Am I the only one baffled and a little bit disappointed in the speech by President Obama last night? Let’s recall that House Democrats wrote their version of the stimulus bill without any pretense of soliciting Republican input, and were happy to pass it without a single vote from across the aisle. The public greeted the result with nearly universal condemnation for the vast array of unnecessary, silly, or even offensive provisions. Polling indicates that public support for the bill has fallen below 50 percent and recedes every day.
As action shifted to the Senate, President Obama encountered a problem with Democrats. During a meeting with Senator Susan Collins, he agreed that the $920 billion stimulus gorilla needed diet, and pledged to see the bill come in at least $100 billion smaller. What happened? During a day of vigorous amendments, Senate Democrats pumped the bill up to $995 billion, a development that sparked a revolt among House Democrat Blue Dogs.
So it was a bit shocking to have the President open his remarks with sweeping praise for the “discipline” of the House Democrats effort. Discipline is the last adjective that most would assign to the House effort. And it was disappointing to see him retreat to a partisan broadside against Republicans, when in fact it is Republicans who are engaged in a bipartisan effort to save the Democrats from their internal divisions and bring the bill closer to the President’s stated wishes. And, frankly, it was at odds with the facts to assert that opponents of the bill were standing in the way of the change Americans want – the public hates this bill.
There is a bipartisan understanding that the economy is in trouble, and a bipartisan commitment to rapid action that will address the freefall. And one of the best things to include in stimulus is more rapid implementation of things that you want to do anyway. But therein lies the real clash of agendas.
For Democrats, this apparently means big, new spending programs in health, education, transportation, energy, environment, and other areas to address social goals and economic infrastructure (broadly defined). For Republicans, it means cutting marginal tax rates to improve growth incentives. Once the need for stimulus is over, Republicans don’t trust Democrats to cut other spending to accommodate their new programs and keep the debt explosion at bay. And Democrats don’t trust Republicans to engage in the loophole-closing, base-broadening that will transform stimulus tax cuts into needed tax reform.
I understand that a dinner with the home team is a tempting occasion for a partisan podium-thumper. But it was an even better opportunity for a measured lecture to his Democratic colleagues about their contribution to the failures that have slowed the Senate effort. Repeating his commitment to reducing the scale of unnecessary spending in the bill would have gone a long way to bridge the skepticism that plagues this debate.
41 responses so far
1 JoetheVeep // Feb 6, 2009 at 1:40 pm
Obama’s poll numbers are drifting back to earth, and this exhibit of peevish partisanship can’t help. Nor can his decision to head to Camp David after two weeks in office. We may not be far off from the day when the GOP can attack him directly. As McCain (of all people!) seemed to do on the floor of the Senate.
2 Bulldoglover100 // Feb 6, 2009 at 4:55 pm
As a Republican? I find your “rant” to be offensive. I find your inability to deal with the facts just totally unexcusable considering the state of the Nation.
How about just a minute or two of perspective?
Amount to bailout AIG – at least $85 billion
Amount to bailout Citibank – at least $45 billion
Amount to bailout Bank of America – at least $45 billion, with guarantees on $118 billion in loans
Amount the Bush administration overpaid for bailed-out bank assets – $78 billion
Proposed cuts to President Obama’s economic stimulus bill (currently being debated by 20 “centrist” senators):
$1.1 billion to Head Start
$24.8 billion to states for budget shortfalls in education programs
$15 billion to states for additional education funding
$2 billion to Child Care Development Block Grants
$150 million to funding for programs in the Violence Against Women Act
Amount of just two years of George W. Bush’s tax cuts: roughly $500 billion (adjusting for interest). Two-thirds of that came from tax cuts on the top 20% of wage earners.
(Note: this leaves out the cost of operations in Iraq because, well, does it need to be said?)
If you really want to deal with the problems in this country, as opposed to just throwing dirt at the Democrats. then try helping the situation we find ourselves in.
No, I am NOT a troll but I find myself knowing that while I may be a moderate Republican, I MUST be an American first.
3 ireign // Feb 6, 2009 at 5:26 pm
Bulldoglover100, it is you who have ranted. With a bunch of non-sequiturs. But’s let deal with the facts.
The Bush administration with widespread Democratic supported passed a bailout program. Whether it worked or not, is unclear at this point. Given that we have already spent so much money, it might be wise to have a smaller stimulus package aimed at providing an “immediate” stimulus as opposed to passing a New Deal style program with more farreaching consequences.
Mr. Holtz-Eakin served as Senator McCain’s economic advisor and was most likely involved Senator McCain’s alternative proposal which is aimed at providing an immediate stimulus and not passing significant spending proposals that many will not be in favor of when this crisis dies down.
Bulldoglover, you are engaged in hyperbole. You didn’t address any of the points made by Mr. Holtz-Eakin on their merits and instead tried to criticize the former President.
Opposing the President’s plan with an alternative is not a “rant” but a coherent criticism of the plan in its current form. Deal with it
4 larryo // Feb 6, 2009 at 11:37 pm
You know, among the few possible tools available, none is slower or less effective in stimulating the economy than tax cuts – that has been clearly demonstrated over the past 8 years. That, I think, was Bulldoglover’s point, and he has facts and figures to prove it. His outrage at the absurd posturing of the Senate Republicans is understandable – there is no “unnecessary spending” in a stimulus bill, although resources are finite, admittedly, and some spending is less productive of economic activity than other spending. But any spending – even for new computers at the Department of Agriculture – has the desired ripple effect in the economy. Whereas, giving money to the banks, a program that virtually all the Republicans and too many Democrats enthusiastically supported, was a rip-off, plain and simple, and too many people called it right at the time to pretend that going along with it was simple negligence.
5 coleman // Feb 7, 2009 at 3:15 am
Sen. Collins demonstrated once again that Republicans can accomplish quite a bit with this President. We have to stop folding our arms, standing on the sidelines, watching the government in action.
We need to get in the room, sit at the table, and get to work. McCain continues to be a problem for the GOP. He grandstands, he can’t get legislation passed, he’s a gadfly who has worn out his welcome.
Republicans have more to gain from bipartisanship, since the GOP is currently framed as a narrow-minded group of angry white evangelicals with little interest in compromise or collaboration – on any issues.
The more we work with the Democrats, the better we serve the country AND our own political interests. Success is to be found by having a seat at the table.
6 ireign // Feb 7, 2009 at 8:36 am
I am beginning to think that the majority of commenters on this blog are Democrats who have some ridiculous stereotypes of Republicans. The vast majority of Republicans are not evangelical Christians. Moreover, Coleman I would bet you would not make similar comments about any ethnic minority, why do you think is okay to pick on a religious minority? How many evangelicals do you actually know?
Senator Collins showed she is quite inconsistent. She previously claimed that she was in favor of a balanced budget and that is why she opposed tax cuts.
Success is found by opposing policies that might not be in the longterm interest of the country and by being treated as a partner as opposed to just picking off a few Republicans in blue state. Funny, people criticitzed Bush for governing in a 50+1 way but that is exactly what Obama did here.
Larryo, there are only two ways to stimulate an economy: tax cuts and government spending. The problem with government spending is that you are left with those programs far after the economy is recovered so you better make sure that you like those programs and that they are effective.
Larryo, PLEASE GO TO THE DAILYKOS. You are not well-informed. The bailout vote in 2008 was passed 74-25. More Republicans opposed the bill (rightly or wrongly) than Democrats. Please know what you are talking about.
Unfortunately, David your blog to remake the GOP has been hijacked by partisan liberals.
7 sinz54 // Feb 7, 2009 at 9:07 am
larryo: Some tax cuts can be quite stimulative. A cut in the Social Security payroll tax, which as you must know is a highly regressive tax, would put more money in the pockets of the working-class immediately. Many conservatives suggested it. And it was a tax cut that Obama wanted, and it was in the first draft of the economic stimulus bill. Unfortunately, the compromise now being worked out cuts it out. The problem with stimulating the economy by spending is that the spending is targeted to the politically well-connected. It distorts the free market. We’ll never know if the next young Thomas Edison or the next Bill Gates or the next Steve Jobs is out there somewhere, with a great new invention, and unable to get investment because of high taxes and the economic crisis. While down the street, some labor union is benefiting. You can only spend Government money on the businesses you know about, not the ones that might spring up in the future. Whereas cutting taxes makes it possible for today’s self-employed and small businesses and entrepreneurs to expand into tomorrow’s huge businesses. The Congressional Budget Office agrees with me on this. They just issued a report that while the economic stimulus package will stimulate the economy in the short term, over the next 5 years it’s going to crowd out so much private investment from our formerly dynamic economy, that it will result in a decline in GDP of around 0.3%. Unless you liberals have the guts to cut the spending after the economy has recovered. In my lifetime, I have never seen liberals do that. They simply raise taxes some more, and hurt the economy even more.
8 sinz54 // Feb 7, 2009 at 9:13 am
ireign: The poster “coleman” didn’t say that the GOP *was* a bunch of evangelicals. He said it had been *framed* that way–that’s how it’s been positioned and that’s how it is increasingly perceived. And you have to admit, there is some truth to that. The 2008 GOP platform is a hard-right platform on social issues. Demanding that the protections of the Fourteenth Amendment be extended to the unborn is a truly hard-right position, and I’ll bet that the non-social conservatives of the GOP don’t support it. (Do *you* support it?) So what is it doing there in the platform? It’s there to appease the highly vocal and highly restive evangelical base, who delivered Ohio to Bush in the 2004 election and thus demonstrated their electoral clout. And the failures of the Bush Administration in Iraq and in economic policy left the GOP with little to show to voters except their hard-right social agenda.
9 larryo // Feb 7, 2009 at 12:04 pm
ireign, you go somewhere else. Mr. Frum invited opinions from all sides of the political spectrum because, he says, conservatives need an influx of ideas from outside their narrow, exclusivist, bigoted box. Well, he didn’t say narrow etc etc, but he did invite opinions across the spectrum. Love it or leave it, ireign. And, if you choose to stay, the next time try to respond at least a little on the merits, as opposed to classifying anyone who challenges your feeble efforts and rickety belief system as “uninformed” or as an enemy invader. What did I say that was in error?
10 ireign // Feb 7, 2009 at 2:06 pm
larryo, did you learn reading comprehension in grade school? I previously told you what you said was in error: 1. Your revisionist history on who supported the bailout of the banks, 2. whether tax cuts can stimulate the economy. 3. you alluded to multiple ways to stimulate the economy besides tax cuts, in fact there is only one: gov. spending.
You are both uninformed and you are here mainly to belittle Republicans and writers on this blog. You are not to help the Republican party succeed i.e. you are here under false pretenses. And each and every time you say some idiotic, which is pretty much every time you post, I will respond as I wish. I go on the dailykos just to see a different viewpoint. I dont post at the dailykos and pretend I care about the Democratic Party, while attempting to relegate them to minority status. I dont go on there to insult any of the writers of this blog. You are undermining the mission of this blog and I will respond accordingly.
sinz54-It is being framed that way, unfairly. The GOP Platform is worthless. The platform in no way shapes any GOP politician’s viewpoint on any issue and is mainly there for symbolic issues. I follow politics on a daily basis: http://www.realclearpolitics.com, politico, cnn, ny times, http://www.instapundit, drudge, etc.(even the dailykos) and I have never even glanced at the Republican platform. As you point out, it is there to appeal to social conservatives. McCain was not hard right on social issues as he supported stem cell research and barely talked abouty marriage or abortion.
Social conservatives didn’t deliver Ohio for Bush anymore than economic conservatives or foreign policy hawks did. Once again, you buy into the msm’s narrative. Bush’s economic policies are no more at fault for the current recession than Clinton’s or the Democratic Congresses or lenders such as Democratic donors Herbert and Marion Sandler. If you believe Bush’s economic policy is a failure (by which I presume tax cuts) there is nothing to prevent you from voluntarily donating more to the treasury. I appreciate the tax costs. Like most yuppies, I can distinguish between wealth and income. If you make six figures in Manhattan http://www.nydailynews.com/money/2009/02/05/2009-02-05_nyc_so_costly_you_need_to_earn_six_figur.html or San Francisco and you have six figure graduate school debt, you are not wealthy despite what the Democrats say. I didn’t see anyone giving Bush credit for a very good economy in 2006, why should everyone be blaming him for economic conditions now?
As for the “failure” in Iraq, that was a bipartisan effort. I believe the main failure was the intelligence community. It is too early as a whole to judge the war a failure. Currently, it is looking like Iraq will turn out fine and Afghanistan which all but a handful of extremists supported will turn out to be the failure.
11 larryo // Feb 7, 2009 at 2:36 pm
ireign, I see the problem: You cannot read! I said there were “few tools available” to stimulate the economy, not that there were “multiple ways” to do so. I said all the Republicans and “too many Democrats” supported the bank bailout – what’s “revisionist” about that? The rest of your post is ad hominem diatribe, undertaken because you have no facts to back up your antipathy. Do you deny that Mr. Frum invited opinion from across the spectrum? No! Instead, you take it upon yourself to delineate “the mission” of this blog. Your pathetic attempts at orthodoxy are symptomatic of what ails the Republican Party at present,so it is good you are here, if for nothing else than to teach by negative example.
12 larryo // Feb 7, 2009 at 2:47 pm
sinz, I heartily agree that social security tax levied on the bottom 1/3 wage earners in the US should be reduced – however, the cap should be removed, so that everyone pays in. That would solve the problems created when Reagan began the systematic raids on the trust fund with Greenspan’s encouragement. However, tax cuts are of long term benefit only to those at the top of the pyramid – figures from the Clinton Administration show that income at the bottom actually increases with progressive tax increases. Second, in an economic environment where investment income is hard to come by, no unions prosper – working class prosperity and overall growth go hand in hand, as do strong unions and working class prosperity. Have you noticed that as union influence has diminished, so have wages and benefits? Finally, I think we agree that any stimulus should be a short term solution and that fundamental changes are necessary for the economy to really recover. That is what you were saying, right? Changes like universal health care, which encourages foreign investment, and cutting the bloated defense budget in favor of infrastructure repair, providing for much needed entry-level laborer jobs and long-term capital-growth, come immediately to mind. That was what you meant, wasn’t it?
13 ireign // Feb 7, 2009 at 3:11 pm
“I said all the Republicans and “too many Democrats” supported the bank bailout – what’s “revisionist” about that?”
Let’s see what is wrong with that: 1. It’s not true. 2. Many House Republicans were against and I as I previously noted, there were 25 votes in the Senate against it. The majority opposed were Republicans.
I have no idea who David invited to participate in this blog. Like most blogs, I am sure he wants as many readers as possible. However, I do know that the stated goal of this blog is to help return the Republican party to power. That is not a goal you share. I am not sure what you hope to gain by posting on this blog other than getting a chance to regurgitate liberal talking points. BTW, in a global economy unions hurt the ability for the US to be competitive and lead to job losses. That should be evident from Detroit’s failure. No mainstream economist thinks removing the cap on social security is a good idea. That is a huge tax increase and converts social security from a social insurance program in which theoretically people were supposed to get what they put in, to a huge income redistribution scheme which is inherently unfair to those living in high cost of living areas saddled with graduate school debt like me. On a positive note, passing that scheme will help do more to convert upward professionals to Republicans than anything else the Democrats could do. Maybe you do share the goal of putting Republicans back in charge:-)
14 larryo // Feb 7, 2009 at 6:25 pm
Part 1: You are correct – “all” the Republicans was an exaggeration. My apologies – I will be more careful in the future. Detroit’s unique problems are almost completely attributable to indescribably bad decision making by executives – decisions which could only be of benefit to big oil. You don’t have to understand what I have to gain by my participation here – I have shown a much higher tolerance for opinions that differ from my own than you have, and I don’t know any talking points. My opinions are my own. (Cont’d)
15 larryo // Feb 7, 2009 at 6:26 pm
What you say about unions is just wrong, and besides they would not even be necessary if our corporations had not abandoned all pretense at humanity in pursuit of profit. Compare the Asian model, which admittedly carries its own set of problems, but still . . . And what you say about removing the cap on social security is obviously wrong – while it would increase government revenues, its impact would only be felt by those earning $100,000.00 per year or more, while the long term benefits to the social safety net, which is in tatters, would more than offset the inconvenience. We could probably even afford to rollback the Reagan increases, virtually reducing the tax by half; that would soften the blow. Many mainstream economists have recommended at least some movement in this direction for years. Your sympathy for the high wage earners is truly touching.
16 Bill Harrison // Feb 7, 2009 at 9:15 pm
Apparently Obama’s idea of “bipartisanship” is a photo op and cocktail party and not actually any kind of political dealmaking. After these comments and his demagogic op-ed in the Washington Post he has done essentially what I predicted after examining his political career, i.e., never really standing up to the entrenched interests in his own party. At bottom he’s simply telling the GOP and the 46% of the voters who didn’t support him to get over it, “I won”.
17 Chekote // Feb 7, 2009 at 9:30 pm
I opposed the Paulson Plan. It was clear to me from the congressional hearings that Bernanke and Paulson cooked up the plan without bothering with such “insignificant” details like what to buy, at what price and how. Personally, I think Paulson never had any intention to buy up toxic assets. I think that he felt that the crisis was mostly a lack of confidence and believed that a bold act on the part of the government would be enough to reassure the markets and avert disaster. Unfortunately, to get his plan approved Paulson resorted to scare tactics and the general public panicked. So Paulson and gang turned a normal recession into a either a deep recession or depression. People are scared. They are not spending money. Even if we pump more money into the system, it will mostly go to pay off exhisting debt. We are in the process of de-leveraging. It will be painful. There is no getting around it.
18 larryo // Feb 7, 2009 at 9:39 pm
Say, Bill, what wask Cheney’s idea of bipartisanship, do you recall? And it looks to me as if Obama is trying to something – at least something different than more of the same – for most all the voters. The GOP, nipping at his heels, appears to be frantic with fear that he will succeed, and their tired, deflated and discredited free market propaganda will be exposed for exactly what it is.
19 larryo // Feb 7, 2009 at 9:46 pm
“Personally, I think Paulson never had any intention to buy up toxic assets. I think that he felt that the crisis was mostly a lack of confidence and believed that a bold act on the part of the government would be enough to reassure the markets and avert disaster.” You know, you could be right. I thought at first that he was just doing and saying whatever it took to get the money, and then it sort of looked – from the outside – like he didn’t really know what to do with it when he got it. But you know, the whistleblower who tried to get the SEC interested in Madoff since 2001 said that if you did not have experience working in the “industry,” you would never have any idea what was going on. I haven’t any such experience, but didn’t I read somewhere that you do?
20 Bill Harrison // Feb 7, 2009 at 9:59 pm
Larry, you should learn that engaging in tu quoque does not constitute a rational argument and thatk Cheney is no longer the vice president.
21 Chekote // Feb 7, 2009 at 10:00 pm
larryo. Yes, I worked in the “industry’ both on the street and regulatory sides. Still do regulatory consulting for b/ds. I didn’t get a chance to hear the whole testimony of the whistleblower but the snippets I heard were right on target.
22 Bill Harrison // Feb 7, 2009 at 10:02 pm
Chekote, the first installment of TARP worked exactly as it was intended to work and that is to stave off an incipient global financial collapse. I do agree, however, that this so-called “stimulus” bill is mostly a sideshow with the real action to start next week when Geithner unveils the “bad bank”.
23 Chekote // Feb 7, 2009 at 10:05 pm
larryo. Obama is not trying anything different. Look up the New Deal and Japan’s Lost Decade. We are going through a de-leveraging process. All we can do is ease the pain through unemployment benefits (should not be taxed), healthcare benefits. Put in place some policies that will help long term job creation. Adopt effective regulations which will ensure the stability of our banking system, i.e. reinstate Glass-Steagall.
24 Chekote // Feb 7, 2009 at 10:11 pm
Bill, TARP was supposed to remove toxic assets from the banks’ balance sheets. To date, not one toxic asset has been purchased through a reverse auction as Paulson represented. Had Paulson not worked for the government, he could be subject to fraud charges for misrepresentation. What staved off global financial collapse was the coordinated actions that governments around the world took including guaranteeing loans. TARP has been used to infuse capital and bail out Detroit.
25 dragonlady // Feb 7, 2009 at 10:49 pm
Where are some posters getting economic advice from? Krugman and company? The vast majority of economists agree lowering marginal tax rates have a stimulative effect. But the GOP should also emphasize payroll tax relief as well to address working class concerns, which they are finally doing in this debate. Part of the problem is the Pres scaring everyone to death on the economy and thats causing them to hold on to their $ when consumer spending makes up 2/3 of the economy. So much of this is about confidence. I’d like to see the GOP embrace a larger economic philosophy than just tax cuts. Make a commitment for tax reform by flattening and simplifying the tax systemwe can quibble on the rates later. Also make a commitment to get back to fiscal prudence once the economy recovers. Id also like to see GOP pay attention to infrastructure, but tie it the funds being spent quickly through fast-tracking certain projects or make those funds available on the condition that states spend them quickly on those projects. Megan McArdle pointed out most infrastructure projects take 5-7 years from beginning of conception to actually break ground due to govt red tape. Also, we should be the party of sane regulation and enforcement (think Teddy Roosevelt with trust busting) that keeps the market functioning, not the party of Keynesian government that thinks it can fix every economic downturn.
26 Bill Harrison // Feb 7, 2009 at 10:53 pm
Chekote that’s certainly true enough but the point is that trying to establish a market price for these assets has proven nigh on to impossible although there has been some activity in this regard by private outfits like pennymac which has been set up by Highfields Capital and BlackRock to purchase home mortgages at something like .$30/$.50 on the dollar with backing from the FDIC.
More to the point though if today’s New York Times is on the money it looks as if TARP II is going to be a variant on both TARP I and the pennymac model — http://www.nytimes.com/2009/02/07/business/economy/07bailout.html?hp
27 dragonlady // Feb 7, 2009 at 10:55 pm
Chekote, what exactly about the repeal of Glass Stegall do you think fueled the crisis? I’m not saying we don’t need regulation in light of what happened, but it seems the banks that have diversified under GLB are in a much better position than purely commercial or investment banks. Also, since you said you are in the regulation industy, how much of our current regulations are really enforced? Are the regulatory agencies staffed with appropriate resources?
28 Chekote // Feb 7, 2009 at 11:08 pm
Dragonlady. Spot on! I also agree that the GOP has the tendency to say tax cuts as the solution of every problem. They are doing the right thing by proposing to reduce the two bottom rates and employment taxes but they are still using the wrong language. Instead of just talking about reducing taxes, they should talk about helping those who needed most. Same with social programs, they need to emphasize that we believe that government should help those who can’t help themselves while the Dems insist on making everyone a ward of the state. In discussing infrastructure, the GOP needs to talk about improving our electrical grid, sewer systems. Point out that a water park is nice but it will not improve our infrastructure.
29 Chekote // Feb 7, 2009 at 11:22 pm
Dragonlady. Repeal of Glass Steagall led to riskier investments/activities by banks which led to losses. The problem is our current regulatory environment – I am only speaking of securities firms – is that burdensome and not effective. As a result, most of the resources of the regulators are spent making sure that firms are in compliance with books and records requirements, mailings of privacy notices, things like that. Lots of resources are wasted in things that have nothing to do with ferreting out fraud or abuses. And Mary Shapiro is a great politician. Not a great regulator.
30 Bill Harrison // Feb 7, 2009 at 11:51 pm
“As a result, most of the resources of the regulators are spent making sure that firms are in compliance with books and records requirements, mailings of privacy notices, things like that.”
To some extent from the effects the well-intentioned but seriously flawed Sarbanes-Oxley legislation enacted in the wake of the Enron and WorldCom fiascos.
31 Chekote // Feb 7, 2009 at 11:52 pm
Bill. That’s why I opposed the TARP. I could never figure out how they were going to establish price. And price was the key to making the program work. Interesting article. I am looking forward to hear what Timmy the Tax Cheat has to say about the new plan.
32 Chekote // Feb 7, 2009 at 11:54 pm
Bill. Soxs was supposed to prevent another Enron. Of course, the exempted Fannie and Freddy. All Soxs has done is make London richer. Until recently, of course.
33 sinz54 // Feb 8, 2009 at 8:54 am
larryo: I haven’t noticed that “wages and benefits” have declined. The statistics on *average* personal income over the last 30 years don’t bear that out. The folks working in the service economy, especially the high-tech economy, are paid pretty well. In fact, those who got in on the ground floor of all the successful new high-tech companies (Microsoft, Apple, etc.) are very wealthy. What you have had, is a widening of the distribution–you’ve got the well-paid white-collar folks, and at the other end of the scale, the working-class blue-collar folks with maybe a high school diploma, wages have stagnated. But that was inevitable, given computers and robots and automation. Back in the 1950s and 1960s, it was widely predicted by futurists. There’s just not as much of a market anymore for a guy who’s not very bright but who has strong muscles and is willing to work hard. Prior to the 1970s, such a guy could get a job in manufacturing, working on an assembly line or handling a fork lift or something. Now those assembly lines are 98% automated by robotics.
34 sinz54 // Feb 8, 2009 at 9:12 am
Chekote & Bill: That was my problem with the TARP too. I saw at least one detailed analysis that the securities that Paulson hoped to purchase at a “fair” price, might actually turn out to be 100% worthless, once all the effects of the deleveraging were factored in. I think Paulson knew it was a big con anyway–his real intention was to buy up securities he knew were worthless (and have the Government eat the loss), just to keep these financial firms from all going bankrupt.
35 larryo // Feb 8, 2009 at 9:49 am
Bill – I was not arguing tu quoque; I was suggesting that bipartisanship is a two-way street. I will try to be less subtle next time.
36 ireign // Feb 8, 2009 at 11:12 am
Two way street? The Democrats never gave Bush a chance. 2001-They claim he stole the election, 2002 Nita Lowey head of the DCCC claims the recession is Bush’s fault and somehow he is responsible for Enron. Even though Bush refused to bailout Enron despite pleas from Robert Rubin. The fact that Enron which primarily donated to Republicans but also donated to politicians on both sides of aisle (unlike say Madoff) like Sheila Jackson Lee was irrelevant and was the Democrats way of taking advantage of a crisis. 2003-Democrats claim it was the neocons that lied us into war after half of the Senate Democrats voted for the resolution (hence, bi-partisan). 2004-Democrats claim it is the worst economy since the Great Depression and tax cuts for the “wealthy” caused it. Both untrue. 2005-Democrats opposed both Alito and Roberts and tried to fillibuster both. President Obama voted against both Alito and Roberts. Both were within the mainstream of American jurisprudence. This is after Republicans supported overwhelmingly Breyer and Ginsburg.
Republicans have been less partisan to President Obama than President Obama was when he was in the Senate towards President Bush. Bi-partisanship is a two-way street and given the Democrats performance over the past eight years, the Democrats are lucky that Republicans are not making a big deal that people like Madoff and the Sandlers were Democrats.
Republicans are so far showing the willingness to work with President Obama. Hopefully, the Democrats will remember next time there is a Republican President.
I would also hope that people stop claiming that what Paulson did was a con. I personally thought Paulson did somethings right and other things wrong but the man sacrificed a lot of money to serve his country and while you can question his judgment, you shouldn’t question his sincerity.
37 dragonlady // Feb 8, 2009 at 3:26 pm
Chekote, I’m not convinced on the repeal of Glass-Stegall because commercial banking services are still heavily regulated by the FDIC. GLB has nothing to do with lending standards. Why did banking failures occur then at purely investment banks (Bear Sterns, Lehman) or commercial banks (WaMu, CountryWide)? The big banks that have diversified commercial banking and investment arms seem to be weathering the storm and buying up the ones who folded (JP Morgan, Citigroup, Bank of America). I trace lot of the failures to the way Fannie and Freddie were run, creating a huge moral hazard for risky MBS that did not meet usual standards. But I think we can agree that a more effective regulatory scheme is needed. One thing the GOP can be strong is on enforcing regulations through appropriate agencies (FDIC, SEC, etc), giving regulators proper resources, and ferreting out those abuses you allude to, in the name of preserving the free market, not for gov’t to nationalize every failing industry. The GOP is known as the party that’s tough on crime…there’s no reason it can not be seen as being tough on financial abuses, either. That would break up the image fair or not, of the GOP being beholden to Wall St.
38 larryo // Feb 8, 2009 at 6:40 pm
“President Obama voted against both Alito and Roberts. Both were within the mainstream of American jurisprudence.” Actually, no one in the legal community regards either of these men very highly as legal thinkers, and most regard them as political extremists who lied during their confirmation hearings to get on the bench.
39 Chekote // Feb 8, 2009 at 6:42 pm
Dragonlady. Citigroup is in trouble because of its investment in MBS. Bank of America is also in trouble for purchasing Merrill. I think it is best to keep investment banking separate from commercial banking. It worked since the 1930s until the 1990s. If it works, don’t fix it. Bubbles are created because as certain psychology takes over the market. It is hard to explain. Basically, a belief of invincibilty sets in and greater risks are taken. I have seen it many time. The regulators have plenty of resources. What they need to do is hire staff with street experience and focus the examination process on finding fraud.
40 larryo // Feb 8, 2009 at 6:42 pm
Another thing – Bush didn’t even think of bipartisanship in 2001, because the Republicans had both houses of Congress – of course, his approval rate was already dropping when September came along, but then the country rallied to his posturing and we were on our way to Iraq.
41 larryo // Feb 8, 2009 at 8:10 pm
Actually, the first step on the road to our economic predicament was the enactment, in the mid-1980’s, of REMIC (Real Estate Mortgage Investment Conduit) provisions in the Internal Revenue Code. 236 USC 860A. There were actually two Glass-Steagal Acts, codified in various sections of Title 12 of the United States Code. The first passed within FDRs first one-hundred days, and the second, passed in June, 1933, was known as the Banking Act of 1935. The first primarily prohibited the hoarding of gold coins and provided for the well-known bank holiday of 1933, permitted the Federal Reserve to issue paper currency and separated commercial banking from investment banking. The second imposed regulations on banking across the board, including the creation of another wall between banking and insurance. The separations of the two kinds of banking from each other and of both from the insurance business were put in place, originally, to avert another depression.
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