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Over the past few days, I’ve written on this site about the inadequacy of conservative thinking about the economic crisis that has beset the United States and the world.
I’ve argued in particular that conservatives often overstate President Obama’s culpability for the severity of the downturn. I agree with the conservative view that the president’s policies are detrimental to the long-term growth of the United States. I agree too that Obama has not responded effectively enough to the crisis. Once more and with feeling: I am not a supporter of this president or his policies. But to say “he has failed to respond as effectively as he should have” is a very different thing from “he made it worse.” That claim I think is insupportable.
This view of mine has triggered a lot of negative comments from fellow conservatives. I am posting a good example of one of these comments on the site today, a piece by FrumForum contributor Jeff Burk that forcefully states what I think is fair to call the mainstream conservative view that Obama made the economy worse.
Take a look, then return here for a reply.
OK?
OK.
Burk makes four main points:
1) $800 billion in stimulus spending has created expectations of future tax increases that weigh heavily on job creators.
2) The Affordable Care Act and the emergency economic actions of the Obama administration have created regulatory uncertainty that likewise weighs heavily.
3) President Obama has interfered with the housing market reaching its natural bottom, whence recovery could begin.
4) Through the stimulus and the Affordable Care Act, President Obama has generally shifted resources from the private sector to the public sector.
I think it’s fair to say that this critique would be endorsed by most conservative economic commentators. I think it’s equally fair to say they would be endorsed by very few conservative economists. We saw just yesterday that Vince Reinhart does not agree. I very much doubt that Glenn Hubbard, Greg Mankiw, John Makin, or Martin Feldstein would agree either.
Any account of what has happened since October 2008 needs to take into account these shaping facts:
1) We have had a global crisis and a global recession, not in America alone.
2) The shock to the world economy has been massive. We have had a massive disappearance of paper wealth: about $10 trillion in the US alone. To put that effect in context, remember that the entire sub prime industry was worth about $200 billion, including both new loans and cash-out refinancing.
3) At no time since January 2009 have taxes been higher in the US than they were in 2007. Right now, taxes are lower. There is no possibility of any tax increase until 2013. As of 2013, we will have had the same tax rates in place for a decade.
Now specifically:
1) The conservative critique of Obama rests heavily on the spectre of “uncertainty.” Obama’s actions have created a lot of “uncertainty” and that is holding business back.
Sorry, but I find it impossible to take this argument seriously. Uncertainty is the most fundamental fact of economic life. As long ago as 1922, Ludwig von Mises brilliantly cited the inescapability of uncertainty as the reason that socialist planning must fail. He could have added: few things are as dangerous to a capitalist economy as the delusion that uncertainty has been banished. If back in 2005 we’d had a little less certainty about the housing market, we’d all be a lot happier today.
The main target to date of the Obama regulatory agenda has been the financial services industry. That’s the one industry that has recovered most completely from the recession. And frankly, the practices most aggressively targeted by the Obama administration – e.g. in the credit card industry – were so abusive that you have to question: can it really be true that the growth of the US economy depends on duping poor and ignorant people into paying 27% interest rates?
2) Jeffrey Burk is right to locate the origins of the crisis in the US housing market. He’s probably right to sense that recovery won’t accelerate until the housing market has normalized itself.
But two more things must be said:
a) Economies are complex feedback mechanisms, not simple accounting formulas. You don’t necessarily recover from a bubble faster by squeezing the remains of the bubble harder. The “purge the unsoundness” approach of an Andrew Mellon can transform a nasty recession into an outright depression. You don’t have to accept the whole Keynesian program to appreciate that such a thing as aggregate demand does exist and does matter.
b) Exactly how did Barack Obama prevent the housing market from reaching bottom? The administration’s mortgage relief programs have been an utter and acknowledged failure. What’s keeping underwater homeowners in their houses is not this administration’s actions, but the magnitude of the housing disaster: the banks simply can’t foreclose fast enough, and each new wave of foreclosures causes price declines that put more people underwater.
3) Finally: it’s really, really important to understand the difference between the long-term and the short-term. Higher taxes after 2014 may well slow the long-term growth trajectory of the United States, all other things being equal. But no business that sees a chance to use labor profitably right now will decline the opportunity because of fears of what may happen three years in the future. If businesses are not hiring today, it’s because business conditions are lousy today. And they are lousy because of the massive and abrupt collapse that occurred in the fall in 2008 – and from which the US has recovered just as slowly as predicted by the best historical study of financial collapse. (Also by coincidence published in 2008.)
I’m curious about the conservative economic commentators who think that the “uncertainty” created by Obama is such a problem for the economy. Did they support the GOP/Tea Party approach on the debt limit?
I can’t think of any uncertainty that would be more potentially disruptive for a business than the looming default of the American economy and the consequent loss of credit rating for the country and increase in interest rates.
If they really cared about uncertainty, then they should have been pushing for a clean debt raise bill in January. Were they?
A foolish consistency may be the hobgoblin of little minds, but any consistency seems to be anathema to current Republicans. Except cutting taxes on the best off, of course.
“If they really cared about uncertainty, then they should have been pushing for a clean debt raise bill in January. Were they?”
Hah. Of course not.
And, if the they really cared about the deficit, they would have been pushing for a set of policies that would best address deficit. Were they?
Hah.
You know that Biblical injunction – ‘ye shall know them by what they do’
Not what they say. It’s all ideology and power with them.
What you don’t understand is that it is simply a matter of math, which is the branch of science most neglected by the Liberal mind. The “uncertainty” is over what are known as fixed costs. That is, how much is it going to cost over the next year to conduct business. Every business has to have some basis on which to make a business plan in order to even start trying to conduct business. It’s not a weekly or monthly thing, it’s over a year or years. The Democrats are PROMISING change and are offering all sorts of possible scenarios, many of which include severe sanctions AGAINST business. You don’t understand the “uncertainty”? That is because you have no notion of what is truly required to start up the engine of commerce. It requires some stable basis on which a business plan can be constructed. We don’t have that, yet. What we do have is certainty that there is no stable basis on which a company or entrepreneur might plan it’s future. And, if the parties can agree to stabilize their political activities for a reasonable period, it will take a minumum of 6 weeks to formulate and begin execution of that plan. So, given the lack of understanding and total intransigence of the government guys toward allowing business to gather it’s skirts, we will continue to spiral downward economically, socially and politically.
Children! Stop peeing in the pool! Your corner of the map is not the center of all that is important. Washington cannot continue without revenue from the private sector, but the private sector can damn sure operate without the chaotic ministrations of the government. You Liberal idiots are stripping the limbs and leaves of the tree from which we all draw our sustenance. You are killing off your own food supply like parasites draining their host of all its blood without regard for what will happen the next day.
You hate Liberals – I got that.
But you didn’t answer the question. When you are obviously so concerned about uncertainty, why is there no concern about the uncertainty due to the actions of the Tea Party?
No one in my company is worried about the uncertainty of Obama. They are worried about the certainty of the tea baggers. Can we please let economists give us advice instead of politicians?
The January 2009 unemployment stood at 7.6 percent. Now, more than two and a half years later, the rate stands at 9.2 percent. Moreover, unemployment has only dipped below 9 percent in two of the past 26 months. This is the longest run of such rates since the Great Depression. Obama owns it.
Next.
It is certainly worth remembering that the economy was losing about 800,000 jobs per month when Bush left office. Only creative accounting could view the current economy in such a myopic view.
Ah, if life were so simple. BTW of course Obama “owns the recession” he’s the guy in charge. Also suggesting that the solution is less taxes, and less regulation as a panacea to all of America’s problem is ridiculous as the 2001-2009 period has clearly shown.
Its not a question of hating Bush & Friends, but it remains that they implemented the very policies that they are advocating today, and no one can say that America was better off at the beginning of 2009 than they were at the beginning of 2000 (except for the 1% richest — they’ve done rather well).
To simplify America’s problem to: Its all Obama’s fault, next is intellectually lazy and frankly a little dishonest.
How about better off in 2003 than in 2000? Or better off in 2007 than in 2005? Was the economic collapse of 2008-2009 inevitable? Couldn’t we duplicate the economic growth of 2002-2007 without guaranteeing total breakdown?
Given how much of the growth was fueled by a speculative balloon in financial instruments and in a housing bubble … probably not.
So we have to reinvent a national economy.
I think I’ll keep trying to restore the one we just had.
“Sorry, but I find it impossible to take this argument seriously. Uncertainty is the most fundamental fact of economic life. ”
:::clapping and cheering:::
FINALLY. Someone steps up to call out this scaredy-capitalism ‘uncertainty’ cant.
Lately, on one hand, we hear about the marvels of capitalism, the nimble and creative enterprises that are set in motion, and about how the innovators and leaders of these enterprises deserve whatever compensation they accord themselves to deserve, because they are the risk takers and rain makers. THEN, we hear, from most of these same folks, how businesses are hanging by on the sidelines, hoarding cash, because some tax 5 years from now, some new regulation, might have some marginal impact on their bottom lines oh dear.
Well the industry I’m most familiar with. The one I’ve worked in over three decades, is held up as the most risky and innovative, one of the most global with all the competitive pressures that entails, and also deals daily in materials and chemicals and permits and waste disposal that those awful awful regulations minutely monitor. The microelectronics industry.
Know what? It’s hiring. Hiring like gangbusters. New factories are being built. Here. In the U.S.A. Multi billion dollar fabs.
Why? Because people are buying microchips, and microchips are being incorporated in a large proportion of new products, and are essential in the manufacture, tracking, and transporting of *every* new product.
Economists cal this – - wait for it- – wait for it – - *demand*. Once the biggest actor in this field ramped up their investing, EVERY actor in this field had to increase investment. Or die.
And all in this terrible, awful awful, uncertain, who-knows-what’s-around-the-corner, many-employees-to-cover-health-insurance-for, world.
Every day I live, every day I recall, puts a lie to this uncertainty kills everything cant that we get fed from the right wing. And, oh, we get stuffed with it. It’s gotten to the point that any schmoe who wants to sound Worldly Wise, speaks in somber tones of ‘uncertainty’.
Well, that emperor aint’ got not clothes.
Bravo! Righteous anger over stupidity at last.
Democrats are the ones peddling unnecessary uncertainty. “Armageddon” “Abyss” “Held hostage” “Terrorists re: Tea Party” suggest a party coming unhinged.
Seriously, do you expect people to believe 65 House members out of 435 are holding the WHOLE country hostage?
Are Democrats the governing party or not??
I think you know better, Chris – that number is enough to block passage of appropriations in the House, and that, given their willingness to pull any big lever, no matter how damaging, gave them inordinate power. Deal with that reality, and quit with the “poor widdle ol’ Dems just a few Tea Partiers scare ya huh huh huh” childish line.
History is full of what small determined groups can do to disrupt whole nations. Gees, a train’s emergency brake depends on the rationality of all its passengers.
Let me turn it around – hasn’t the whole drown gub’mint in the bathtub thing been about how supposedly otherwise a tiny minority of lie-berals can get their grubby hands on taxpayer money and spend it all? Else ol’ Grover Norquist couldn’t be saying his pledge is really a pledge “to the people”.
So this argument that you’ve been posting lately is nothing more than a playground taunt, and I’m calling it out as such.
Give us a break Banty. The Tea Party is a small contingent doing what all elected reps in government are supposed to do: represent the interests of their constituents.
There was no crisis on raising the debt ceiling except for the one the Dems manufactured. Dems got their increase with almost zero cuts the next year.
Politics is making sausage. We witnessed sausage making last week, nothing more.
Very well deduced, David. So now you realize the entire Republican economic policy rests on a ridiculous talking point, AND you accept some of the assumptions of Keynsian economics? Don’t worry, it’s not that you left the Republican party, it’s that the Democratic party is what’s left of it.
This is a fine piece. “Uncertainty” is a silly, easily falsifiable talking point.
See: http://andrewsullivan.thedailybeast.com/2011/08/conservatives-abandon-economics.html “In all of the recent recessions, faltering output has been accompanied by lower, or even negative, inflation. This means that demand shocks must have been the culprit. If “uncertainty about government policy” were really the cause of the recession, as many conservatives claim, then we would have seen prices rise – as companies grew less willing to make the stuff that people wanted, stuff would become more scarce, and people would bid up the prices (dipping into their savings to do so). I.e, we would have seen inflation. But we didn’t see inflation.”
And, of course, nothing has created more uncertainty than the GOP/Tea Party’s taking America to the brink of default.
Have to disagree with one part: “Higher taxes after 2014 may well slow the long-term growth trajectory of the United States, all other things being equal.”
What is the empirical support for the proposition that 1990s-level marginal rates on income earned above $250,000 will be bad for the economy?
“Exactly how did Barack Obama prevent the housing market from reaching bottom? The administration’s mortgage relief programs have been an utter and acknowledged failure. What’s keeping underwater homeowners in their houses is not this administration’s actions, but the magnitude of the housing disaster: the banks simply can’t foreclose fast enough, and each new wave of foreclosures causes price declines that put more people underwater.”
And the peanut butter paste of bad, missing, or outright wrong paperwork getting into the gears of the foreclosures. Did Obama invent MERS? Did he pass a law forcing robo-signing? Heck, was robo-signing and liar loans part of the CRA that is central to the right wing fairy tale about this??
But he is continuing the Bush Treasury policy of shielding To-Big-To-Fail banks from the consequences by allowing them to report worthless paper as having some value. The value of the second or third decade of a foreclosed mortgage is $0.00, but they’re not purging their chopped and bundled mortgages of dead loans. That’s one reason they’re hoarding cash — someday they will have to value those assets down to $0.
This is a chicken and the egg argument. The housing industry financial system was definitely culpable in the fragility of the overall economy. But a simple assignment of the recession onto the housing industry is not appropriate.
The housing industry is a part of an economy that failed, and its failure was in large part due to the overall economy’s failure. If the employment and general economic problems did not exist (and they are grossly understated by the official statistics), then the problems in the housing industry would likely have remained dormant.
In large part, the housing industry’s performance was a symptom of the economy’s problems, not the source of the problem.
Reference: http://thelonggoodbye.wordpress.com/2010/08/12/the-myth-of-fannie-mae-freddie-mac-barney-frank-the-housing-bubble-and-the-recession/
Eli and Banty, both nicely done.
American direct investment in China is in the hundreds of billions of dollars, does anyone want to tell me people have all that much “certainty” in the Communist party of China? No, the perceived rewards outweigh the risks.
Although Bush is to be commended for pushing through permanent Most Favored Nation trade status early on in his Presidency – thus creating the certainty needed to open the floodgates for a lot of that American investment capital that flowed across the Pacific in the 2000′s.
Ezra Klein did a piece on his show a few minutes ago showing Paul Ryan agreeing that Keynsian economics usually fail at first because the first jabs are too light. Then, the critics use that failure to indict the whole idea and the chances for a do-over are pretty much gone.
Look how well Keynesian economics has worked for Japan. Massive stimulus is not guaranteed to work. But it has left the Japanese extremely deep in debt.
We probably won’t get another chance to find out. We know it worked extremely well the last time we were in this much trouble, in the form of a nationwide war effort, but our economic variables were as different then as Japan’s are today.
There has been over $8 trillion in deficit (stimulus) spending in the last 10 years. The results don’t look to good to date.
So the Shrub tax cuts were Keynesian? I don’t think so.
Fact remains, spending under both Bush and Obama has been far in excess of revenue.
Will even more deficit spending pull the US out of economic malaise or will the US simply end up like Japan?
The key is that for Republican politicians, their economics have become immutably intertwined with their economics.
Postulate 1: Democrats will always raise taxes and increase regulations.
Postulate 2: The threat of increased taxes or regulations inherently increases uncertainty in the business community.
Postulate 3: The business community responds to uncertainty the way a turtle responds to a threat, by pulling in it’s head and legs and waiting it out.
Postulate 4: The business community going into defensive mode causes economic downturns.
This basically just takes a few GOP core beliefs – Democrats baaad, taxes baaad, regulations baaad – and builds an economic theory around them. It’s faith based economics.
Mr. Frum, you’ve picked a fight with closed minds.
You won’t convince anyone.
I’m glad to see Mr. Frum standing up to the dunderheaded pundits in the GOP. It’s wonderful and I hope something comes of it.
Bravo, Mr. Frum.
More “Economics” like WHHutt’s “resource” parameter studies and Marshall’s concept of “diseconomy.”
Scroll down on the comment page here, for “DAY AFTER” collapse scenarios. Hollywood’s starvation-and-forage formulas wouldn’t apply. Emergency management would diminish Socialism as a model.
http://pajamasmedia.com/richardfernandez/2011/08/04/fear/#comments
David:
Could you pose a DAY AFTER model based on what you know about Economics and Politics? Doing so would lower your blood pressure.
Even as a conservative, I’m not sure the “more of the same” approach of Republicans would work. How would Republicans prevent another housing bubble in the future? Less regulation?
The bubble popped under the Republican’s watch and they never saw it coming. It’s fine to blame Fannie Mae and Freddie Mac for the problem, but the crisis was much larger then the two of them. Banks and corporations can misbehave, if that is the word, and many did, endangering the economic welfare of all Americans.
Lower taxes are interesting too. Since cuts must come, how deep do Republicans advocate the military budget be reduced? Should military personnel take a pay and benefit cut to help balance the budget? Or even as a symbolic gesture, how about House and Congressional members giving up their public health care plans?
I’m not suggesting a compromise on taxes, simply a hard list of where the cuts would come from to balance the budget. If it can be done, Republicans owe it to Americans to explain, in detail, how it would be done.
Paul, I don’t like to pay taxes either. Like everyone else I try to find every exemption and loophole in the tax code to reduce my taxes. But the truth is that the only way to reduce the deficit without eviscerating the government is to raise taxes. It will take a 40 – 44% reduction of government programs and expenses to balance the budget at today’s tax intake. Imagine nearly half of government gone. And even that wouldn’t pay off the deficit. It would take even greater cut to government – in the 50% range – to have enough left over tax revenue to pay down the existing debt. I can’t even imagine how those deep cuts to government would keep our country competitive in an interconnected global community. It just seems like a fantasy.
David,
I agree with you.
Obama did not make the economy worse.
He distracted himself with irrelevancies while the economy got worse, until it was too late for him and for us. To wit:
1. A ludicrous economic “forecast” by Christina Romer in 2009 that the stimulus package would reduce the unemployment rate to below 7% by now. So after he signed it into law, Obama waited and waited for that to happen, ignoring warnings from both conservative and progressive economists that it wouldn’t happen. In the meantime, Obama had other things on his mind:
2. ObamaCare. Obama spent most of a year trying to get that done, even though its effect on the unemployment rate would be nil. He chose national health care over unemployment as his top priority, spending all his remaining political capital on ObamaCare instead of on other measures to reduce unemployment. That’s understandable, given how Dems had been salivating for national health care for so many decades. But it was wrong.
3. “Never let a good crisis go to waste”: That infamous line, from Rahm Emanuel, explains why the Obama Administration did that. They saw the deepening economic crisis not as an urgent problem to be fixed, but as political leverage to ram through Congress a raft of long-standing liberal dreams like ObamaCare and cap-and-trade and immigration reform. Their attitude was: We’ll set the priorities and force the American public to accept them. But things didn’t work out that way.
In January 2010, Scott Brown broke the Dems’ filibuster-proof majority in the Senate; and 10 months later, the GOP, now including numerous Tea Partiers, took over the House. The final blow fell this past week, when Obama agreed to a GOP-inspired deal that slammed the door on any more economic stimulus packages or big-ticket social programs. Game over.
So when liberals fume about how the Tea Party Republicans forced a budget cutting deal over the debt ceiling crisis, they should remember that the Tea Partiers weren’t doing anything that Rahm Emanuel didn’t do himself: Like he did with the unemployment rate, the Tea Party looked at the looming debt ceiling crisis and decided not to let that crisis go to waste either.
And Standard & Poors promptly downgraded US debt. Hooray for the Tea Party!
Lord help us if Democrats are that impotent in the face of a small noisy opposition.
Not everyone who opposes the Tea Party is a Democrat, paul_gs…
But only Democrats are impotent in the face of the small noisy group of Tea Baggers.
I mean really, Democrats claim they are smart, they must be able to outmaneuver those Tea Party simpletons, no?
I see your point, paul_gs, but somewhere on the order of 95% of Republican Congressmen have signed the Americans For Tax Reform pledge, and Republicans have a very large majority of seats in the House. These Congressmen know that if they go back on their word and give in on taxes they will likely be facing a primary challenge in the next election. Any Republican who wants to keep their job is crazy to compromise with the Democrats. This is more than just a small, vocal band of Tea Party Republicans. Unless the US Constitution has changed in the last few days, this is more than enough to make it virtually impossible to get anything meaningful done in Congress. This is brinksmanship. The government was designed for compromise, not ideological pledges.
Repubs compromised big time. That’s why the debt ceiling was raised with hardly any cuts.
What more do you want? :-\
I think I want what most people in the US want, paul_gs: a reduction of the deficit that includes both entitlement reform, discretionary spending cuts, and revenues in the form of tax reform and/or tax increases to close the gaping hole in the budget. To me, this is common sense. Our Congress is made up of Republicans AND Democrats, and for now anyway, Dems have a majority in the Senate. Both sides have to come together. But, when I see people wearing tricorne hats, taking political purity tests, and signing pledges not to raise taxes under any circumstances I see a dysfunctional system. I am not a liberal, but I have yet to see a Democrat version of Grover Norquist and his Americans For Tax Reform. Am I wrong to think the Republican Party has been heavily influenced by a group that won’t compromise with the other side?
But that’s the points Dems keep missing. The Repubs did compromise. That’s why the debt ceiling was raised, why cuts are so modest for the next few years and why the Bush-era tax cuts expire in late 2012. What more could you want?
I copy-pasted my response from another post that occurs further down in the page:
The debt ceiling increase is not a Democratic “win,” paul_gs. We have an appropriations process for spending money, and as fate would have it, a separate debt limit increase process for deciding to pay the bills we’ve already committed ourselves to paying. So, increasing the debt ceiling merely means that we’ve decided to pay our bills — it doesn’t authorize any new spending, stimulus or otherwise.
When the Republicans were in charge they didn’t hesitate to increase the deficit through entitlement spending, discretionary spending, and tax cuts. It’s disingenuous to suggest that only Democrats needed a debt ceiling increase.
Additionally, Democrats didn’t get any of the revenue increases they wanted. Only spending cuts were approved under the debt ceiling agreement. Republican commentators and politicians themselves are claiming a big Republican victory. I’m pretty sure this is why.
Finally, the expiration of the Bush-era tax cuts were not part of the debt ceiling agreement. That was worked out last year.
However, I’d be willing to bet there are more than a few Democrats who can’t wait for the Americans For Tax Reform adherents to look to them for support in extending the Bush tax cuts. It wouldn’t suprise me in the least if the Dems went all “Tea Party” on them. That would be a shame, too.
Actually the downgrade is to credit watch, citing the failure of the two parties to work together to meet the challenge of long term, as opposed to immediate, deficit reduction and even more importantly the huge fight that nearly caused a default. That debacle that Congress inflicted on American businesses and the country’s people was totally unnecessary.
This was S&P’s way of saying, “get your act together and stop acting like spoiled, self-indulgent adolescents.” S&P, Moody and Fitch are demanding Congress to stop playing politics and face the unemployment and debt problems that exist and together resolve those challenges.
The warning downgrade of S&P today should give every elected official as well as every pundit pause, McConnell especially. When your greatest goal is destroy a president and the opposing party, you put the country at risk, especially during a weakened economic era. (It just hit me how much akin to the lead up, just prior, to the French Revolution this is.)
Franklin said after much the argued and debated, in every home, pub, paper, townhall and legislature, Constitution was approved the country had a democracy if it can hold it. We may be on the verge of losing our democracy if we don’t come together, stop attacking political opponents as enemies to be destroyed, and recognize that the country is far more important than political parties.
I agree with what you say. All except the part about the downgrade. S&P did indeed downgrade the US credit rating to AA+.
Said it before, and I’ll say it again: Thank God for David Frum!!!
- delete -
[blockquote]NEW YORK (CNNMoney) — Credit rating agency Standard & Poor’s on Friday downgraded the credit rating of the United States, stripping the world’s largest economy of its prized AAA status.
In July, S&P placed the United States’ rating on “CreditWatch with negative implications” as the debt ceiling debate devolved into partisan bickering.
http://money.cnn.com/2011/08/05/news/economy/downgrade_rumors/index.htm?iref=BN1
[/blockquote]
Dear Teabaggers, great work shitheads.
Someone should probably start a thread about this. Unless everyone is at their atm trying to get all their money out.
Nope rbottoms, this one rests on the Democrat’s shoulders since they’ve been in power 3 years already.
And if you can’t avoid the lazy profanities, go to the Huffy Post, they welcome potty mouths like you.
Shitheads is pitch perfect. After all it was your guys trying to tell everyone that the whole default thing wasn’t a big deal, right?
You probably think “Horrible Bosses” is a funny movie too Oldskool. Absent profanity, many of you are unable to articulate a point.
There was zero chance of a debt default. Not sending out SS checks would be a crisis, but definitely not a debt default.
If Democrats want to be perceived as competent, they should not have misrepresented the risks regarding the debt ceiling.
Never saw that one but I loved Bad Santa.
You guys took the hostages, you got your ransom, you got your downgrade, now you should declare victory and go home.
Sorry, Paul, but that was not was the rating agencies, Wall St, or economists were saying. They said specifically that default on any bills would lead to a downgrade, just as when you fail to make the required payments on your own bills. Just as you can’t pick and choose which bills to pay or not pay at the end of the month and still maintain your FICO score, neither can the government.
And yet a downgrade happened anyway. You don’t have to default on your debt to be downgraded these days, it seems. In fact, reasons given for the downgrade include an inability of policymakers to deal effectively with the nation’s problems — the words “political brinksmanship” were thrown in there somewhere. I’m not naive enough to believe that there wasn’t some brinksmanship on both sides, but when you have members of Congress going on air to say default is no big deal, one is bound to raise the eyebrows of one’s creditors.
Yeah, Bad Santa was funny. Now I find vulgar movies too common and a lot less humorous.
“You guys took the hostages, you got your ransom, you got your downgrade, now you should declare victory and go home.” – Oldskool
LOL. What hostages? Or do Dems pay ransom to everyone who says “Boo!”?
“Sorry, Paul, but that was not was the rating agencies, Wall St, or economists were saying. They said specifically that default on any bills would lead to a downgrade, just as when you fail to make the required payments on your own bills. Just as you can’t pick and choose which bills to pay or not pay at the end of the month and still maintain your FICO score, neither can the government.” – valkayec
No, the US couldn’t default on their debt. Bills wouldn’t get paid and checks wouldn’t go to seniors, etc.. But that is a much different type of crisis then a debt default.
By not sending out SS checks for a few days or withholding military pay, Tea Bagger opposition would have collapsed and Dems would have finangled a deal much more to their liking.
You are correct in that defaulting on the debt would result in a downgrade but not sending out SS checks on time would not. Anyways, the point is moot as the credit rating has been downgraded anyways.
Any sober person will pay the ransom of people who have a WMD and say they’re willing to blow up the world. So congrats, you won. The downgrade may even play in your favor which was probably a consideration that you boys had in mind all along.
Tea Baggers had a lousy poker hand Olkskool, nothing more. But it appears that’s all it takes to spook the Democrats.
“No, the US couldn’t default on their debt. Bills wouldn’t get paid and checks wouldn’t go to seniors, etc.. But that is a much different type of crisis then a debt default”
Call it an Oogabooga, then. The S&P just told us they’re unhappy that there is a persistent threat of Oogabogas given our political situation.
That better?
“Tea Baggers had a lousy poker hand Olkskool, nothing more. But it appears that’s all it takes to spook the Democrats.”
Paul, you completely don’t get it. The rest of the world doesn’t care to even have that particular game of poker played! It’s not about who might or who might not have been bluffing. It was a hell of a chip the Republicans threw in.
I don’t agree Banty. Last weeks events was just typical politics but for some reason the Dems panicked.
Even so, the Dems were the winners: higher debt ceiling, almost no cuts.
Last time I checked, the GOP controls one half of Congress, and Congress has to approve an increase in the debt ceiling. Republicans own at least 50% of this. It will be interesting indeed to see who the public blames for this embarrasing mess.
So far the polls show the Tea Party has lost. Favorable ratings are down to 20%.
Yep. The bloom is off that rose. People won’t be writing them off as a noisy fringe group any more. Or ardent but basically reasonable people who can be educated a la the 1994 group.
Indeed, corporate funding hiding behind certain kinds of PACS may dry up, too, as certain powers that be have seen that their useful idiots took over the madhouse. It’s a Frankenstein story. I’ve even noticed Fox moderating itself a bit on this.
How’s this possible, the debt ceiling was raised with practically no cuts in government spending. This one and only fact, if Dems were to be believed, was the cure. This one and only act would prevent a default, a downgrade, stave off economic ruin and create global harmony.
Who was wrong, who mislead the intrepid poster to FrumForum. The Dems of course. And what will the Libs do now? If their economic high priest is to be believed these rating agencies mean nothing. Krugman stated last week this very sentiment. So now I’m confused, if Krugman is right RBottoms is wrong, if Rbottoms is right Krugman is wrong.
S far the only ones who were right have been the TeaParties.
“How’s this possible, the wound was cleaned with alcohol after a week of bickering. This one and only fact, if doctors were to be believed, was the cure. This one and only act would prevent an infection, a disease, stave off a life-threatening illness and result in a healthy patient.”
Yeah springy, time is completely irrelevant to politics.
“Obama did not make the economy worse. He distracted himself with irrelevancies while the economy got worse……”
I tend to agree with this. And I think its time Obama proposed something “BOLD”.
Democratic Party + BOLD = Eternal deficits and endless pork barrelling.
Has anyone seen Rick Perry’s college transcript that’s out on the web this afternoon? I particularly like the fact that he got a “D” in “Principles of Economics”.
Any chance he was a cheerleader too.
Amazingly we have never seen Obama’s, state secret ya know. So now whats the deal, you need to see Perry’s but not Obama’s.
Obama was President of Harvard Law Review. They don’t just hand those positions out to someone “because they’re black.”
I’ll be a little contrarian vis a vis the previous comments. Not very contrarian, but a little.
Uncertainty has a huge financial impact, as aptly demonstrated by the debt crisis. Uncertainty in the safety of an investment drives interest rates up, as every investor should intimately know.
Uncertainty with regard to public policy is an issue when the government is fickle about where it spends large amounts of money. The demand available to construction companies depend more than a little on the volume of infrastructure projects that governments invest in. Contractors don’t want to be burned when a change in policy causes the loss of a government contract.
Uncertainty about one’s job prospects in the public sector (such as being a teacher in a climate of threats to education spending) can and should scare employees into spending less and saving more.
Most importantly, on a macroeconomic scale confidence is everything, and economies can be sunk by a lack of investor or consumer confidence.
Having said that, uncertainty over a few percentage points in the higher marginal tax brackets is not a pivotal consideration when weighed against demand.
The Tea Party caucus certainly isn’t helping to stabilize the economic outlook.
Agreed. There’s never absolute certainty in business…and honest CEOs will say so. They know that taxes will rise or fall, or regulations will increase or decrease, so they make adjustments and move on. The uncertainty businesses don’t like is what we’ve seen in DC over the last 6 months. At least 25% of American businesses do work for the federal government. How can they plan if every day Congress threatens their business? How can families plan if their livelihoods are threatened by Congressional schizophrenia and infighting.
S&P, Moody and Fitch were more disturbed by the infighting and failure to come together to resolve problems than they were about the immediate debt. As they said, the failure of political leadership both in the US and Europe is leading to the downgrade, citing unemployment…and the failure to create any policies to reduce unemployment…as the biggest problem in the US.
But apart from the calculable risks and probablities of earning a profit, are added the completely unpredictable danger of a government that believes it can tell when people “have made enough money”.
uncertainty over a few percentage points in the higher marginal tax brackets is not a pivotal consideration when weighed against demand.
The most useful thing that’s been said in this thread.
Fox is actually reporting the downgrade story. Somewhat impressive given how heavily they promoted the tea party hostage takers at the outset and then wedged them into the far right of the Republican party. And they’re probably delighted to see this mess play out, thinking it increases their party’s chances next year.
Bachman is clutching her pearls as we speak, calling for the Treasury Sec to resign.
^+1 Oldskool
The Half Governor is spewing the same old stool from both sides of her mouth. On Greta’s show on Fixed News
“Sorry, Paul, but that was not was the rating agencies, Wall St, or economists were saying. They said specifically that default on any bills would lead to a downgrade, just as when you fail to make the required payments on your own bills.”
Not Moody’s Investor Services.
“For Moody’s, a debt default occurs only when an interest or principal payment on a Treasury security is missed, and does not arise when payment are delayed on other obligations such as federal employee salaries, Social Security, or vender bills.”
http://www.zerohedge.com/news/moodys-releases-statement-potential-outomes-us-aaa-review-now-says-virtually-any-deal-would-not
Exactly Chris, bondholders would have been prioritized and received their money no matter what.
News flash. Bonds are not the only obligation that the government has to pay. Default on any of the obligations is default.
Anyone who ignores the mile long list of government contractors (many of them staunch conservatives!) who would start lining up at the courthouse the moment the first guaranteed delivery contract gets cancelled is dangerously naive.
No, not sending out Social Security checks or not paying military personnel should not be confused with defaulting on the debt. They are two very different matters.
Shit. Heads.
In Tri-Corn hats.
Thanks a lot, what are you going to do next you dumb bastards?
lol. With both barrels.
Well the next thing is to provide leadership on the 2012 budget. Unlike Obama’s budget proposal, which was rejected by the Senate 97-0, or the Senate’s/Reid’s proposal, which has never reached the light of day, the Republicans in the House have a reduced spending budget.
The next thing is to remove the remaining Dems from the Senate and send Obama over to Jimmy Carter land. Throw the largest blockage to increased hiring, ObamaCare, out the window and remove the regulation strangle hold the EPA has over our industry.
Throw the largest blockage to increased hiring, ObamaCare, out the window and remove the regulation strangle hold the EPA has over our industry
Yep … because companies with billions in assets who already provide healthcare to their employees will rush to hire the moment that the ACA is cancelled because … well, because!
And it’s about time we follow the Chinese model and quit worrying about breathable air in our cities, or the level of chemicals in our waterbodies.
Dems have to be the sorest winners I have witnessed in a long time. Debt ceiling increase, continued stimulus with no significant cuts. Automatic expiration of Bush-era cuts in 2012.
What more do Dems want?
“Automatic expiration of the Bush Tax cuts in 2012.”
Well, yes, because both were passed by reconciliation.
And it looks like hardball as the game of choice has just been established. You’re going to see anything above $250,000 a year raised, unless some major concessions are made from the Tea Party side. And don’t count on the lame ducks being the ones you think will be. That fight can nicely wait until mid-November, and S&P won’t have a dog in that fight. Indeed they’d be happy to see the revenue.
Dems don’t do hardball, as we’ve just witnessed Banty. They panic, fold and flee at the tiniest opposition.
The debt ceiling increase is not a Democratic “win,” paul_gs. We have an appropriations process for spending money, and as fate would have it, a separate debt limit increase process for deciding to pay the bills we’ve already committed ourselves to paying. So, increasing the debt ceiling merely means that we’ve decided to pay our bills — it doesn’t authorize any new spending, stimulus or otherwise.
When the Republicans were in charge they didn’t hesitate to increase the deficit through entitlement spending, discretionary spending, and tax cuts. It’s disingenuous to suggest that only Democrats needed a debt ceiling increase.
Additionally, Democrats didn’t get any of the revenue increases they wanted. Only spending cuts were approved under the debt ceiling agreement. Republican commentators and politicians themselves are claiming a big Republican victory. I’m pretty sure this is why.
Finally, the expiration of the Bush-era tax cuts were not part of the debt ceiling agreement. That was worked out last year.
However, I’d be willing to bet there are more than a few Democrats who can’t wait for the Americans For Tax Reform adherents to look to them for support in extending the Bush tax cuts. It wouldn’t suprise me in the least if the Dems went all “Tea Party” on them. That would be a shame, too.
I hope that the gays and lesbians enjoy serving openly in the military of a fastly-becoming-third-world nation. Because that’s what the administration spent all of its time and effort on.
Ahh – a test of the theory that Poe’s Law can also be applied to conservative thought.
I really can’t tell if Rockstar is a troll, an amazing idiot, or attempting to be ironic.
Ah yes, typical FF method. Interpret for us the “mainstream conservative” argument, then knock down that straw man.
1) $800 billion in stimulus spending has created expectations of future tax increases that weigh heavily on job creators. Uh, no, the real problem is massive government debt and borrowing driving up government interest payments, with no rational plan for containing deficits.
2) The Affordable Care Act and the emergency economic actions of the Obama administration have created regulatory uncertainty that likewise weighs heavily. Uh, no again, there’s no uncertainty about the massive expense the regulations will impose on businesses both large and small, while doing absolutely zero to control costs–same old pay for service model of Medicare and Medicaid
I’d go on, but you get the picture. Nice try, but no cigar.