything. I am just saying that there were un inspectors on the ground saying the wepons did not exist and Powell didn’t believe that his own testimoney before congress with the antrax was accurate or that the urgency was there. I won’t get into sending you there without proper body armor or the fact contractors make 10 times the amount that the troops are making and the contracting corporations are profiting from the unbeliveable training that the tax payers are funding.
Thanks, David. I appreciate it.
Nice discussion. One item that has not been mentioned in the debate about Obama’s economic record is monetary policy. Aside from the impact regulations may or may not have on the economy, as any econ 101 class teaches, government has two main tools in its chest to deal with economic hard times: interest rates and spending/reducing taxes. In this case, Obama only had one–spending. That is because interest rates were aleady at zero or near zero when he took over. So, he inherited a callapsing economy with really only one major tool to use–the stimulus package. Combine that with the toxic asset crisis and the natural tightening of credit availability that resulted and even less money is available in the economy. I have many disagreements with Obama–mostly around his lack of firm leadership on policy positions, but this economy cannot be blamed on him. He had/has too few tools at his disposal. Interest rates at zero, tax rates at near record lows, and credit tightening. Not much can be done. This is the legacy of decade of failed policy. My guess is that the legacy will continue next November. I hope not, but Americans are not a patient bunch. We have been trained to expect the quick fix. Simple solutions. Sound bite policies. Problems like this are structural and take years to solve. Obama is smart enough to tackle them. I am not sure most American’s (and the politicians they elect) are.
“In this case, Obama only had one–spending. That is because interest rates were aleady at zero or near zero when he took over. So, he inherited a callapsing economy with really only one major tool to use–the stimulus package. Combine that with the toxic asset crisis and the natural tightening of credit availability that resulted and even less money is available in the economy. I have many disagreements with Obama–mostly around his lack of firm leadership on policy positions, but this economy cannot be blamed on him.”
I agree with all of the above points. I also agree that Obama is not responsible for the economic downturn. However, his actions have not done much to improve the situation, even with his access to predominantly fiscal stimulus. 31 months into the job, the unemployment rate is 1.3 percentage points worse than where it was when he started. I do hold him accountable for this. What else could he have done? Well, he should not have wasted valuable political capital on healthcare reform for one. Until it passed, job growth was accelerating at $70k jobs a month in the wake of the stimulus. Immediately after PPACA passed, that rate drop to $6k per month and dropping. It is impossible to tell if businesses simply stopped hiring because of the uncertainty in the PPACA, but it certainly looks that way.
I don’t expect miracles from the man, I just expect him to leave the economy slightly better than where it was when he started. If we were at 7.7% unemployment, I would give him credit for a 0.1% improvement.
Sean we agree on some things and disagree on others, naturally. But we are fundamentally at odds when you shrug your shoulders and are ok with the concepts of profits over people. You say our current system is the best among all the alternatives? Really? Are we going to give up that easy? We are ok with a tiny group of Billionaires that call the shot and a mass and majority of impoverished people? There has to be a better way. Ironically its your party that preaches “Christian” values. Our current system is thoroughly un-Christian, un-productive and un-sustainable. By the way, if it werent for Unions, our children would still be working in factories, 13 out of 14 days a week. We all need a living wage, nothing less, nothing more..
I prefer profits as a measure because they are unambiguous, clear, and rational. I have found that the fewer quantitative measures an organization has, the more political and irrational it becomes. Businesses cannot survive if they cannot compete globally. By demanding concessions for low skilled labor, unions have simply priced themselves out of the market. Unions did good work at the turn of the century. Now they are an anachronism that serves as the source of its own destruction.
Regarding, Christianity, not everyone in my party is a religious radical anymore then every Democrat is a Socialist on welfare. As Ben Franklin so famously said, “God helps those who help themselves.” Furthermore our system is literally the most productive in the world as we are ranked #1 in GDP.
Let’s be real about when a president’s economic policies take hold, not the date they enter office. The federal fiscal year begins October 1. So any new president in office beginning in January (in this case Jan. 2009) doesn’t actually have their budget take hold until Oct of that same year, if congress acts in a timely manner. So, putting unemployment numbers from January of 2009 until October of 2009 is simply monkeying with reality. Of course, that would completely hurt your point of view as the jobless numbers went through the roof in that period of time when the country was still running under George W. Bush’s last budget.
I’ve heard this argument before from folks on the left who are doing whatever they can to paper over Obama’s poor record. It was Obama, not Bush who signed the $787 billion stimulus in February 2009. As such, he deserves credit (or blame, depending on whether you think the stimulus worked). Giving Obama a free pass for 9 months is absurd. The right could make the equally absurd argument that businesses responded to Obama’s election in November 2008, so therefore he deserves the blame starting then.
Starting in January is the fairest way to do it.
Of course you have heard it before because it’s REALITY – I know you don’t like living in reality, but EVERY president inherits the economy of the previous president for at least the first 9 months of their term. The stimulus was NOT the budget, the incoming president LIVES with the budget from the previous FISCAL year, to ignore this FACT is simply, well, IGNORANT!
“Of course you have heard it before because it’s REALITY – I know you don’t like living in reality, but EVERY president inherits the economy of the previous president for at least the first 9 months of their term.”
An interesting take on “reality.” Your argument is that Obama’s first 9 months in office don’t count, even though you admit that the stimilus was “NOT the budget.” Of course, the president lives with the budget from the previous fiscal year, but he can (as Obama did) amend or alter it. Furthermore, the President has regulatory power and authority over that period. In effect, a sitting president can impact what goes on in the country when he is in office. He cannot when he is out of office.
By your logic, if Obama had started a war in the first nine months of office, it would have been his predecessor’s fault, because Obama inherited the budget. Furthermore, just because I’ve heard a bad argument before does not mean it is “REALITY.” Many conservatives have arguments suggesting that climate change is an elaborate hoax, and I’m sure you’ve heard these arguments before. Ergo, by your logic, climate change must be an elaborate hoax. Obviously, the evidence suggests otherwise. But hey, you’ve heard that argument before, so it must be true, right?
By the way, here is reality: When Obama first assumed office, the unemployment rate was 7.8%. Now it is 9.1%. That’s reality.
Please think through the logical implications of your arguments before you call someone else ignorant.
Sean the stimulus in feb 2009 was in response to Bush wrecking the economy… just to remind you.
I agree that President Obama inherited a terrible economy. I think he helped stabilize it, but has done nothing to improve it. It is this distinct lack of progress for which I think he deserves some blame.
Sean regardless of the logic (or lack of it) on both sides, the FACT is that Republicans are not trying to work with President. Mitch McConnell, the Republican ranking member, has stated publicly that his #1 priority (above country and constituency) is to make sure that President Obama is a one-term president. Furthermore, the Tea Party radicals, are extremist that also will never work with President Obama regardless of any proposal that he puts forward. Additionally, many Republican party members have shown a high-level of public disrespect to President Obama and moderates in your party (such as yourself) have not condemned such behavior. All of the above analysis is lovely but moot if the Republicans refuse to work with President Obama in good faith.
I agree that the Tea Party clearly has no interest in working with the President. Some Republicans are willing to give the President the benefit of the doubt, but most are more concerned about beating the President in the election. Sadly, it is this way for both sides. In regard to disrespecting the President, I’m actually okay with it after President Bush received similar disrespect from the Democratic Party. After all, turn about is fair play.
Why is Obama’s stimulus tallied at $787 billion when 38% of it was tax cuts? When Republicans do tax cuts, they call them tax cuts. When Obama does them, they call them spending.
It’s political semantics and both sides do it. For instance, Democrats blame Bush for Obama’s extension of Bush’s tax cuts. It’s just plain old politics.
In addition, Bush 43s favorable employment figures were fueled by a real estate bubble that blew up in our face. Does he really want to brag about that? Frankly, I think he’s embarrassed. If you read David Frum’s book you will see that they made a concious decision to “ride the wave as long as possible.”
True, just as Clinton’s employment figures were fueled by the dot com bubble.
True. But all bubbles are not created equal. This one is much more serious. The debt overhand for consumers will be with us for a while.
True, but that bubble was building for years. It didn’t start with Bush, and both Republicans and Democrats contributed to the mess. Regulation that forced Fanny Mae and Freddy Mac to extend home ownership to the poor (pushed by Democrats like Barney Frank) as well as loose monetary policy contributed to the bubble.
RE: Dems hold Bush responsible for Obama extending the Bush tax cuts? That’s a new one on me.
Yes. He extended them in the 2009 Stimulus Bill. Yet Democrats still blame Bush for the tax cuts today, when President Obama could have vetoed them.
Yes, he obviously did NOT veto them, because the Republicans held the tax cuts for the high earners hostage. They wouldn’t let Obama do one without the other. He had taken a pledge to not raise taxes on the middle class, and felt that would be counter productive to do so. It was the Republicans who blocked the tax increase on the high earners. I’ve not hear ANY Democrats OR Independents, of which I am one, complain that Bush had anything to do with that. Bush has enough to answer for without heaping stuff on him he had nothing to do with. Democrats DO blame Republicans for blocking the increase on the top bracket, as well they should. BUT they are still referred to as the Bush tax cuts. Greensan and others says they all need to go away.
Democrats can blame Republicans now for blocking a reversal of the Bush tax cuts, but not in 2009, when the Dems controlled Congress.
The Democrats squandered opportunities, although Kennedy’s illness and blue dog Democrats posed problems. If not for Snow and Collins, the Stimulus would have never passed.
“True, but that bubble was building for years. It didn’t start with Bush, and both Republicans and Democrats contributed to the mess. Regulation that forced Fanny Mae and Freddy Mac to extend home ownership to the poor (pushed by Democrats like Barney Frank) as well as loose monetary policy contributed to the bubble.”
Exactly WHAT regulation forced Fannie and Freddie to extend ownership to the poor. This is the most common myth thought to be reality in the Republican Party. AND it is a result of the most obscene obfuscation. YES, there was a Community Reinvestment Act. YES, it applied to Fannie and Freddie. It also applied to depository banks BUT NOT TO INVESTMENT BANKS. 85% of mortgages purchased during the bubble period were purchased by non CRA regulated lenders. And the CRa loans made during that period have performed as well as others. The problems were NOT CRA loans, but even riskier loans made by assemblers of the collateralized debt oblications better known as mortgage backed securities. These people could sell their mortgage backed securities around the world as AAA. How did this happen? It was credit default swaps that enabled the AAA rating. And issuers of credit default swaps were NOT REQUIRED to reserve capital to pay potential claims. And who do you suppose blocked the efforts of the Chairman of the Commodites and futures Trading Commission to regulat swaps? HINT – A bunch of Ayn Rand sycophants from the laissez faire RW. Greenspan, Leavitt, Gramm, DeLay, Rubin, and a host of others. It happened under Clinton, so technically you could say Dems were involved to a degree. Larry Summers was a lso complicit. But there was NO FORCE OF LAW that compelled anyone to approve the risky mortgages that created the bubble.
The CRA and the CDO machine operated simultaneously. The CRA loans have performed well. The riskier ones brought down the economy and will impact us for years. The DNA and fingerprints of the RW are all over this.
I think you are mistaken. This article provides some sufficient background. But here are the highlights:
While I agree that investment banks’ solutions to help finance this ponzi scheme made the system susceptible to increased financial risk, they nor Republicans are the only ones to blame. I actually find it absurd that the Obama administration is suing banks like Bank of America for pursuing loan practices that were required by law. Democrats most assuredly have a part in this. To deny it is to ignore the facts.
You both are making good points, but I think we’re facing a set of structural imbalances that have been brewing since the last recession: increased debt, a growing current account deficit, and loss of productive capacity. Bubbles hid the problem. Nothing this bad could be built by one party alone. To create this kind of crisis, you need a bipartisan effort! I blame Reagan, Bush, Clinton, and Bush II. I also blame Congressional Democrats and Republicans. I think Obama had the right instincts to try to get a deal with the GOP on this, but I don’t think it was realistic given the power of the tea party in the Republican party now. Rebalancing is going to take a bipartisan effort too.
One could certainly say both parties contributed to our situation. I hear that mostly from Republicans who have been beaten into submission by the facts. Yet, they still expect people to believe that “liberals made banks make risky loans” as the reason for our current economic crisis.
One could even say that both parties are guilty in the gridlock in congress. And technically, that would be true. But we all really know who is driving what. The vitriol and obstruction is at least 3 to 1 RW over LW. The responsibility for the economic mess is easily the same in the direction of the RW. AND they are clear that their first priority is to get read of Obama and reclaim power, the good of the country be damned. From the standpoint of an Independent, let’s give these people every stage and microphone we can and let them make their case. The electorate doesn’t understand the complexities of derivatives. But they can understand “Let ’em die on the sidewalks,” “SS is a Ponzi Scheme,” and at 65 we’re going to give you a voucher, and then you’re on your own.”
@ Sean – You might begin by considering the source. Which party is the proud party of deregulation or minimal regulation, and brags about it? There are so many factual errors in this piece I don’t have time to address each one. But this is consistent with the RW trying to obfuscate their responsibility. Alan Greenspan has already copped. And he was tutored by Ayn Rand.
I have already freely admitted that the CRA existed. I’ve been personally impacted by the CRA since it was first passed in 1977. I’m quite familiar with it.
This article doesn’t mention that the so called new CRA mandate they received was in fact requested by them. The CDO assemblers were taking all their business. The piece also doesn’t break out the MBSs they bought and HELD that contained much riskier mortgages than CRA mandated mortgages. This satisfied their CRA requirements. Whenever they were given a new CRA mandate, they were already beating the objective they just received.
Rather than going through each paragraph please explain this to me:
Jack Kemp’s Republican RW credentials are intact, I presume?
IF you want the truth, the LAST place you want to look is RW media.
Jack Kemp was a former HUD Secretary. He has a vested interest in rationalizing bad policy from an agency that he led. It is as simple as that. Furthermore, he offers no data to support his claim other than that he is, well, Jack Kemp.
The people granting the risky mortgage were doing it regardless of whether there was a CRA or not. It MADE NO DIFFERENCE. They were already making risky mortgages because they could assemble them into a CDO, get them rated AAA, and sell them anywhere. The CRA was of no consequence. As mentioned, 85% of mortgages approved during the bubble were made by NON CRA entities.
The RW has been using the CRA as a smoke screen to obfuscate their own responsibility. AND they now want to rail against burdensome regulation as we suffer through the results of their previous efforts. .
I never argued that CRA was the only policy that encouraged lenders to provide bad loans to the poor. It was one of several policies. According this WSJ article, almost two-thirds of all the bad mortgages in our financial system were purchased by government agencies or required by government regulations. To your point, only 2.5 million of the more than 10 million subprime loans on Fannie and Freddie’s books when they were finally taken over by the government in 2008, were made under the mantle of the CRA.
Therefore, in addition to the CRA, government agencies had clear quotas that forced these agencies to issue mortgages to home buyers who were at or below the median income. Non-CRA banks and entities simply rushed to fill in the artificial demand these unwise regulations stimulated.
Derivatives simply made all this lending possible by distributing risk throughout the entire system. This, of course, exacerbated the financial collapse when it happened. To your point, Greenspan’s loose monetary policy also helped enable the housing bubble.
The financial collapse was the culmination of many misteps on both sides of the aisle over a great many years. The right enabled business to infect the system with excess risk and the left mandated demand for bad loans by artificially creating a market for them.
Jack Kemp was HUD Secretary in the 1980s. He had NOTHING to do with the current debacle and has nothing to defend. The Peter and Alice mentioned in the video are Schiff and Rivlin, BTW. Do you really think these people don’t know the data?
If you really study this, and stay away from RW information sources, you will determine that all of these so called quotas were mere window dressing. AND you will also find that of these “mortgages held” by Fannie and Freddie, a large portion of them were not individual mrotgages, but mortgage backed securities purchased from CDO assemblers.
The fact is that the driving force behind the crisis had so little to do with the CRA and various goals and madates associated with the CRA that it is just not worth mentioning unless one is trying to spread the blame away from the true primary cause. It was the unregulated credit default swaps that enabled CDO assemblers to become Fannie and Freddie’s competitors, and take them out of the game. Fannie and Freddie couldn’t keep up and went to Congress for another “mandate” to try to compete. In the end, they ended up buying and holding MBSs assembled by their new competitors. Before credit default swaps, Fannie and Freddie had the market all to themselves. No one could compete with them because they carried the “full faith and credit of the U.S. government. Credit default swaps changed all that because the CDSs are what “justified” the AAA rating. Not only did Wall Street cease to be F&F’s “partner,” it became a ruthless competitor, along with all the other CDO assemblers like Countrywide, Novastar, New Century, etc. Whenever F&F received permission to buy more loosely, the MBS assemblers just ratcheted up their own buying practices another notch.
The point: Credit Default Swaps enabled the entire affair. Without them, the whole thing doesn’t happen. All that would have had to have been done would have been to require them to reserve capital to pay potential claims. In fact, Obama has called for F&F to be abolished and replaced with a private capital system that doesn’t rely on government sponsored enterprises. Credit Default Swaps will be an essential part of any new system BUT reserves have to be maintained. And regulation on how the CDOs are assembled must be in place.
Another thing to remember – At one time, Wall Street firms were partnerships. Partners watched each other with an eagle eye. A misstep by a partner could bring the roof crashing down on the other partners to the point that their personal wealth and holdings were at risk. Once Wall Street partnerships became public companies, all of that went out the window, and it was on. There is no way this whole affair would have happened when investment banks were partnerships.
Well, according to the information you provided, the CRA was passed in 1977. So it seems to me he was defending the CRA. I never heard the other two speak, but until they do, I cannot asses whether they know the data or not. You see, my generation grew up under the baby boomers, who by what I can tell really made a mess of things. Therefore, Nobel prize or not, I only believe an argument that is well-argued, not one that is argued by a so-called expert. The bottom line is that I don’t trust authority for authority’s sake.
Also, you keep coming back to the CRA, but ignore the quotas and mandates outside of it, which really drove poor lending practices. I agree that MBS and CDS were a big component of the problem. I do not disagree with you there. Where I strongly disagree is that government somehow how no part of the blame for pushing home ownership to low income folks. A quota is not window dressing, it is a government mandate that forces government entities to allocate dollars to certain areas of the economy. And it has a real impact.
With all due respect, I don’t think you know what you are talking about regarding partnerships. If these firms were still partnerships, I submit that the problem would have been worse, because it would have all happened in the dark. In fact, that’s precisely why what most hedge funds are – partnerships. Did it stop them from taking excess risks? Of course not.
Do you really think the Wall Street Journal is an impartial source? Or is it part of the giant FOX RW information machine? If you want facts you might consider Nocera, McLean, Lewis, Sherter, and a host of other financial writers who have no personal axe to grind.
What agenda might the Fed have?
The WSJ is no better or worse than the New York Times, which has also argued that low income mandates helped lead to the crisis. The article you provided from the Fed only concerns CRA, which the WSJ article admits were only 25% of the loans the GSE’s purchased, which is roughly consistent with your data that non-CRA loans made up 15% of the total.
Kemp wasn’t defending anything. He was merely making a statement of fact, something even knowledgeable RWers know, but choose to obfuscate. Alan Greenspan is a notable exception, as is Kemp.
So forget about the WSJ OR the NYT. You can make your own choices, but I find the NYT to be much less biased than the WSJ since FOX bought it. At least the NYT provides space for multiple points of view, something I find lacking in anything from FOX. In all my watching of FOX I have NEVER heard anyone there talk about the Brooksley Born affair and the role of RWers to block regulation of credit default swaps. I noticed their Nocera/McLean interview was carefully structured and edited. Their motives are clear. I used to think FOX was a tool of the RW. I now believe the RW is a tool of FOX.
What you haven’t yet discerned is that there is more than one way to buy a mortgage. You can buy it and hold it as an individual mortgage OR buy it as part of a mortgage backed security. One is quite different from the other. One is “insured” by a credit default swap, and the other isn’t. There is risk associated with a “held” individual mortgage. Not so with a MBS, at least that was the plan. If you remove the CRA compliant mortgages that the GSEs held as part of mortgage backed securities, you don’t find very many. The stats quoted in the article you linked conveniently left that out.
The fact is, it wasn’t the CRA mortgages that caused the problem. The Minneapolis Fed pointed this out. The problem was caused by mortgages that were MUCH riskier than CRA mandated mortgages and had NOTHING to do with any “mandates” and everything to do with the fact that they could assemble them in a CDO and get them rated AAA because of the credit default swap. The GSEs HAD NOTHING TO DO WITH THE GRANTING of those BUT ended up holding many as a consequence of the MBSs they held.
Worse yet, CDO assemblers and issuers of CDSs were often one and the same. Goldman Sachs would construct a CDO and buy a CDS from say Lehman. Lehman would construct a CDO and buy a swap from GS. And NEITHER was required to reserve any capital to pay potential claims because of the efforts of the RWers Greenspan, Leavitt, Gramm, Rubin, etc. In fact, efforts to regulate derivatives began during the Reagan administration and were beaten back by mostly the same people even then.
At one point, AIG developed a credit default swap that included some interesting new innovations. Instead of a security having to completely default before I claim had to be paid, claims could be made if a security reached certain thresholds. As a consequence, AIG commanded the largest share of the CDS market. These were issued from London, not the USA. The rest is history.
It makes one wonder about the lessening of regulation the RW wants these days. Will they ever learn their lesson? As long as the electorate is too lazy to learn what credit default swaps and collaterlized debt obligations are, and the difference between investment banks and depository banks, many will continue to fall for slogans like “the liberals made banks make risky loans.” And the RW will continue to obfuscate.
There you go again. You keep hammering on CRA mandated loans as being a much smaller proportion of the problem. I agree. But 75% of the bad loans were from non-CRA low income ownership government mandated quota programs. You still haven’t addressed this point other than called it “window dressing.”
You also continue to hammer on the fact that CDOs and MBSs were toxic to the financial system, a point with which I agree. Yet it still does not diminish the fact that government regulators pushed for mortgages to low-income households. Whether the loans were individual or bundled makes no difference. The point is the GSEs had a mandate to fill, and a bundled mortgage had less risk than a single mandated low income one. It still does – it’s called diversification.
On news sources, there is not one in this country that is unbiased. For this reason, The Economist is my favorite go-to source.
As a matter of record, I am a thoroughly disgusted registered Republican whose party has left him behind. Until Obama, I have NEVER voted for a Democrat. I now categorize myself as an Independent. There is NO WAY I could EVER associate myself with any of the current loons running for the Republican nomination, with the possible exceptioon of John Huntsman, who stands no chance. The Tea Party is an abomination, and fortunately will self destruct as did the Goldwater movement in the 1960s.
I attend a variety of economic conferences, including those of the Federal Reserve. I can tell you there are no serious people connected with those conferences who think the “liberals made the banks make risky loans.” The VAST majority of these people are Republicans.
I agree with you that the right has become far less rational and intellectual in recent years, which is why I started this blog. The problem for me is that the left’s political philosophy is so alien and different than mine, that I still would find it almost impossible to vote for a Democrat.
In terms of liberals making banks make risky loans, the truth is more nuanced than that. The government made the GSEs purchase low interest loans from banks, who simply rushed to fill the demand. Both sides are to blame.
I like Huntsman as well, and agree that he won’t stand a chance. I think Romney will get the nomination.
Regarding home ownership: During the bubble period you say was driven by a push to increase home ownership the percentage only grew 1.7% The bulk of the problem was with REFIs and ELOCs. I furnished a link to Bush 43’s speech on home ownership. There is NO denying there was a lot of rhetoric on the subject swirling around. Despite the lip service, mandates, objectives, incentives, etc. these issues were swamped by the CDO machine fueld by unregulated swaps. For all the research I have done on the subject, the most complete is “All the Devils are Here,” by Nocera and McLean.
Peter Schiff is a noted RWer, recently notorious for his false assertion that the government fined him $15K for hiring too many people. Alice Rivlin was Clinton’s budget secretary. Paul Ryan hijacked her name and associated it, without her permission, with his budget.
The push for low income home ownership started well before the bubble. The CRA started in 1977 (which we both agreed had less of an impact), but reached a fever pitch in the early and mid-90s with quotas.
Hasn’t everyone wanted to own a house? The CRA was revised many times over the years. But if you can show me any real force of law behind what you call quotas, and I call objectives, I’ll be surprised. Banks could get their name put on a list, and that list might become public. It might impact a banks ability to expand. But there was no real force of law. But you are missing an important point. The government did NOT make the GSEs buy low interest loans from banks. They provided objectives with monetary rewards for execs based on achievement. In the meantime, CDO assemblers were buying everything anyway. All Fannie and Freddie had to do was to buy MBSs from those assemblers. Did the Minneapolis Fed piece not make an impact on you? You really need to read the “devils” book. You’re going to find out that the RW obfuscation is a blatant lie.
“The government did NOT make the GSEs buy low interest loans from banks. They provided objectives with monetary rewards for execs based on achievement.”
Whether or not these were objectives or quotas, the bottom line is that the government was actively encouraging the GSEs to support providing loans for low-income people. If you reward someone monetarily for reaching “objectives,” I guarantee you that these execs will do everything in their power to meet them.
The Minneapolis Fed piece only focuses on CRA loans, which we both agreed were a small percentage of the total.
You seem to be saying there is some kind of government mandate other than the CRA forcing banks to make risky loans. What Act or piece of legislation are you referring to? I have studied this thing at length. I’ve watched hours of archived testimony from CSPAN and read everything i can get my hands on, in addition to having access to the Federal Reserve and PhD economists from a variety of different schools. If you have information they don’t have I’d be very surprised. There has been no mention of other “forces” in any of the books I have read, including the ones I have written reviews for for a variety of publicans. Are you sure someone isn’t pulling your leg? Government regulators can’t just go out and start making demands without force of law. If you read the “Devils” book you will find out that the “objectives: given the GSEs were already being achieved even as the objectives were given them.
Don’t take my word for it. This University of Chicago professor argues that the push to offset income inequity was a big factor in the government establishing “objectives”, “quotas” or whatever else you’d like to call them, in providing increased home ownership for low income folks.
Here is some text from the final FCIC Report commissioned by Congress:
In the dissenting statement of the FCIC report, there were three primary programs that encouraged these poor lending practices to low income households:
Three specific government programs were primarily responsible for the growth of subprime and Alt-A mortgages in the U.S. economy between 1992 and
2008, and for the decline in mortgage underwriting standards that ensued.
The GSEs’ Affordable Housing Mission. The fact that high risk mortgages formed almost half of all U.S. mortgages by the middle of 2007 was not a chance
event, nor did it just happen that banks and other mortgage originators decided on their own to offer easy credit terms to potential homebuyers beginning in the 1990s.
The other two programs were the CRA, of course, and the HUD Best Practices Initiative. You can find a more detailed description in the full FCIC Report.
This guy gets it, but the seminal book on the subject is “All the Devils are Here.” He gets somewhat overcomplicated in his explanation. The fact is that if issuers of credit default swaps had been required to reserve capital to pay potential claims, it would have slowed the CDO machine to a crawl. But the RW laissez faire types didn’t want that kind of “weight” imposed. Better for swaps issuers to be able to pocket the “premiums,” pay huge bonuses on the revenue, and worry about any claims later. CRA objectives just happened to be in place. The CRA was like trying to push a AA Fuel Dragster under full power. You have to catch it to push it.
Did you read the swaps part of the 2000 Commodities and Futures Modernization Act?
Again, I never disagreed with you that derivatives were not a major part of the problem. Both sides are skewing history to make people believe it was one side or the other, when it was both government and private industry.
As I mentioned, I have NEVER encountered any other “mandates” or “objectives” that weren’t associated with or reference the CRA. If you can show me anything else with any force of law, I’d be pleased to know about it. The CRA didn’t even have force of law.
Yes, anyone will work to maximize their compensation plan. And IF they weren’t already exceeding their mandates or objectives anyway, they might have bought some riskier deals to max out their compensation package. The point is that they were already exceeding the objectives they were given, because the CDo machine enabled them. Hence, it wasn’t the CRA that drove this. Without the CRA and any other mandates or objectives, the crisis would have still happened. Did you read the piece I linked from the Economist?
A personal friend is Rick Katz, is editor of the Oriental Economist. He’ll tell you the same thing I’ve been saying. But if you REALLY want to know the truth, start with “All the Devils.” You might resign your membership in the Republican Party.
Yes, I read The Economist link, which is where I found the University of Chicago economist who argued the opposite point. And again, it wasn’t just the CRA that was part of this effort. it was also Title XIII of the Housing and Community Development Act of 19926 (the GSE Act), and the HUD Best Practices Initiative.
Again, even if what I read infuriated me, it would never make me consider the Democratic Party, because its worldview is completely alien to mine. Remember, I am a former military officer who believes in small government and individual responsibility. Those have never been the tenets of the Democratic Party, and probably never will be.
Yes, I also saw that. It was so full of factual inaccuracies and ommissions that there simply isn’t time to go through it. I suspect you are going to believe what you want to believe, but read “All the Devils” if you really want to know the truth. Nocera and McLean are not raving liberals. McLean was involved with the seminal book on the ENRON debacle. You can read about Wendy Gramm’s role there. And Nocera is a respected financial writer.
I’m still trying to figure out what “personal responsibility” means. Is it a euphemism for “let ’em die on the sidewalks outside the emergency room? Acknowledging the failures of the current batch of Republicans doesn’t turn one into Nancy Pelosi.
You have cited some “Acts.” Where is the language in those acts that provides “force of law?” Same with the CRA.
I think that Congress passing them means they have the force of law. On personal responsibility, I believe that people are increasingly expecting too many entitlements from the government, when they should be taking responsibility for there own actions. About 15% of the US population is draining the productive energy of 50% of the population (the other 50% don’t pay any federal income tax). This is unsustainable, because the bottom 50% no longer have any disincentive in voting themselves more programs from the government. It is adverse selection in practice.
If you want to read an economist who reaches the conclusion BEFORE doing the research I can recommend Robert Higgs at the Heritage Foundation.
The RW desperately needs the electorate to think it was liberals who made banks make risky loans, the resources they have invested in their misinformation campaign is boundless. When the Greenspans, Volckers, Kemps, Buffets, etc. tell the truth, it really gripes them.
Have you read David Frum’s book about his time in the Bush 43 administration? He tell the story of discussions about the threat of a real estate bubble fueled by unregulated credit default swaps. They made a concious decision NOT to rein things in knowing the housing boom was the only thing driving the economy. But Frum, like Colin Powell, Volcker, Dole, Kemp and others is an honest guy.
I haven’t read his book, but hope to fit it and “All the Devils,” when I get a chance. The problem is my backlog of books keeps getting bigger. 😉
BTW, the job loss graphs came about as Republicans piled on Obama for not being able to stop Bush’s job loss in its tracks, even though that accelerating job loss was stemmed in less than a year. Also interesting is that the stock market, bouyed by the knowledge that the U.S. government was firmly behind the economy, rallied to restore alomost $16 trillion in mostly American wealth. Yet, the cry from the Party of No was that the stimulus had “failed.” In fact, they have stated that the stimulus made things worse. They have claimed that the auto industry bailout shouldn’t have been done, as if that wouldn’t have had SERIOUS job loss ramifications.
After a while, it becomes easy to figure out that the good of the country is secondary to these people. In fact, the worse it is for the country, the better they think their chances of regaining power are.
I think the stimulus helped create jobs in the short term just as firms rapidly decelerated hiring after the President passed Obamacare. I think American welfare is secondary to both parties. When many of my friends were fighting and dying in Iraq, weasels like Senator Reid publically declared the war was lost. Of course, he was wrong, and the surge worked. Yet I will never forget how that bastard was willing to make public statements that provided succor to our enemies just to score political points.
Harry certainly shouldn’t have said what he said ALTHOUGH when we leave if Iraq descends into violence, civil war, and Iran or radicals take over, it will all seem like a waster of time, money, and lives. I was one who was pushing Bush to go after Afghanistan was seemingly under control. I was so proud when our forces swept in and Saddam was one the run. What happened afterwards changed me from a Republican to an Independent.
Certainly, the “surge” worked short term. No one doubted that. Has Iraq formed a government? Wasn’t that the second objective, or should we hold them to that one? Then there is what will happen after we leave. Its easy to say we shouldn’t have gone in to Iraq. I lost a childhood friend in Viet Nam. We shouldn’t have been there. My brother, a retired Air Force officer still working for the government as a contractor, tells the story of Chalabi and his cohorts creating false radio traffic. The Bushies either bought it, or were so predisposed it didn’t make any difference. Chalabi had already been on British media bragging about how he had fooled the U.S.
Hiring slowed down when the stimulus money started running out and there wasn’t enough demand in the economy to support robust consumerism. How do you expect people to be consumers when they recently took a 6 figure hit to their personal balance sheet in the form of their home equity? Plus they were in shock over the accelerating unemployment. Obama was supposed to fix this FUBAR with tax cuts and regulation rollbacks?
Obamacare shouldn’t be such a big deal to Republicans. It is a much more conservative bill than the Republicans own bill offered up in 1993 as a counter to HillaryCare. The bill hands millions of new customers to private insurance companies. Isn’t that what they wanted?
Its amazing to me that Republicans were suddenly against what they were previously for just because Obama agreed with them. Death panels = end of life counseling, introduced by Republican Johnny Isaakson. The “mandate.” Part of the original Republican bill. Newt, Dole, Hatch, and a total of 19 Republicans co-sponsored it. Reagan is the one who gave us universal healthcare. Unfortunately, it has proven to be staggeringly inefficient. Forcing people to pay for coverage they have been receiving for free should make RWers happy. But if Obama walked across the Potomac, they’d accuse him of not knowing how to swim.
Obama made the calculation NOT to take a bill to the Hill and try to get it passed. In his mind, that’s what Hillary did, and it obviously didn’t work. So he thought if he let them develop their own bill, they might take ownership. He was obviously wrong and spent FAR too long trying to work with the Party of No.
So much for what’s good for the country.
To have force of law, there has to be a penalty for non compliance. What is the penalty if a lender doesn’t make “bad loans.” By the way, low interest loans were not mandated unless you can show me a statute that said a lender couldn’t price for risk.
So what do you do when the healthy 30 year old shows up in a coma at an ER without insurance?
Perhaps a larger question might be, “Do you self identify as a follower of Austrian School economics ala Ron Paul?”
“So what do you do when the healthy 30 year old shows up in a coma at an ER without insurance?”
Ron Paul screwed this one up. Here’s my answer:
You treat him until he recovers and then you charge him for the cost of his treatment. He freely made the decision to forgo insurance, and now should face the consequences of his actions. If the cost is too much, he assumes debt until he pays it off.
As a military officer, I was held accountable for everything that happened on my watch. If a soldier lost night-vision goggles I could have faced a prison sentence.
Your thinking is so simple minded. Let’s start with your “he assumes debt until he pays it off” response. The hospital paid employees, paid for supplies and overhead from the day the patient was treated. How long are they supposed to wait to be paid? And that assumes they will ever get paid. That same patient may need to be treated for something long term like cancer and die while being treated. That patient may file bankruptcy on the debt. That person may be in jail or prison. It’s easy to solve problems in fantasyland where people only have medical issues they can afford to have treated and people always pay their bill. In the real world people can work full time for a year to earn $17,160 pre-tax dollars and be asked to pay for health insurance which averages over $15,000/yr in the U.S. What exactly is their choice here? I’m sure you aren’t going to suggest “earn more” while trumpeting about how people need to earn less so employers can hire more people. In the real world those lower wages mean less spending on things like healthcare.
You missed some very important principles in your ECON101 class. You must have missed the day when the class went over the concept of companies needing customers to buy their products. Companies become successful when they have customers. Companies hire more employees when they can’t keep up with demand with the employees they have. Companies don’t hire just because they have money. Henry Ford understood the concept a long time ago. He had a product people wanted, but most people didn’t have the money to buy. So he paid a good wage so people could afford to buy his product, which led to more sales. That money flowed into through the local economy so others in the community also had the money to buy his product. The more money flows, the more everyone gets. It’s not like gas that gets burned up when you use it. Right now the large corporations are sitting on Trillions of dollars, that money is not flowing through the economy. Like you, they seemed to have missed the part where customers need to have money to spend if they want there product to get sold. Consumers spending is roughly 70% of our country’s GDP, and the wealthy can’t seem to think about anything beyond this quarter’s profit numbers. Trying to wring customers dry is fine for a short term strategy, but eventually ends with a dry well.
As far as your “blame Obama” stance, do you notice you completely ignore the facts to come to your conclusion? Obama has obviously improved our country since taking office. Your own graph shows millions of jobs being lost when he took over, and that has changed to jobs being created. When anyone points out how millions of jobs were being lost during the Bush-Cheney years, you fall to the “when are you going to stop blaming Bush” mantra. It’s what happened! It’s a fact! You acknowledge it would take time to turn things around no matter who was in office, but keep rolling debt and job loss numbers caused by Bush’s administration into your numbers for Obama. Give credit where credit is due! The Bush tax cuts for the wealthy, two unnecessary unpaid for wars, an unpaid for drug plan, an economy in recession heading for a depression, a collapsed housing market, 8.5 million jobs (aka taxpayers) lost, an 11 Trillion dollar debt, and a budget with 1.3 Trillion dollars in deficit spending; they all came from Bush. Obama has tried several times to end the Bush tax cuts for the wealthy, he’s bringing the wars to an end, the economy was kept from becoming a depression and the recession ended, 2.5 million private sector jobs have been created and he’s been trying to get an agreement that would reduce the debt by 4 Trillion dollars. You even blame Obama for the drop in our country’s rating when it was specifically mentioned 3 times that the reason was because of the governments willingness to consider revenues. That was not Obama, that was thanks to Republicans my right-wing bigoted friend. At most you can tag Obama with the debt, but most of that comes directly from the Bush administration (80-90% depending where you draw the lines).
“That was not Obama, that was thanks to Republicans my right-wing bigoted friend.”
There is no point in respondiing in full to this “left-wing bigoted” diatribe. You lost me when you started citing statistics that have no basis in fact. If you look at the Bureau of Labor statistics, President Obama has presided over a net job loss. This isn’t rhetoric or bigotry. It is statistical fact. How you can somehow rationalize that things are somehow better is beyond me. Food stamp recipients are at an all-time high (46 million in case you don’t believe me). Unemployment is nearly two percentage points higher since Obama took office (9.1% vs. 7.8%), and he is running up debt at over 2.5x the rate of his predecessor. The U.S. poverty rate reached an all-time high in 2010 (again 46 million). To your “Bush wars”, President Obama blithely added a third in Libya (and without Congressional approval, mind you). Bush added about $4.9 trillion to the national debt. Your $11 trillion estimate is more than double the actual historical record.
Your memory of the S&P downgrade is also selective as well. The report mentioned both unwillingness to increase revenues as well as an unwillingness to reduce spending. But of course, you ignore that fact and call me a “right-wing bigot” because statistical exaggeration and ad hominem work really well when you don’t bother to check and/or source your facts.
It’s so much easier to just make them up.
Before you call me a “right-wing bigot,” I suggest you arm yourself with facts before you are exposed as one yourself. Thanks for playing.
Your entire response is rhetoric. Instead of actually responding to what I said, you repeat your numbers that take Bush spending and policies and attribute them to Obama. Over 2.5 million private sector jobs were created under Obama, do your research. That “net” number you keep clinging to includes the job loss handoff before Obama’s policies were implemented. You do the same thing with the unemployment numbers. And your 2.5x debt rate comparison is outright absurd. Again you completely ignore all that debt that is directly attributable to Bush and blame it on Obama. You even misquote what I said about the 11 trillion dollar debt. What was our country’s debt when Bush left office? It wasn’t $4.9 trillion. It’s too bad you didn’t bother to look into the numbers before responding.
Did the S&P not mention the unwillingness to consider revenues as a reason for the downgrade? Why yes they did. How many times? Was it 3 like I said? There was always willingness to reduce spending, I’m not sure how you missed it. Republicans just want spending reductions, Democrats want revenues along with the spending cuts. Both parties agree we need spending cuts, revenues is the sticking point.
When did Libya become a third war? Your “response” fails to address the costs involved with Iraq and Afghanistan, but you try to imply our involvement in Libya is on par? If you’d like to include the costs for our help in Libya, you have my blessing. Obama is responsible for those costs. Unlike you, I give credit where credit is due.
Of course you’re a right-wing bigot, your “response” to my post is proof of that. You ignore the points I made, you repeat your distorted numbers condemning Obama for numbers Bush is directly responsible for, you completely missed 2/3rd’s of my post, and you have the impudence to say I cited statistics that have no basis in fact, when I post actual facts while you posts distortions of the truth as fact.
Here’s a simple one: How long has it been since our economy lost jobs? And how long has it been if you don’t include the government jobs lost due to spending cuts? I’ll give you a hint, your own graph is a big clue. Think you can respond to those questions directly without falling into another half-fact tirade?
Again, you resort to ad hominem and assert my numbers have no basis in fact without providing any evidence to support your claims. Your original post implies that Bush was responsible for all $11 trillion of debt. If that is not what you meant, then do you agree that Bush added $4.9 trillion to the debt?
How do you substantiate your claim that Obama is not running up debt at over 2.5x the rate Bush added to the debt? It is not sufficient to just ignore the data and call me a bigot instead. By your estimation at what rate is Obama adding to the national debt? Since you likely haven’t done the calculation yourself, it is not enough to just dismiss the data.
On the S&P downgrade, I never disputed your claim that an unwillingness to increase revenues was part of the downgrade. I agree. However, what you conveniently left out was that S&P also mentioned the unwillingness to cut entitlement spending as another reason.
On your question, I believe the economy added private sector jobs for the last 18 consecutive months. However, unemployment is still higher because the economy is not adding jobs at a sufficient enough rate to compensate for the growth of the labor force.
My question to you is: what is the unemployment rate today? What was it when Obama took office? Is it better or worse today?
I’m also curious by what you mean by the “job loss handover.” Is that some sort of code for “Bush gets credit for all job losses during Obama’s term, while Obama gets credit for all job gains.” In fact, I think this is a standard Democratic talking point. However, I think you conveniently left out the point that that jobs number is range bound between a starting and end date well after Obama assumed office. If you look at my chart and add up all the blue bars, you don’t get a positive number. How did you arrive at your 2.5 million number? Move On.org? Pravda?
Ah, I found it! It is a theoretical number based on the so-called multiplier effect. If the government had spent $1 trillion on diaper cream, the same formula would have predicted the creation of 2.5 million jobs. http://www.americanthinker.com/2011/08/where_are_the_25_million_jobs_mr_president.html
I suggest you read my posts before “responding” to them. You seem more interested in parroting distorted “facts” than considering what I said and responding. If you aren’t right-wing biased, why do you think you avoid responding to the points I make, but instead repeat your obviously right-wing spun version of the facts?
Let’s start with the debt amount. Try to follow along without falling back to dismissing the facts just because you want to remain blind to them. What was the debt amount President Obama inherited? How much interest has that debt accrued since? How much has Iraq and Afghanistan cost since then. How much has Bush’s unpaid for prescription plan cost since then. How much revenue was lost thanks to the Bush tax cuts for the wealthy? How much revenue was lost because of the millions of jobs lost thanks to Bush? What is the total debt when all those things are considered? Can you force yourself to be impartial enough to even consider what that total is? That’s not even considering the country’s “Great Recession” status, the collapsed housing market, the problems in European, etc. I know in your fantasy world President Obama snapped his fingers the day he became President and started with a clean slate, so everything that has happened since that day is President Obama’s fault. But the reality is President Obama did inherit all those problems and should get credit for what he is responsible for, not the mess he inherited.
I’m curious where you get you’re net job loss number from if you have no idea how many jobs were created. To help you understand, let’s start with that 18 months of jobs growth. What is the total number of jobs created? Does your number include government jobs lost due to spending cuts? Make sure the numbers you are looking at are not the net number of government and private sector jobs. Hundreds of thousands of government jobs have been cut due to spending cuts (smaller government).
I’m going to let you in on a little secret, history shows government grows more under a Republican Presidents than it does under Democrat Presidents. I used to consider myself a Republican because I believe in less government, personal freedoms, state’s rights, etc. But unlike people like you, I don’t blindly follow a party. I watch actions over party speak. I see individual rights being taken away under the guise of “family values” and “war on terrorists”. I see spending increases and debts climbing more under Republican Presidents. For some reason people like you feel the need to hide from the facts and parrot twisted versions of the facts to defend the party that now works only for large corporations and the wealthy.
As far as your S&P rating response, I have to ask if you actually read things before responding? I pointed out how you blame President Obama for the lowered credit rating and didn’t mention the fact that they specifically mentioned the government’s unwillingness to consider revenues. And you respond with how I “conveniently left out” information? I was pointing out what you “conveniently left out” when giving our President the blame for the rating drop. Do you need me to repost your posts when I post my response to your post? Seems a bit ridiculous, but I guess you should consider doing that when responding to my posts because your “responses” seem to elude the comments I make.
The problem is I have read your posts, which are littered with so much ad hominem and so many distortions that they are difficult for me to take seriously. Of course, my job loss numbers are net numbers. Why shouldn’t they be? It is a bit “bigoted” to only include only the jobs created and not destroyed if they help one’s side look better. And you still haven’t addressed the validity of your 2.5 million jobs number. You do agree that the number is not based on any real economic data, but is based on a theoretical formula that suggests that x% of GDP growth results in a y% decrease in the unemployment rate. In fact, I believe there is a name for it – Okun’s rule. In fact, it is a rule because it does not always hold.
Furthermore, not even the Obama administration has the gall to suggest it created 2.5 million jobs. It claims that it created or saved that many jobs.
On the debt, the Democrats had complete control over the executive and legislative branches of government in Obama’s first two years of office. He could have overturned the Bush tax cuts, and Bush’s prescription drugs program, but didn’t. Yet the Democrats still blame Bush for the fact that those programs still add to the debt. The bottom line is that during the Bush administration, government was less than 20% of GDP. Under Obama, it is nearly 25%. Admittedly, my methodology of starting the debt clock, the day the President got into office is crude, but it is the fairest way to do it without injecting any partisan bias. In your opinion, how much debt did Obama add? What is your “official” number?
If you agree that the S&P also noted that a failure to adequately address government spending was one of the leading rationales for it’s downgrade, then my apologies.
At some point, your “side” needs to take responsibility for it’s share of the mess. Blaming Bush 3 years into Obama’s presidency is not a sufficient excuse. And by the way, my points are my own, and they are derived based on an observation of official government statistics, not Republican talking points.
Why do you think it is you can’t bring yourself to even look at the real numbers? I’m trying to get you to show us how you came to your net loss number, but you can’t seem to do it for some reason. I agree if you include the job loss numbers from the Bush economy handoff you will have a net loss. But your net loss amount needs to be derived from jobs lost and jobs gained. So where are your numbers? I’m not sure how simple I can ask the question to make it more clear. What part looses you? Or is it you don’t honestly know numbers beyond the biased versions you’re given?
I’ll repost my questions with numbers beside them so you can either answer that question or tell me what prevents you from answering it. Saying you don’t understand the question or President Obama should have been able to fix it is just a cop-out on your part.
1) What was the debt amount President Obama inherited?
2) How much interest has that debt accrued since?
3) How much has Iraq and Afghanistan cost since then.
4) How much has Bush’s unpaid for prescription plan cost since then.
5) How much revenue was lost thanks to the Bush tax cuts for the wealthy?
6) How much revenue was lost because of the millions of jobs lost thanks to Bush?
7) What is the total debt when all those things are considered?
8) How many months of consecutive job growth have we had?
9) How many months of private job growth have we had?
10) How many jobs were created during those periods?
11) How many of those jobs were private jobs and how many were government jobs?
12) Did the S&P mention unwillingness to consider revenues as a reason for the downgrade in our country’s credit rating?
13) If yes, how many times?
14) Which party was unwilling to consider revenues?
15) Were both parties willing to make cuts to spending?
16) Did Republican leaders say their number one priority was to make President Obama a one term President?
17) Is President Obama more likely to get re-elected in a good economy or a bad economy?
18) Has President Obama made an effort to end the Bush tax cuts for the wealthy?
19) Was our economy in it’s worst recession since the Great Depression when President Obama took office?
20) When do most economists agree the recession ended?
I could keep going, but we’ll see if you can handle those 20 very straight forward questions. Try to just answer the question the same way they were given to you.
If you honestly derive your information by observation of official government statistics, these will be easy questions for you to answer. Try to keep any right-wing bigoted comments to yourself at least until after you’ve answered the questions. If you look at my previous posts, you will notice most of my questions were mentioned before. If you look over your previous “responses” to my posts, you will notice the majority of those questions weren’t answered.
Something I should make you aware of, I’m not a member of any party since leaving the Republican party. Unlike people like you, I research the candidates and vote for the individual I believe is best for the job. I don’t vote for someone based on the party they belong to. I vote Republican, Democrat, Green, Libertarian, etc. Your “your “side”” comment doesn’t apply to me. While you say things like “my methodology of starting the debt clock, the day the President got into office is crude, but it is the fairest way to do it without injecting any partisan bias”, when it clearly is bias (did anyone believe President Obama would be able to fix everything the day he was sworn in). I take the more honest approach by giving him credit/blame for his actions, not the actions of others.
No, it doesn’t work that way.
You made several claims, yet never backed them up. The burden of proof is on you, not me.
Furthernore, I already answered #9 and #12, yet you are asking these same questions again. At least I made an attempt to answer some of them. You’ve made no similar attempt for any of my questions.
I will be happy to answer one question for each one of mine you answer. In fact, it seems you owe me two according to that criterion. Answer two of my questions below and I will answer another one of yours, after which I will expect you to respond in kind. Like you, I’ve gone through my posts to find only the questions you have ignored — which are all of them:
1) Why shouldn’t the jobs numbers be net numbers (i.e., jobs gained – jobs lost)?
2) In your opinion, how much debt did Obama add?
3) How did you arrive at your 2.5 million jobs number?
4) Please quantify what you mean by the Bush “job loss” handover (i.e., when precisely did it start and how many jobs did it include)?
5) What is the unemployment rate today?
6) What was it when Obama took office?
7) Is unemployment better or worse today than when Obama took office?
8. By your estimation at what rate is Obama adding to the national debt?
I look forward to your response.
I knew you would cop-out. I gave you very simple questions in a easy to understand format and you still couldn’t even park your personal bias long enough to answer one. I’ll give you some questions on par with yours:
1) When President Bush left office, were job loss numbers increasing or decreasing?
2) How many jobs would we be loosing/creating this month if we had continued on that path?
3) How many jobs would have been lost/created since President Obama took office if the rate had remained the same as it was the month prior to taking office?
4) What would the current unemployment rate be today in each of those cases?
5) Describe as a percentage, how much the debt increased while President Bush was in office.
6) Did that rate increase or decrease when compared to the rate from the prior President?
7) If we had gone directly from President Clinton to President Obama and all President Obama’s same spending had taken place (even though most of it wouldn’t have been necessary), how much would the debt have increased?
8) When a Republican controlled Senate passed a bill to increase the spending limit on the same day they passed tax cuts for the wealthy, did President Bush or the Republican controlled House require offsetting spending cuts?
9) How many times did President Bush need to increase the country’s spending limit?
10) Did Republicans require an offset in spending before passing those spending increases?
11) When Vice President Cheney was confronted with concerns about the growing deficit, what did he say Ronald Reagan proved about deficits?
12) Under President Bush, did government grow or shrink?
13) Overall, did the stock market numbers improve under President Bush?
14) Overall, did the stock market numbers improve under President Obama?
I’m not sure if you honestly don’t understand that the state of the economy and Bush’s policies didn’t just go away when President Obama took office, or you’re so blinded by your personal bias that you’re unwilling to acknowledge it. If one company was loosing $500,000/mo. and another was making $500,000/mo., but they both were earning $30,000/mo. under new management; the new management’s performance would be rated very differently at each company. They wouldn’t just dismiss the company’s direction prior to when the new management took over. If I was working a production job and the person before me was 1,000 units below expected output when he left, my production numbers wouldn’t include the -1000 units from the previous employee.
Even though you failed to answer my questions again, I am going to be the bigger person here and answer one of yours:
1) I never said job numbers should or shouldn’t be net numbers.
A couple of my questions to you are about getting net job numbers from you. I keep asking you what numbers you are using to get your net numbers, but you won’t answer the question for some reason. What numbers are you using in your “jobs gained – jobs lost” equation? If you actually use real data to get your numbers, you must have the job creation numbers. How do you get your net jobless number if you have no idea what the job creation number is? The fact that you have dodged answering that question in all your posts, but have repeated your net number in numerous posts, suggests you don’t really know the specifics about how your net number was arrived at. How can you question any job creation number if you have no idea what that number is?
I’d like you to be honest about why you won’t answer my questions. The only “rational” reasons would be you don’t have the ability to answer or you’re unwilling to answer them. If you’re unwilling to answer them, it’s obviously because you realize those answers contradict your “reasoning”. As a person who promotes himself as “rational” and purports his information is based on observation of official government statistics, you sure seem opposed to answering any question which might counter the right-winged biased version of the “facts”. You say I “resort to ad hominem and assert my numbers have no basis in fact”, so I’m giving you an opportunity to share the “real” numbers. And instead of offering those “real” numbers, you won’t answer my questions and ask me for more numbers? I certainly wouldn’t describe your responses as “rational”, but I would describe them as evasive and filled with bias.
You still owe me one more answer, but to be kind, here is how I arrive at the net numbers under Obama: If you go to the US Bureau of Labor Statistics, download the total number of private sector jobs in each month from January 2009 to August 2011 (tomorrow, you will be able to add the September numbers). For each month, subtract the previous month (this gives you the change in private sector jobs) — that is, Jan 2009 minus Dec 2008 + Feb 2009 – Jan 2009 +…+ August 2011 – July 2011. Because Obama took office on January 20, 2009, in the latest version of this post, I only give him credit for the last 12 days of the month. Therefore, I multiply January 2009’s job losses by (31-19)/31 to get -325.6k for Obama and -515k for Bush in January 2009. I add the -325.6k to the job losses in February of 721k, etc. If you add all changes in private sector jobs all the way up to August using this methodology, you get to a net number of 2.137 million private sector jobs lost during the Obama adminstration. If you blame Bush for all of January 2009, then 1.811 million private sector jobs would have been lost under the Obama administration. If you performed the analysis for total nonfarm employment, the numbers would look even worse because of local and state jobs lost.
I’ve now answered three of your questions. I won’t answer anymore until you reciprocate by answering two more of mine.
Just curious – Why would you hold Obama responsible for even his first year? Do you think there is anyone, Dem, Republican, Christ, who could have stopped the accelerating job loss and economic contraction created during the Bush 43 administration in its tracks and reversed it immediately?
In fact, aren’t Republicans the “hands off” party of small government, allowing the market to work things out?
I am not holding him “responsible.” I am merely reporting the number of jobs lost while he was in office. Furthermore, he passed an $800+ billion stimulus in February 2009, so he was having an immediate impact ( which was a positive, but short-term one).
Might be good to mention that the stimulus was 38% tax cuts, something Republicans usually like, even in times of severe deficits.
I can’t verify that number, but it sounds about right. No argument here.
I really don’t understand why no one has discussed two points.
First – Reagan did NOT raise the debt as he did NOT control congress. As all spending is done by the House of Reps and it was controlled by Democrats for 60 years until 1995.
Clinton get credit for a balanced budget even though it was Gingrich who had to literally shut the Federal Gov down before Clinton was agree to the balanced budget.
Bush stood by and did nothing with Fanny and Freddie even though he warned congress, D-Franks and D-Dodd refused to allow more oversight and Bush backed down like a coward.
Secondly – Democrats controlled BOTH houses the last two years under Bush and did NOTHING to stop the financial crisis or even suggest there would be one. In fact in 2007 R-McCain tried to do something about it, however D-Franks and D-Reid and D-Dodd chastised McCain and said quote “There is no impending crisis”. So if the Democrat controlled Congress which was also home for then Senator Obama, why are they taking ZERO blame for the financial melt down. Congress under Ried and Pelosi refused to admit there was a problem let alone provide a solution.
It’s fine to Blame Bush and I am no fan of Bush, but take off the Party Loyalty blinders as I did (Democrat since birth). Under Bush employment actually reached levels lower than 5 percent the year before the crash, so it’s not like it was eight years of disaster. Truth is had the Feds under Clinton not encouraged or even forced banks to give sub-prime loans back by Freddie and Fanny we would not be in this mess. If Bush had taken a hard-line on the Fanny and Freddie problems the financial crisis would have still happened, only to a lesser extent.
Remember folks, Congress controls spending and during Reagan, D-Foley ran the debt up and the last two years under Bush, D-Ried and D-Pelosi ran both houses. Pelosi did not pass a budget the last two years as speaker and left it for the next congress.
I agree to the extent that Congress is indeed entrusted with the “Power of the Purse.” That said, I think the crisis was a result of the interaction of many factors including loose monetary policy, wasteful government spending, Wall Street and Main Street greed, and globalization. Ultimately, both parties had their share of the blame.
You’re expecting immediate results- no wonder you’re confused!
Congress doesn’t have the power to raise the dead. Clinton’s policies were working before the Balanced Budget Amendment. He raised taxes on the wealthy. He cut taxes for the middle class. Republicans said it would lead to economic catastrophe. It led to the greatest 8 years of economic prosperity in postwar US history.
Congress doesn’t have the power to interfere with markets- not immediately. That’s why we have a Federal Reserve- whom Bush had appointed. it’s the Fed’s job to ‘let a little air out of a bubble’ before it pops. Not congress.
Bush appointed the CEO of Goldman Sachs who took a ‘hands off’ approach to the markets leading up to the collapse – due in no small measure to lack of regulations of the derivatives markets.
You’re doing what alot of republicans do- you pick and choose two years and forgive a half dozen in one go. It’s selective reasoning. eg some republicans say it was Gingrich who balanced the budget, rather than Clinton’s reversal of Reagan era deficit spending. You forget, Clinton inherited a record deficit. The deficit was key to his platform in 1992. The debates centered on the deficit. Bush and Reagan raised taxes because of their record deficits. This is why Clinton raised taxes on the wealthiest and Republicans warned it would lead to disaster. Instead it lead to a prosperous decade of record job growth. Clinton cut taxes on the Middle Class- something Republicans even now are unwilling to do (Early Dec 2011- refusing to extend the payroll tax cuts- again).
As much as you tell yourselves that lower taxes on the wealthiest is good for the economy the truth doesn’t bear this out one bit- nor will it. It took a few years before Bush was able to drive Clinton era prosperity into the ditch. It took Clinton a few years before he was able to bring a divided nation together and rebuild the economy and it will take Obama a few years also.
It seems your definition of immediate results seemed to be three years, so I’ll just let readers decide on whether that time period is immediate or not. I tend to think three years is quite a long time.
On this ridiculous argument that high taxes resulted in economic prosperity during the Clinton years, I challenge you to link the two. Please prove to me that it was high taxes that caused the economic prosperity during the Clinton years rather than the Internet bubble. You can’t. This is the usual partisan argument from the left that ignores basics economics and confuses correlation with causation.
RE: “My takeaway is that Keynesian economics only works to stave off disasters, but is completely inefficient at sustaining a growing economy.”
No arguement. Who is saying different?
“The government is too big and consumes too much.”
Of course it does. And this statement will always be true. There is no such thing as “right sized government” that satisfies everyone in a democracy.
“The unemployment numbers reveal that what Obama is doing is not working much like what FDR did before WWII.”
This is patently ridiculous. First, considering the severity of what the Republicans handed off, there has been remarkable progress. The only complaint anyone might have is that things might have improved more quickly. AND the complainers are the obstructors. You can do the math on that. Just look at the accerlating job loss that has been stemmed. Talk is mighty cheap by the same group who caused the problems in the first place.
For perspective, unemployment stats during the Reagan era also reflected those who dropped out of the statistical calculation. Of course it isn’t accurate. It wasn’t during the Reagan era, it isn’t now. But it IS an valid comparison.
Economic downturns caused by financial crisis are much more stubborn. Do the Republicans have a plan to reverse the negative equity of 25% of homeowners and restore some equity to those who suddenly lost it when the buble burst? If there is one thing holding back the economy, this is it. The middle class won’t be robust consumers again until that is straightened out.
Do yourself a favor and watch the movie “The Warning.” Listen to tearful acknowledgements of Arthur Leavitt and Alan Greenspan for wrongly following Ayn Rand laissez faire policies regarding derivatives. Find out what really happened before you criticise the President for doing his dead level best with an almost impossible situation compouned by obstruction by the very people who caused the problem in the first place.
“Of course it does. And this statement will always be true. There is no such thing as “right sized government” that satisfies everyone in a democracy.”
I disagree. The long-run average size of government is about 19% of GDP. Today, government is about 25% of GDP. I believe there is a role for government and that 18-19% seems to have been about the right size.
“This is patently ridiculous. First, considering the severity of what the Republicans handed off, there has been remarkable progress.”
Remarkable progress by what measure? Private sector job growth at a rate below population growth three years into this administration? 34 consecutive months of unemployment above 8%?
“Talk is mighty cheap by the same group who caused the problems in the first place.”
I see. So, in your opinion, the Republican Party is entirely to blame for last three years of economic stagnation, despite the fact that Democrats controlled both Houses of Congress from 2006 to 2010. I think both Parties failed on a number of levels. But so did the American consumer as did the greedy banker. Everyone has there share of the blame. Any other explanation is rife with partisan politics.
“Economic downturns caused by financial crisis are much more stubborn. Do the Republicans have a plan to reverse the negative equity of 25% of homeowners and restore some equity to those who suddenly lost it when the buble burst? If there is one thing holding back the economy, this is it. The middle class won’t be robust consumers again until that is straightened out.”
You certainly make a fair point that economic downturns caused by debt problems take much longer to cycle through. That said, why should government reverse negative equity on 25% of homeowners? Do you actually advocate redistributing wealth to people who paid too much for homes they couldn’t afford. This is definition of moral hazard. Instead, the government should focus on policies that drive economic growth (and create jobs). Obamacare, for instance, will simply make it more expensive for businesses to hire employees. The president could not have chosen a worse time to add a trillion dollar entitlement to the national debt.
If you want to know what one’s solutions are, I took a crack at them here: https://reflectionsofarationalrepublican.com/2011/10/08/a-proposal-for-a-more-rational-jobs-bill/.
There is no such thing as right sized government that satisfies everyone. If you think there is ANY way to do that you should make your case and run for office.
Remarkable progress is in proportion to the size of the problem inherited. You seem to be saying the problem really wasn’t that big and that Republican policies, whatever that may be, would have repaired the damage more quickly. Yes, talk is cheap.
The problem was cause part and parcel by RW laissez faire party of deregulation moves. Just watch “The Warning,” Despite the fact that Democrats were involved, they all aren’t socialists you know, it was laissez faire that caused the problem. You can always maintain there is plenty of blame to go around. Technically, if I took a leak into the Gulf of Mexico, you could say I contributed to the tsunami. But its not worth mentioning.
This isn’t a liberal/conservative thing. It is a truth and pragmatics versus RW dogma issue.
I never said the government should reverse homeowners negative equity. But you are criticizing Obama for not doing enough to reverse the economy. Without fixing this there will be no robust recovery. So how do Republicans do it? With smoke and mirrors?
Are you actually saying that Republican measures would have reversed things more quickly? You know what they have said they would have done. No TARP. No Stimulus. No auto rescue.
There is nothing that increased employment like increased demand. There won’t be much until the household debt overhang straightens out! You have made nothing but arbitrary statements with no basis in fact. You can arbitrarily state that Obamacare is a trillion dollar entitlement, but that doesn’t make it so.
“Are you actually saying that Republican measures would have reversed things more quickly? You know what they have said they would have done. No TARP. No Stimulus. No auto rescue.”
Actually, TARP was done under Bush, not Obama, and it returned a profit. You are right that many Republicans didn’t support the stimulus, but some did vote for it. In regard to what Republican policy would have been absent Obama, the answer is who knows? No one can prove a counterfactual. I am pretty sure they wouldn’t have passed Obamacare in the midst of the worst post-war economic disaster since World War II.
“There is nothing that increased employment like increased demand. There won’t be much until the household debt overhang straightens out!”
I agree. I just don’t think the Democratic solution of increasing taxes will help solve the debt overhang problem. That’s all.
“You have made nothing but arbitrary statements with no basis in fact. You can arbitrarily state that Obamacare is a trillion dollar entitlement, but that doesn’t make it so.”
I have? Every point you make is grounded in one left wing documentary. Do you think that is an adequate basis for arguments that blame one party for every economic woe for the last decade? Really???
It turns out I’m about $64 billion short, but according to the New York Times (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/health_insurance_and_managed_care/health_care_reform/index.html?inline=nyt-classifier), the non-partisan CBO estimates Obamacare will cost $938 billion dollars. But apparently, I have made “arbitrary statements with no basis in fact.”
Where did I say that Obama signed TARP? My comment was directed at those who take a government laissez faire attitude, Dem or Repub.
If common sense happens to agree with the LW, so be it. Facts don’t care which constituency agrees.
ObamaCare had to be passed while the votes were there. Sorry if that chafes. It was phased on over time to prevent it from having any negative impact on the recovering economy. Sorry if that recovery isn’t happening as fast as you would like. You might look at the Republican party for its obstruction.
Watch “The Warning” and tell us which constituency, Dem or Repub, is responsible for blocking the regulation of derivatives. The Dems involved were guilty of the same thinking as the party of deregulation. Greenspan is the highest profile Ayn Rand sycophant of the bunch. Don’t listen to me. Hang on Greenspan and Leavitt’s own words.
We have two problems, a damaged economy and a out of control budget. We need both tax revenue AND growth. Are you actually saying that a paltry 4.6% on income over $250K is going to harm the economy? Why are you fighting so hard for those in the top income level? Its not even a tax increase. It is restoration of a tax that was “cut” as a short term stimulus. It is restoration of the tax structure we had when the budget was close to being balanced.
Might I remind you that tax cuts while in deficit are not CUTS but are INCREASES on subsequent generations.
“Where did I say that Obama signed TARP? My comment was directed at those who take a government laissez faire attitude, Dem or Repub.”
You didn’t, but you did say that Republicans opposed it. The Republican President at the time did not oppose it. That was my only point.
“Sorry if that recovery isn’t happening as fast as you would like. You might look at the Republican party for its obstruction.”
To be fair, the Republican Party controls only the House of Representatives and has controlled that branch of government for about one year. They certainly have been obstructionist, but you cannot blame them for a failed economic recovery when Democrats controlled both Houses of Congress for the prior four years.
“Watch “The Warning” and tell us which constituency, Dem or Repub, is responsible for blocking the regulation of derivatives. The Dems involved were guilty of the same thinking as the party of deregulation. Greenspan is the highest profile Ayn Rand sycophant of the bunch.”
I don’t disagree with your point here. Where I think our points diverge is what factors “caused” the crisis. I believe your argument is that the lack of regulation of derivatives was almost entirely responsible (please correct me if I am misrepresenting your view), while I believe it was a host of factors beginning with a consumer credit binge, a housing bubble fueled by both derivatives and bad government policy, and the desire to keep the economy booming during a time of war.
“Why are you fighting so hard for those in the top income level?”
Because they are carrying the rest of the country. A tax system that funds entitlement programs on the backs of an increasingly smaller segment of the population is far more volatile than one that is more broad-based.
Why are you fighting so hard against those in the top income level?
Where do you get off using the term “failed” for the economic recovery. Is that in any way honest?
The Democrats took over in Jan 2007 after winning the 2006 elections. Saying they took over in 2006 might give someone the impression that they had an extra year. By 2007 the wheels were already starting to come off the wagon.
Of course there were many things going on in the economy. But the lack of regulation of credit default swaps enabled the entire affair. Without the credit default swaps there would have been no AAA rating. Without the AAA rating, Wall Street and others would have merely been the assemblers of securities for Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac were prohibited by law from approving the kinds of mortgages, ELOCs, and REFIs that created the bubble and ultimately brought the global economic system to its knees. Its just that simple.
We are spending 25% of GDP and taxing at 15%. You have acknowledged a so called “Sweet spot” of about 18 – 19% of GDP. Now add in the wars and other unpaid for budget additions. And you want to argue over 4.6% of income over $250K and hold the nation and the deficit hostage over it? There is simply no rational justification for that.
“Where do you get off using the term “failed” for the economic recovery. Is that in any way honest?”
The unemployment rate is higher today than it was in January 2009. To the tens of millions of unemployed, it certainly doesn’t seem like a “successful” recovery. Most Americans are worse off than they were three years ago. Do you actually believe things are better now than they were then? That fewer people are unemployed? Sure, we aren’t losing jobs at the same rate we were in January 2009, but the economy remains sluggish. Is it “honest” to suggest that everything is honky dory?
“Saying they took over in 2006 might give someone the impression that they had an extra year.”
When did I say that? I said they controlled both Houses of Congress for four years, which is true.
“Of course there were many things going on in the economy. But the lack of regulation of credit default swaps enabled the entire affair. Without the credit default swaps there would have been no AAA rating. Without the AAA rating, Wall Street and others would have merely been the assemblers of securities for Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac were prohibited by law from approving the kinds of mortgages, ELOCs, and REFIs that created the bubble and ultimately brought the global economic system to its knees. Its just that simple.”
So your argument is that basically that since Wall Street provided the “guns” to the people, the people are not responsible for taking on mortgages that they could not afford? That’s like saying arms dealers should be held accountable for every person someone else kills with a gun they sell. Do you actually believe that people wouldn’t have assumed massive debt for their homes in the absence of credit default swaps? “Is that in any way honest?”
I agree that derivatives magnified the problem, but they aren’t responsible for good old fashioned greed. When the stock market bubble burst in 2001, people shifted their money into homes and homese appreciated. This would have happened with or without CDS.
“We are spending 25% of GDP and taxing at 15%. You have acknowledged a so called “Sweet spot” of about 18 – 19% of GDP. Now add in the wars and other unpaid for budget additions. And you want to argue over 4.6% of income over $250K and hold the nation and the deficit hostage over it? There is simply no rational justification for that.”
Of course not, if you frame it in the partisan lexicon of either or? Why is it necessary for the left to scapegoat one group of people? Is that right? Is that American?
The way you are framing this argument is ludicrous. I am not arguing that we should hold the nation and the deficit hostage over a 4.6% tax increase on incomes over $250k. I am arguing that a 4.6% tax increase on incomes over $250k is mean-spirited and makes no rational sense as a policy. However, it makes complete and total sense as a political strategy. You seem to believe this is the only way to solve the deficit problem, when the reality is that if the government took all the income above $250k in this country, all the profits of Fortune 500 companies, and seized the assets of all the country’s billionaires, it still would not be enough to fund the country’s budget for all of 2011.
What you and the left are ignoring is that this country has a spending problem. The so-called wars cost ~$250 billion a year between them and they are winding down. Take them out and you shave off about 2 percentage points that government takes from GDP. That leaves us at 23% of GDP. We’re still not anywhere near the sweetspot, which means the country needs to reduce spending in the intermediate term as well as increase taxes on everyone. Do you disagree? Do you actually believe taxing the “wealthy” alone will solve our structural problems? If so, is that rational?
It is simply honest to say policies are “failed” because an accelerating job loss of 750K per month isn’t stopped in its tracks. Further, you nor anyone else couldn’t pull that off. And you know it.
Hunky dory and failed are vastly different. Considering the degree of the problem you seem to be saying you or yours could have done it more quickly. HOW?! What is your objective standard?
I’m sure you will say that the rebound in the DOW that restored trillions in American wealth is due to coincidence rather to markets having confidence that the government was firmly behind the economy due to the stimulus package being passed.
You really aren’t attempting to be at all honest here, are you…. speaking of typical dishonest party dogma.
You say Republicans have been obstructionist because of 4 years of failed Dem control of Congress? They were obstructionist of the President from Day 1.
Of course we also have a spending problem. We also have a growth problem. AND a revenue problem. I don’t know a SINGLE Democrat who thinks we can balance the budget with tax increases alone. It isn’t even on the table and hasn’t been.
What you have is a bunch of RWers holding the country hostage over the lousy 4.6%. The $4 trillion deal passed by the Repubs included spending cuts along with increases. In the big picture this is a good thing. The public sees what is going on. Trying to characterize the Dems as only agreeing to tac increases with no cuts is more dishonesty and won’t float with the electorate. The Ryan Budget makes things pretty clear. Actually, I need to relax about this since the Republicans are in the process of self destructing anyway. Its exactly what they deserve for their obstruction.
A combination of cuts and revenue is the answer BUT who signed the Norquist pact? Who stated they would not increase taxes $1. even if they got $10. in spending cuts with it?
“It is simply honest to say policies are “failed” because an accelerating job loss of 750K per month isn’t stopped in its tracks. Further, you nor anyone else couldn’t pull that off. And you know it.”
I never said the stimulus didn’t work as a short-term solution. I take a President’s policies in their entirety. The stimulus effort was necessary, but the $938 billion Obamacare follow-up from a policy standpoint was tone deaf to the economic problem. Net-net, the country has higher unemployment than it had 3 years ago. The man has had THREE YEARS with a Democratic Congress for two of them to bring the unemployment rate down. He hasn’t. If you think things are better, you are being intellectually dishonest with yourself. “And you know it.”
“HOW?! What is your objective standard?”
Well, I posted the “how” here in a previous comment, which I am assuming you didn’t read, (https://reflectionsofarationalrepublican.com/2011/10/08/a-proposal-for-a-more-rational-jobs-bill/). As for the objective standard, how about a lower unemployment rate three years after taking office? Seems pretty objective to me.
“I’m sure you will say that the rebound in the DOW that restored trillions in American wealth is due to coincidence rather to markets having confidence that the government was firmly behind the economy due to the stimulus package being passed.”
Well, then your certainty is a little less certain than you think, because I agree that that is mainly why the DOW rebounded. I never said that the stimulus was unecessary, nor that it didn’t work in the short-term. It did.
“You say Republicans have been obstructionist because of 4 years of failed Dem control of Congress? They were obstructionist of the President from Day 1.”
I never said that. I agree that the Republicans in Congress have been obstructionist. That said, they have only been in office for less than a year. The Dems had two years of complete control of our government. Yet the unemployment rate was higher. To quote your last comment, “You really aren’t attempting to be at all honest here, are you…. speaking of typical dishonest party dogma.”
“The $4 trillion deal passed by the Repubs included spending cuts along with increases.”
Actually it didn’t. It included cuts in spending increases, something entirely different than spending cuts.
“A combination of cuts and revenue is the answer BUT who signed the Norquist pact? Who stated they would not increase taxes $1. even if they got $10. in spending cuts with it?”
I agree, signing the Norquist Pact is an irrational move. To be clear, I am not here to defend every stupid and partisan move by the Republican party. But I will defense those who advocate a smaller government, lower government spending, and fewer taxes. Like you, I also believe that one needs both spending reductions and tax increases. But I think it is disengenuous by one side to target a small percentage of Americans with full knowledge that it will barely dent the national debt solely to earn political points.
“It is simply honest to say policies are “failed” because an accelerating job loss of 750K per month isn’t stopped in its tracks. Further, you nor anyone else couldn’t pull that off. And you know it.”
“I never said the stimulus didn’t work as a short-term solution. I take a President’s policies in their entirety. The stimulus effort was necessary, but the $938 billion Obamacare follow-up from a policy standpoint was tone deaf to the economic problem.”
So your beef is with the HCR bill, NOT the Stimulus? Hell, it hasn’t even kicked in yet, at least not to any great degree. Did you expect the President not to pass it when he had the votes? There was a historical opportunity to pass it and he did. When would another opportunity arise? He was elected based on passing it. He ran on it. And he passed it despite the largest lying and lobbying campaign I have ever seen. Republicans were consistently against things they had previously been for for no other reason than obstruction.
Look what has happened since HillaryCare failed in 1993? Look at the increased bite of GDP healthcare has taken in that brief period of time.
Also, why would you use the amount of $938 billion without mentioning that the amount is a projection over ten years? Are you purposefully attempting to mischaracterize and misrepresent?
Net-net, the country has higher unemployment than it had 3 years ago. The man has had THREE YEARS with a Democratic Congress for two of them to bring the unemployment rate down. He hasn’t. If you think things are better, you are being intellectually dishonest with yourself. “And you know it.”
Yes, the country has a higher unemployment rate than it had in Jan 2009. And you are saying that 3 years is a long time in the context of the severity of the problem and that you and yours could have fixed it better and quicker. I get that part…. at least the part where you say you could have done better.
Are things better than Jan 2009? Let’s take two measurements. We AREN’T losing 750K jobs each month with a pace that was accelerating. The Dow has restored trillions of American wealth. Given the nature of the problems it is merely cheap talk to claim you could have done better. I don’t think you have a clue as to what needs to be fixed and prefer to nibble around the edges at small items that aren’t core to the issue. In the meantime, you support the obstructers.
“Did you expect the President not to pass it when he had the votes?”
I expected him to focus on the primary problem, which was the economy. If you believe the stimulus worked, why not channel a second one costing $938 trillion dollars over ten years that provided incentives for businesses to build more manufacturing capacity in the United States? I bet you he had the votes for that too, yet he squandered them on Obamacare.
“Look what has happened since HillaryCare failed in 1993? Look at the increased bite of GDP healthcare has taken in that brief period of time.”
And you attribute all that increase to the failure to pass HillaryCare? Amazing. To quote you, “I don’t think you have a clue as to what needs to be fixed and prefer to nibble around the edges at small items that aren’t core to the issue.”
“Also, why would you use the amount of $938 billion without mentioning that the amount is a projection over ten years? Are you purposefully attempting to mischaracterize and misrepresent?”
First I was “arbitrarily stat[ing] that Obamacare is a trillion dollar entitlement”. Now that I’ve proven the CBO estimates it will cost $938 billion, you accuse me of misrepresentation because I didn’t mention it was over a 10-year period. What’s next? I didn’t tell readers that estimates can change?
“I don’t think you have a clue as to what needs to be fixed and prefer to nibble around the edges at small items that aren’t core to the issue.”
Really? What’s your solution? I’ve posted mine — twice. What specifically about my solution is indicative that I don’t have a clue?
Please enlighten me on your solution. Are you telling me that the President’s policies could not have been any better? Will taxing the “rich” suddenly solve our structural problems?
Rather than making blanket assertions sprinkled with ad hominem and no explicit support about why I have “no clue”, please tell me why the President’s policies are perfect.
It is easy to just bemoan the other side and claim they just have “no clue.” It is quite another thing to come up with something better.
The underlying problem cannot by fixed by a little band aid here and some iodine there. The root cause of the economic softness is lack of demand. If demand picks up all of these little here and there things become moot. And demand is held down by the huge household debt overhang that isn’t going away any time soon without government intervention. But that’s another issue. What is assured is that the “wealthy” are not the job creators., the middle class is. And $250K ain’t wealthy. And if high taxes kills economic growth, please explain the post war economic expansion, especially the Clinton years.
We have a demand problem. No rational business person expands or produces if demand doesn’t exist. “No clue” applies to the party that thinks if business produces, people will mysteriously but it. Having the cart before the horse is worse than no clue.
RE: “That’s your bar? We AREN’T losing 750k jobs each month with a pace that was accelerating. Seriously?”
Read the word “accelerating.” Read 750K. If you don’t think today’s situation is an improvement on Jan 2009 you have been living under a rock.
Referring to ObamaCare as a trillion dollar “entitlement” is arbitrary AND disingenuous. For get for the moment that you are giving an estimate over ten years without mentioning that part. You act like healthcare coverage is being given to someone not previously covered under ObamaCare. Is that what you are really saying? Are you sure you don’t want to rethink that?
How are these people covered currently? Health care is ALREADY an entitlement. Where have you been living? It wasn’t addressed in 1993 and look what’s happened.
I never said the President’s policies have been perfect. I emphatically said that to characterize them as “failed” is patently dishonest.
“If demand picks up all of these little here and there things become moot.”
Perhaps. I do agree that lack of demand is the key issue. I also agree that increasing taxes on anyone hurts demand (rich or poor). The Republican failure to extend a lowered payroll tax and the Democrat’s targeted taxes against those making over 250k both will hurt aggregate demand.
“Read the word “accelerating.” Read 750K. If you don’t think today’s situation is an improvement on Jan 2009 you have been living under a rock.”
If this is your “bar” for a successful economic policy, then I hope you apply similarly rock bottom standards for Republicans. Though I doubt that.
“I never said the President’s policies have been perfect. I emphatically said that to characterize them as “failed” is patently dishonest.”
Dishonest implies that I am lying about what I think. The unemployment rate is still higher than it was three years ago. By my bar of getting to an unemployment rate that lower than when you began over a reasonable period of time given the severity of the crisis (I think three years is long enough), I personally believe President Obama’s overall economic policies have failed to achieve their desired goals.
“It wasn’t addressed in 1993 and look what’s happened.”
Yes, costs increases but so did the number of retirement age folks who require more healthcare. It is not as simple as costs rose because we didn’t have Obamacare. Furthermore, the legislation will likely result in companies dropping coverage for their employees, but that is a completely separate argument (see here for more: http://www.forbes.com/sites/aroy/2011/08/10/obamacare-bombshell-did-the-government-underestimate-the-costs-of-ppacas-exchanges-by-hundreds-of-billions/)
Not losing 750K jobs per month IS A bar. So is the auto industry rescue. So is the restoration of wealth caused by the stock market rebound, all of these no thanks to the Republican Party. You would characterize just these accomplishments as “failure?”
What is your reasonable amount of time to rectify that? So seriously, how fast could Republicans have accomplished that with their stated policies?
Talk is cheap.
Yes, it is a bar, albeit a very low one. In the military I was trained to leave an organization I joined better off than when I assumed command of it. That is my standard, and Obama unambiguously fails that test.
Had we done the policies I advocated on this site, which I still think you didn’t read, three years would have been more than sufficient to get unemployment back to below 7.8%. Three years is an incredibly long time.
By the way, I failed to address this point:
“Let’s take two measurements. We AREN’T losing 750K jobs each month with a pace that was accelerating.”
That’s your bar? We AREN’T losing 750k jobs each month with a pace that was accelerating. Seriously?
Since we’re being hyper critical about what Bush left and what Obama inherited let’s take a look at what Clinton left and what Bush inherited:
Longest Economic Expansion in US History
* In February 2000, the United States entered the 107th consecutive month of economic expansion — the longest economic expansion in history.
* 22.2 million new jobs have been created since 1993, the most jobs ever created under a single Administration — and more new jobs than Presidents Reagan and Bush created during their three terms. 91 percent (19.9 million) of the new jobs have been created in the private sector, the highest percentage in 50 years.
* Unemployment is down from 7.5 percent in 1992 to 4.0 percent in June 2000, and in April the unemployment rate was the lowest in over 30 years. The unemployment rate has fallen for seven years in a row, and has remained below 5 percent for 34 months in a row.
* The poverty rate has fallen from 15.1 percent in 1993 to 12.7 percent in 1998. That’s the lowest poverty rate since 1979 and the largest five-year drop in poverty in nearly 30 years.
Source: WhiteHouse.gov web site , Dec 1, 2000
If Clinton’s policies and sensible tax policies were so harmful- explain the results of 8 years of them.
If lower taxes for the wealthiest “job creators” and limited regulation is supposed to lead to prosperity, explain please the results of 8 steady years of them.
Explain why if tax breaks up top work so well and deregulation up top works so well – why we had a disaster after 8 years of a Republican administration and supply side tax policies and 6 years of a Republican congress? Too much regulation? Not enough financial collapse?
It’s easy to pile on the new guy who isn’t solving Bush’s problems quick enough for you, but please put this in context and explain to me how- even during the Reagan years – Republicans were unable to match Clinton or even LBJ era prosperity.
22 million net jobs were created under 8 years of Clintonomics. You can say it’s all Congress’ doing but if so they weren’t able to come close when they had 6 years of control and a Republican President.
Clinton’s 22 Million jobs are more jobs than 20 years of Republican Siders put together- more than Bush and Reagan and Bush.
Clinton had higher marginal tax rates, yet more jobs were created. Republicans dodge this or say it was Congress but the bottom line is- Congress was unable to do it without Clinton or his tax rates.
If you want to talk results then let’s talk results.
Yuri, I have a separate post on this site about Bush vs. Clinton that compares both Presidents and comes up with the same 22 million number. One critical mistake many liberals make when discussing Clinton’s record is that they attribute his success to tax increases. Correlation does not imply causation. The reason the economy did so well under Clinton is because Americans created an entire indusry during that time – the Internet. In other words GDP rose despite tax increases. Almost three months after George Bush took office, this bubble burst.
The bottom line is that while Clinton’s job record looks unmistakingly better than Bush’s, to claim it was due to high tax rates is absurd.
The fact that you have to drag in Clinton in this discussion is also very telling. Why? Because Obama’s record is awful. He’s been in office for nearly three years and the unemployment rate is still almost one percentage point higher than when he started. I agree that one shouldn’t expect immediate results, but it’s been THREE YEARS and the Democratic Party had control of both the executive and legislative branches for two of them. I’m frankly tired of hearing excuses. Democrats have tried every tool in their ideological cookbook and the country is now at a higher unemployment rate than when they started.
The great Ronald Reagan didn’t fix unemployment so quickly either. But this doesn’t keep RWers from criticizing the President despite the fact that he inherited an accelerating job loss of 750K in Jan 2009. Of course, they aren’t even making an attempt to be honest… like $4 trillion additional spending. Other than the stimulus where is the increased spending OR are you simply talking about ongoing W Bush spending that wasn’t curtailed. And who, in their right mind, cuts spending during recession?
Talk is cheap. Cite one instance of unemployment being stopped in its tracks by a Republican OR a Democrat.
For a real understanding of the impact of Austrian School thinking is impacting us today, watch the PBS documentary, “The Warning” and the Oscar winning documentary, “Inside Job.”
Alan Greenspan, Ayn Rand protege that he was, didn’t even think fraud should be regulated. I thought markets would naturally take care of it. One should watch the video of him testifying before Congress disavowing his previously held opinion in a MOST apologetic way. Then there is Arthur Leavitt’s tearful mea culpa. You won’t see a tear in the eye of the ultimate asshole, Phill Gramm, however.
Another conservative on record against typical RW rhetoric:
At least there are some honest ones, although they have been relegated to RINO status…. Dole, Powell, Bartlett, Stockman, Frum, Medved, Will, etc.
“Unemployment never reaches zero, but 4-6% is widely considered high rate of employment. And recent historical averages are within that range (though admittedly toward the high end). But what’s also easy to see is there’s a huge amount of time elapsed between relative unemployment peaks and the point unemployment nears the median and average. Of particular note: 1982’s 10.8% unemployment, which didn’t hit 6% until 1987. Nearly six years. Long! But economic growth continued throughout the six-year period, gradually working off unemployment. And that’s not unusual; it’s the norm.
So while we’d agree a healthier housing market (though we’d quibble with government attempts to “fix” housing), a lighter regulatory and tax climate and more could aid jobs through more growth, there’s little reason to believe the result would be an immediate reduction in a wonky statistic that nearly always takes a long time to fall. Ultimately, it would be far more atypical or unusual for unemployment to be at average or median levels today than its currently elevated state.”
I just came from the BLS where I found a report that shows that there has been a recovery of 33% of jobs in the private sector since Feb of 2010. That is when the economy bottemed out and since has slowly been coming back.
The report shows different industries and how they have improved in about the same time frame give or take. The only thing that hasn’t improved is construction. That is probably because few to no housing or commercial structures are going up since the realestate bubble burst.
• In November, a job gain in private-sector employment (+140,000) was partially offset by
a job loss in government (-20,000). Retail trade stood out with a significant job gain over
the month. Employment growth continued in professional and business services, leisure
and hospitality, and health care.
• Nonfarm employment reached a trough in February 2010 and has since grown by 2.5
million. During this period, the private sector added 2.9 million jobs, while government
cut about one-half million jobs.
• The private sector has now recovered 33 percent of jobs lost in the peak-to-trough period
of January 2008 to February 2010.
Click to access ceshighlights.pdf
I could not find the information in your article on the BLS web site. I would like to see it for myself though.
The report does show recovery has occured though and we should be thankful for that.
I had a problem finding the numbers in your article on the BLS web site. Could you direct them to me so I can see for myself.
This more recent version of the post provides more detail on the actual numbers by month:
You can find the numbers on the BLS site here: http://www.bls.gov/data/
From there, you go to the section entitled “Employmnent.” Click on the “One-Screen Data Search” button next to “Employment, Hours, and Earnings – National
(Current Employment Statistics – CES)” and under the title “Monthly”.
Once a new window pops up, select “ALL EMPLOYEES, THOUSANDS”, then select “Total private”, and uncheck “Not Seasonally Adjusted.” Click on “Get Data” and the total number of private sector employees each month pops up. At that point you can download the results into excel and then calculate the change from month over month.
I hope this helps. Please let me know if you have any further questions. Data accuracy is obviously of the highest importance to me.
RE: “My takeaway is that Keynesian economics only works to stave off disasters, but is completely inefficient at sustaining a growing economy. The government is too big and consumes too much. The unemployment numbers reveal that what Obama is doing is not working much like what FDR did before WWII.”
Are you kidding? You think Keynesian economics only relates to actions governments can take to temporarily prop up a sick economy? Where did that come from? You’re talking about a small part of Keynesian theory. Even they Austrians know what Keynes said is true. The difference is that they don’t think economic stimulus should be done. They embrace Depression, thinking it does the best job of clearing out bloat and inefficiency from an economy. And they are right. But modern democracies don’t have the patience for it. Austrians also know this. That’s why their theories are just that, theories. No modern democracy would think of practicing true Austrian economics. You can’t find any. They don’t exist.
It is simply absurd to claim that Obama should have been able to turn the economy around more quickly. One could say that about anyone who had been in charge. Of course, without Republican obstruction, the stimulus could have been larger. Perhaps something could have been done to stem the loss of home value, which laid a 6 figure reduction in net worth on most Americans without RW opposition. One thing IS for sure. Cutting the budget and taxes in the face of recession would have been a catastrophe.
Nothing like having a bunch of back biting second guessers around when trying to do something big.
Ah, the classic $1 trillion stimulus didn’t validate my theories on Keynesian stimulus, therefore I can’t possibly wrong, but the absurdly massive stimulus should have even been bigger argument. This argument holds about as much weight as President Bush is still responsible for poor economic performance argument three years into the Obama administration. If the leeches don’t cure the patient, we simply didn’t use enough leeches. C’mon.
@ Sean – The $1 trillion stimulus. You KNOW that is a lie. you have been corrected on that numerous times, but yet you persist. You cannot be considered even close to sincere with that kind of consistent falsehood being the core of your phony argument.
The only case you can possible try to make is that Obama should have fixed the Bush FUBAR more quickly. So you need a cite of where previous RW economics has been used in a similar situation AND worked more quickly. Otherwise, all you have is empty claims to accompany your false premise. Find one of those and someone might actually take you seriously.
And it might help if you can cite a country using your economic methods, whatever they are. My opinion is that you don’t have any, and prefer to second guess others. It is empty rhetoric to say you or your preferred methods would have worked better if you have no cites and put forward nothing concrete. Of course, if you want to continue to say Obama should have cut spending in the face of recession, you will find ALL economists in agreement of what happens when that is done. And, you can deny Republican obstructionism too. But we all know better.
“The $1 trillion stimulus. You KNOW that is a lie. you have been corrected on that numerous times, but yet you persist. You cannot be considered even close to sincere with that kind of consistent falsehood being the core of your phony argument.”
Don’t take my word for it. According to the New York Times, Obama’s stimulus was $787 billion coupled with Bush’s 2008 stimulus of $158 billion = $945 billion. Round that up, you get $1 trillion. Facts are stubborn things (See http://topics.nytimes.com/top/reference/timestopics/subjects/u/united_states_economy/economic_stimulus/index.html).
“So you need a cite of where previous RW economics has been used in a similar situation AND worked more quickly.”
Well, the last time we had a worse situation was during the Great Depression. In this case, both crises had Democrats in power trying there own big government solutions. Therefore, there has been no historical precedent in which conservative economic policies have even been attempted. Therefore, you have constructed a straw man, that you know cannot be answered. I have, of course, on numerous occasions posted what I would do in this situation. You have never commented on, or bothered to read them. Instead, you decry the evil “right wingers” and blame them for everything, in what is, in reality, a more complicated a nuanced series of economic failures caused by a plethora of complex events, none of which are exclusively one political parties “fault.”
“My opinion is that you don’t have any, and prefer to second guess others. It is empty rhetoric to say you or your preferred methods would have worked better if you have no cites and put forward nothing concrete.”
This is a blatant lie. Again, here is the plan I put forward on numerous occasions, and that you have ignored on numerous occasions: https://reflectionsofarationalrepublican.com/2011/10/08/a-proposal-for-a-more-rational-jobs-bill/.
And I can tell that you’ve never read it, since you assume that I believe the United States government should cut spending in the immediate term.
I cannot cite any historical examples of this recommendation working, because Republicans have never been in power in either this current economic situation or in the Great Depression to implement these policies. Therefore, it doesn’t mean that they won’t work.
And you don’t consider it germane that a significant part of the Obama stimulus was made up off tax cuts? IF you were actually attempting honest discussion, one might expect that to be mentioned.
The Dems took over Congress in Jan 2007.
Straw man or now, there is a reason RW economics, better known as Austrian School, aren’t employed. You can’t even find an example around the world. The closest you can come is Hong Kong, where they have no real defense budget. RW economics has a LONG history of being ignored.
“And you don’t consider it germane that a significant part of the Obama stimulus was made up off tax cuts? IF you were actually attempting honest discussion, one might expect that to be mentioned.”
Of course its germane. Its a key part of the stimulus that was helpful. Remember cash for clunkers?
“Straw man or now, there is a reason RW economics, better known as Austrian School, aren’t employed.”
One strain of right-leaning economics is the Austrian School. Another is Milton Friedman’s version of monetary policy. The bottom line is none of these economic policies (including Keynesian economics) works in its purest form. They all depend on the time and the situation. A suitable mix of the three with regard to the situation at hand is important.
Just curious – Do you claim any background in economics, in theory or otherwise?
You cite Milton Friedman. What do you think the QEs were based on?
What’s your point in mentioning Cash for Clunkers?
Interesting that the electorate eschewed the Republicans when things were perceived as not going well during the Hoover era. Is that what you are trying to do with Obama? You are certainly trying to assert that a different approach could have turned things around more quickly, despite the lack of evidence. Of course, Obama could have turned things around more quickly without Republican obstruction. In the radical RW world, TARP doesn’t get done and GM and Chrysler don’t get government aid to their C11s. What do you think happens under those circumstances. Let’s see how intellectually honest you are.
“Just curious – Do you claim any background in economics, in theory or otherwise?”
Well I have an MBA and a Master in Public Policy from Harvard, and I am a financial analyst. So, yes. Do you?
“You cite Milton Friedman. What do you think the QEs were based on?”
Ah, Milton Friedman’s monetary theory, of course. I never mentioned quantitative easing as being a bad policy. I think it is a necessary one. Just because some Republicans decry it as bad policy, does not mean we all do.
I think one mistake you make (and I mean this as a point of clarification and not to discount any of your arguments), is that you seem to assume that I blindly take all Republican policy positions as gospel. I don’t. I also think you and I agree on more things than you might realize, if you would stop viewing me through that Republicans-are-always right lens. Republicans clearly aren’t always right. I think Bush’s Prescription D Plan was a disaster, for instance. I am also thoroughly unimpressed with the current slate of Republican nominee candidates.
I believe the main point of our disagreement is twofold: 1) on whether Obama’s policies have been as effective as they could have been, and 2) who is to blame for the 2008 financial crisis and subsequent economic malaise. Your argument is that Obama’s policies are exactly what the doctor ordered. My argument is that his initial steps were effective, but that his subsequent healthcare distraction and increase in regulatory pressure have made it difficult for the economy to grow.
You seem to blame the current economic malaise exclusively on Republican policies. I blame it on a complex chain of events tied to loose monetary policy to soften the blow of the September 11th attacks, the Repeal of the Glass Steagull Act in 1996, aggressive government mandates to provide home ownership to those who could not afford, consumer greed, toxic derivatives that were created to help provide affordable homes to achieve said government mandates, wall street greed, and the massive asset bubble in housing that resulted from this mix of economic policies encouraged by both parties and spurred by private industry. Everyone had a piece in the mess.
“Interesting that the electorate eschewed the Republicans when things were perceived as not going well during the Hoover era. Is that what you are trying to do with Obama? You are certainly trying to assert that a different approach could have turned things around more quickly, despite the lack of evidence.”
Nor could you prove the alternative that had my recommendations been enacted the economy would be in a better place. I could make a similar argument to you that you have no evidence that a bigger stimulus would have succeeded as the last one was the largest in American history.
“Of course, Obama could have turned things around more quickly without Republican obstruction. In the radical RW world, TARP doesn’t get done and GM and Chrysler don’t get government aid to their C11s.”
Republicans have only controlled the House for 12 months, so Obama had full control of the government for two full years. This argument rings hollow. You also seem to forget that TARP got done under a Republican President. I agree that the far right would have opposed the TARP, but I don’t represent the far right, nor do I agree with them on all policy issues. I take the moniker “Rational Republican” rather seriously. I do not blindly agree with the more radical far right wing economic policy suggestions. While I agree with reducing the size of the government, I think it must be done in the intermediate term. Slashing government spending immediately would be a bad thing.
Again, you are assuming that I blindly believe all Republican talking points. I don’t.
Regarding economics – 4 decades real world experience. I consult with macro economists in my field of specialization and lecture regularly on economic issues in a variety of venues including at the university level. I write columns for trade publications on a variety of subjects, including economics.
You repeat a common theme – Obama didn’t fix the FUBAR quickly enough, and “WE” could have done it better and more quickly. For someone who claims economic training you seem to by ignorant of the vicious downward cycle that is created by trying to balance federal budgets in the face of economic downturn. I have NEVER met an economists that doesn’t understand this. But now in this last post you seem to acknowledge that. Obama couldn’t even get all of the Dems to agree on everything. The stimulus was an orgy of pork with everyone positioning themselves for a place at the trough. But that’s what stimulus is.
So you don’t back the Tea Party. I presume Ron Paul is out. Who DO you back? Which Republican do YOU think has the vision AND the heft to get the best package passed in a world where everything is negotiated and compromised.
Are you saying “succeeded” is an absolute term? How about “Failed?” How can you call any policy “failed” when it set of a stock market bull run that restored so much American wealth, and prevented the country from sliding into Depression, along with the auto industry restructurings? Whether or not the stimulus kept unemployment at 8% or under, it obviously lessened the trough of economic decline. You are aware, I hope, that it wasn’t until after the stimulus passed that the final economic numbers for the last quarter of 2008 came in at 6.1% as opposed to the projection of 3.8%. And you do know that debt, tax revenues, and job loss were all accelerating.
Now if you want to complain about ObamaCare, that’s another issue. The jury is still out on that one. Numerous Presidents had made the attempt to pass universal health care, the most recent before Clinton being Reagan, who gave us the closest thing we ever had. It has also been eating us out of house and home. Portraying ObamaCare as socialism might be accurate, but ONLY IF first acknowledging what Reagan’s ER mandate has been.
BUT don’t you find it difficult to refer to yourself as a Republican in a world where those who don’t follow the dogma are labeled socialist RINOs? I’m a registered Republican. I was raised in a John Birch Society environment. I recognize the ugly rhetoric. I’ve spent 4 decades in the real world of businesses, turning around small businesses until I turned to consulting and writing. I am so embarrassed by the current crop of Republicans I am embarrassed to admit I am still one. I will be changing my registration soon. I completely agree with George Will and David Frum on the state of current Republicanism.
“So you don’t back the Tea Party. I presume Ron Paul is out. Who DO you back? Which Republican do YOU think has the vision AND the heft to get the best package passed in a world where everything is negotiated and compromised.”
If I am limited to the current slate of candidates, it would Jon Huntsman. Since he doesn’t have a chance, the next best option is Mitt Romney.
“For someone who claims economic training you seem to by ignorant of the vicious downward cycle that is created by trying to balance federal budgets in the face of economic downturn.”
I never claimed that we needed to be trimming the budget in the face of a severe economic downturn, only in the intermediate term. Again, you presume that I blindly accept all default far right Republican positions. I don’t.
“I am so embarrassed by the current crop of Republicans I am embarrassed to admit I am still one.”
I agree with you on the first point that the current crop of Republicans is an embarrassment. Frankly, it’s one of the reasons I started this blog – to take the party back. The problem for me is that the tenets of the Democratic party, particularly on entitlement programs, are so alien and antithetical to what I believe that I simply cannot stomach voting for them. It’s not a good position to be in, but I don’t feel I have much of a choice.
“Whether or not the stimulus kept unemployment at 8% or under, it obviously lessened the trough of economic decline. You are aware, I hope, that it wasn’t until after the stimulus passed that the final economic numbers for the last quarter of 2008 came in at 6.1% as opposed to the projection of 3.8%. And you do know that debt, tax revenues, and job loss were all accelerating.”
I agree that it lessened the degree of the recession’s severity. That said, the administration wildly overestimated how effective the stimulus would be. For instance, the current unemployment rate is worse than the Obama administration’s projections for what it would have been without a stimulus (See https://reflectionsofarationalrepublican.com/2012/01/04/promises-promises-why-hope-is-not-a-method/).
“I recognize the ugly rhetoric.”
I do as well. On both sides. I lost friends in the Iraq War while Senator Reid was aiding and abetting the enemy with War is Lost speeches. People like him disgust me.
Well, we agree on Huntsman. But I despise Romney. Ever read Frum or Will on the current state of the Republican Party?
So was the Iraq war a righteous war? Were we lied to? Were we fed selective intelligence. Did Bush hand Colin Powell out to dry? What part did Ahmed Chalabi have to play in us getting thousands of our soldiers killed? I would think that after 2 unpaid for wars, an unpaid for drug plan, thousands being killed unnecessarily, the country left in shambles, etc. etc., that your republicanism might be a little shaken. In my own case I am ashamed to say I voted for Dubya. TWICE. Never again. But I’ll never by a Pelso, Kucinich follower. Despite Harry Reid’s unfortunate comment, he’s not as bad as you think. Did we win that war? Wouldn’t you say its a little early to tell?
“Ever read Frum or Will on the current state of the Republican Party?”
I have a bit. In fact, ROARR contributor Chris Ladd is also a contributor of FrumForum (See https://reflectionsofarationalrepublican.com/frumforum/). I agree with Frum on many points, though I do find his former neoconservative tendencies distasteful.
“So was the Iraq war a righteous war? Were we lied to? Were we fed selective intelligence. Did Bush hand Colin Powell out to dry? What part did Ahmed Chalabi have to play in us getting thousands of our soldiers killed? I would think that after 2 unpaid for wars, an unpaid for drug plan, thousands being killed unnecessarily, the country left in shambles, etc. etc., that your republicanism might be a little shaken. In my own case I am ashamed to say I voted for Dubya. TWICE. Never again. But I’ll never by a Pelso, Kucinich follower. Despite Harry Reid’s unfortunate comment, he’s not as bad as you think. Did we win that war? Wouldn’t you say its a little early to tell?”
Given the intelligence we had at the time, I do believe it was a righteous war. I was in the military on the eve of the invasion. I was stationed at the National Training Center where I trained the 3rd Infantry Division for storming the Karbala Gap. In the scenario we subjected the Division to simulated chemical weapons because we “knew” Saddam still had them. The fact of the matter is that while no chemical weapons were ever uncovered in Iraq, no one has ever accounted for the chemical weapons Iraq had at the end of the 1991 war. One Iraqi general believes Saddam moved his chemical weapons to Syria in March 2003 under the guise of providing humanitarian aid during a flooding the Orontes River. I don’t know what happened to them, but I do know firsthand that the US Army was preparing for Saddam to use chemical weapons on its forces.
I firmly don’t believe we were lied to either. The current Deputy Secretary of Defense testified before Congress several years ago, and well after the invasion and admitted that nearly everyone in the US defense intelligence establishment believed Iraq had chemical and biological weapons (and was wrong).
“I would think that after 2 unpaid for wars, an unpaid for drug plan, thousands being killed unnecessarily, the country left in shambles, etc. etc., that your republicanism might be a little shaken. In my own case I am ashamed to say I voted for Dubya. TWICE. Never again. But I’ll never by a Pelso, Kucinich follower.”
My faith in Republicanism has never been shaken, though my faith in the Party’s current leadership most certainly has been. After all, there is nothing conservative about supporting a prescription drug program.
“Did we win that war? Wouldn’t you say its a little early to tell?”
Absolutely. Saddam is no longer in power and Iraq has a democracy. That said, I believe we may have pulled out a bit prematurely, which could result in undoing all the work the US did in turning Iraq around via the surge. That said, Obama was probably right to pull out now given what is likely on the horizon for Iran…but that’s a different story. While I am no fan of most of Obama’s domestic policies, I believe his record on defense has been excellent.
I sat here in So Cal and watched what really caused the whole downward spiral and no one seems to know. I watched as millions of people crossed our borders seeking “jobs Americans wouldn’t do”. Remember? Well, they needed a place to live, didn’t they? That created a demand on housing, right? Well, the housing “gold rush” was on. They were “undocumented” and therefore, given “undocumented” loans. Check this article from 2005: http://www.businessweek.com/magazine/content/05_29/b3943001_mz001.htm
There was a downward pressure on lower income wages while at the same time there was an upward pressure on housing. It was obviously unsustainable. It really should be labeled the “illegal alien bubble”. Well, no one can say anything without being labeled a racist, so, shh.
I never thought of it this way. The best way to test this thesis would be to see which housing market bubbles burst the most. I know Nevada, Arizona, and California got hit disproportionately, so there may be something to your thesis, but I would certainly like to see more data to confirm it.
RE: “Given the intelligence we had at the time, I do believe it was a righteous war.”
My brother is retired Air force. 911 delayed his retirement as he was pulled back into Cheyenne Mountain. His considered opinion is that we were duped by Ahmed Chalabi and his henchmen. Chalabi was in the UK bragging about “tricking the Americans” on British media. Its easy to be duped when you have already made up your mind.
Ever read the book written by the man who interrogated Saddam? Ever watch the documentary “Fog of War” by Robert McNamara?
Ahmad Chalabi certainly provided intelligence that corroborated what the rest of the US intelligence community wanted to believe. There is no doubt about that. That said, I think he was just one piece of a larger puzzle in a mosaic that pointed to Saddam’s possession of chemical and biological weapons.
I haven’t read the book by the man who interrogated Saddam, but I love the “Fog of War” documentary. I think much of it applies to what happened in the Iraq intelligence failure.
It became clear to Saddam’s interrogator that Saddam wanted his unfriendly neighbors, in particular Iran, to continue to think he still had WMDs. He was trying to walk a fine line between keeping the U.N. at bay, giving them the bare minimum, while still leaving doubt in the minds of the Iranians.
We received intelligence from many countries that Saddam had only the remnants of his old WMD program left. We chose to ignore it. Some of those even went to war with us anyway.
“We received intelligence from many countries that Saddam had only the remnants of his old WMD program left. We chose to ignore it.”
That’s highly likely. Saddam’s rationale regarding Iran also seems rational for him.
As usual, we Noise (Blogger, Journalist, Pundit, Preacher, Politician, Democrat, Republican, I think, they think…) instead of identifying root cause:
UNFUNDED DEFICIT SPENDING
Two Wars: 1 to 1.5Trillion or more but there will never be an official source
Medicare Part D: 1Trillion or more
Tax Cuts for Americans (Poor to Wealthy): 1 Trillion
Corporate Welfare: .5 to 1 Trillion year (Direct Subsidies and Tax Breaks)
Lost Tax Revenues Millions of Outsourced Jobs: Trillions
There’s also a ton of other things to add to the list as well:
1. Loose Monetary Policy
2. Affordable Housing Mandates
3. 1996 Repeal of the Glass Steagull Act
4. The Rise of China and India and their impact on pushing down labor costs and pushing up energy costs
5. Many other complex factors including, but not limited to the list you provided.
RE: “Affordable Housing Mandates”
Just show me ONE. A mandate means consequences if not followed. Show me ONE government mandate with any force of law. Then show me any pattern of lenders who made any mortgage loans as a consequence of this alleged mandate. Then show me that there was something about those mortgage loans that cratered the economy.
I made this argument on this thread several times. There are three such quotas or mandates across a span of several decades. Just reread them.
Here again, any argument is justifiable and defensible. Mandated Housing, China’s rise, Bush, Obama…. we are all blessed (or cursed) with the ability to rationalize (not reason) most any argument. All of the reasons mentioned in the “cause” of our dilemma in the U.S. and many more are correct.
What is missing is root cause: The greater part of Politics, Policies and Religion (Christianity included) are established, communicated and implemented based on small groups and/or individual opinions, desires or objectives.
Very few of them will meet this litmus test: We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.
It is not doing what is right (The British were right according to their constitution) it is doing the right thing.
I wonder if we have we lost the ability to even distinguish between the two.
I am not denying that there was a CRA that would allow for a bank’s name to be put on a list if they were shown to have continued producing statistics that indicated they were still engaging in “red lining” or other discriminatory practices. Nor am I denying that F&F execs received objectives upon which their compensation was based. They weren’t quotas, they were objectives. AND it is also true that F&F were allowed to somewhat loosen their standards to compete with those who were actually causing the problem. BUT F&F were NEVER allowed to loosen their standards to the point of the Wall Street MBS assemblers. AND according to the FED, those loans have performed well. The fact that these CRA based initiatives were taking place initiatives were taking place at the same time is much bigger forces, is coincidence. If you take the CRA completely out of the picture, the mortgage crisis still happens.
One thing that the CRA and these “mandates” or objectives MIGHT have spurred was the purchase of billions of MBS securities FROM Wall Street. They were rated AAA. Included in them were CRA category mortgages, although had they stood on their own F&F could NEVER have purchased them, and they satisfied objectives that allowed the execs to max out their bonuses.
BUT to try to assert that the CRA has any real weight in the equation, compared to the blocking of the effort to regulate credit default swaps, is to not understand the issue OR to be dishonest. It is like the rooster arguing with the sun over who creates the daily dawn.
“One thing that the CRA and these “mandates” or objectives MIGHT have spurred was the purchase of billions of MBS securities FROM Wall Street.”
I think we agree on this point.
“BUT to try to assert that the CRA has any real weight in the equation, compared to the blocking of the effort to regulate credit default swaps, is to not understand the issue OR to be dishonest.”
This is a matter of opinion I think. My view is that you cannot supply drugs if you don’t have a demand for them. Wall Street was like a drug dealer that sated the demand that was in some cases artificially inflated by these “objectives”, as well as by greedy consumers who willingly entered contracts they knew they would never be able to pay. I think the reason these derivatives were created in the first place is that regulations closed other profitable business lines for Wall Street firms – think SarbOx, the Global Research Settlement, Decimalization (this wasn’t a regulation, but it was another major factor putting pressure on trading spreads). As such, like water, innovation in the financial services industry flowed toward more profitable activities like derivatives. We still see this today. Wall Street has moved on to the next big thing which is high frequency trading. As far as I know, no one is screaming for regulation here, yet this practice could easily trigger another meltdown. In fact, hackers from foreign intelligence services might even use this practice to bring our system down. The bottom line is that government is simply not fast enough to anticipate and plan for future problems. Instead, its heavy-handed regulation sometimes serves as a stimulus for innovations in finance that are even more risk prone.
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