$800 billion dollar TARP!
 

This election season we are hearing about the cost of the TARP program which many have credited for preventing another great depression. I have often heard the quote of $700-$800 billion in lost tax dollars. But what has the true cost been to tax payers?

http://graphics8.nytimes.com/images/...tarp-popup.gif

Assuming that the NY times data is correct the current cost assuming no one pays back any more is $155 billion. However, these companies still owe the government $189 billion + interest & dividends.

There are only 3 possiblities with this outstanding debt. 1) The companies pay them back in full, 2) The companies go under and leave outstanding debt to the tax payers, or 3) Congress forgives their debt.

I don't see 3 happening realistically. So that leaves 1 and 2 as possibilities.
If 1) happens TARP will have been profitable by upwards of $50 billion or more. if 2) happens in the worst case the cost has been $155 billion.

So what do you think has TARP been a success or a failure? Have tax payer dollars been squandered or well invested?

Utterly squandered. A total waste, even if the Gov't makes something it can call a profit.

Why?

Because TARP in essence told large corporate banks that it didn't matter what they did, or what stupid decisions they made, or how they screwed their customers and shareholders: if they were "too big to fail," which conveniently never -did- get defined, they can do whatever they like and Uncle Sugar will just shake down the taxpayers for the money to bail them out. Just like every other form of Mercantilist/Corporatist welfare, it insulates bad actors from the consequences of their bad acts.

As a result of this, we -will- see this kind of chicanery again, and it -will- be worse next time.

The profit will be nice to see, if it indeed does happen.

As far as your comments are concerned, Dunedan, I have to disagree in that you're making the assumption that these companies that lucked out in the crisis are now keen on the idea of planning to fail with the hope they can get more easy funding from the government to prevent untold damage.

If you think this will be their new business model going forward, you're mistaken.

You're also assuming that most customers, shareholders, and stakeholders are stupid and/or have terrible memories and/or that these companies will ignore them.

You're also assuming the government is fine with how things played out and that they probably don't need to change how things work over the long term.

You're assuming nothing has changed.

I think you're wrong. I hope you're wrong.

well, there's a side of me that sees the conservative bail-out in parallel terms. except that the idea of markets being rational is absurd. as is it's correlate in the assumption that business can be understood like plants. because this is capitalism in its contemporary variant and not some fiction drawn from mangled readings of ricardo and other chestnuts of english political economy from the days of the great fantasy novels fobbed off as political economy.

my problem with tarp in the end is the way it was done---in a reactive mode by people who are ideological opposed to doing things like designing and implementing tarp. so done by conservatives, who are the worst people to be confronted with crisis because in the main they react by saying fuck it, this is normal, it's not a crisis and doing nothing. except that in this case, the bush administration could not simply do nothing because this was a crisis that involved much of the global capitalist order because so many states and major social institutions have been allowed, under conservative watches and following on conservative "thinking," to play in the Great Casino of financial devices in general and HEY! so long as it worked out, conservative "thinking" was all like "AWESOME!" but then it didn't because of that whole real estate bubble as a matter of policy thing, that whole avoidance of the political consequences of the reorganization of the economy thing, that whole creation of new and improved debt bundling devices the exact content of which no-one knew but which were rated triple a ultra excellent by standard and poor and moodys, houses brought to you courtesy of the same institutions selling these accumulations of negative numbers, and that whole fed "let's not have a clearing house or actual market-place for these derivatives because that might bum out the traders" thing (think alan greenspan, 2002)...

and everyone appeared to benefit until that appearance wore itself out and a good appearance was good enough for the asshole free-marketeers who were at the helm....who turned out to be the same asshole free-marketeers who devised the stop-gap measures the effect of which was to accelerate concentration in the financial sector...

the "principled" objections to tarp are just so much gas, predicated on no understanding whatsoever of the world of global capital flows and all that entails. it's a bit of sepia-toned navel-gazing nostalgia for the bad old days of autonomous nation-states. it's quaint. it's the functional equivalent of an amish wagon.

but i digress.


there's no way to know yet what the outcomes beyond concentration in the financial sector that will follow from this last conservative bon-bon visited upon the rest of us. it's still a bit early in the game for such evaluations.

i would have preferred far more radical regulation of the financial sector than was imposed. i would have preferred an actual policy that did something beside encourage concentrations of wealth and power. but we didn't get anything like that.

Would have preferred the US to go into a great depression for the next 20 years and possibly become a 3rd world country?

Also I disagree with your assertion that now banks will see this as an invitation to keep doing this. This is analogous to saying someone who gets in an accident but is unharmed and their insurance picks up the bill will try to get in accidents again because they know their insurance will cover it.....

Also don't forget that many of the banks didn't get bailed out and guarantee that this is a fear among these banks that the next time they won't be bailed out.

---------- Post added at 06:01 PM ---------- Previous post was at 05:10 PM ----------

Finally here is one more question for you DuneDan. If your neighbors house (which ends only a few feet from your house) were on fire because they were playing with matches, would you tell the fire department to let it burn because it is their own fault, despite the fact that it is likely that the fire would spread to your own house?

Actually, Baraka, if you read Matt Taibbi's series of articles about Wall Street post-TARP, you will see that they continue to do exactly what they did before, and plan to continue to do it. They now have DC in their back pocket, with former Wall Street insiders in most major economic positions in Washington. The TARP bailout was a major victory for Wall Street, and they will continue to exploit everyone/everything they can as Congress bends over backwards to make sure that they are never punished and that no regulations are put in place to stop them

If you are so worried about the banks continuing the same types of risky lending then why don't we pass a financial reform bill that makes it illegal for them to do that type of lending.....

can you say financial oligarchy?

Whaaaat? I was under the impression that the government was going to do something about the regulatory environment. I thought they already made some steps in banking.

I was also under the impression that near-failures in large institutions are catalysts for internal change. Of course, I could be wrong. Apparently I am.

They should change. This is why I support government regulation. It keeps capitalism in check.

---------- Post added at 02:41 PM ---------- Previous post was at 02:40 PM ----------

See, I didn't want to say it. I haven't been reading much about this issue for a while. I really thought there was going to be a re-evaluation of regulatory practices.

There isn't?

not really.

this says things better than i could. it's from the turning point in the simon johnson piece "the quiet coup" from the may 2009 issue of atlantic monthly.

there's more here:
The Quiet Coup - Magazine - The Atlantic

this from may 2009.
ain't shit changed.

I think a potential profit on the bailout illustrates the absurdity in Obama's claim that it saved us from the brink or a great depression. Whatever the amount, it is such a trivial amount compared to the economy, housing or the financial sector it defies any rational explanation for how it actually saved anything or than a selected few that should have been allowed to fail.

And, the potential profit and the time frame illustrates that the bailout would have and could have been handled by the private sector. When there are assets and enterprise values, investors will step in at the right price to earn a potential profit commiserate with the risk.

The issue is that if those certain few failed, then others would fail, and then more would fail, and then investors wouldn't want to risk their money and more would fail, then workers would get let go and stop spending causing more to fail, housing prices would continue to tumble because there is no demand...


And who are we going to vote for that would put some laws on the books and punish Wall Street? The Tea Party should be a far left wing party if they really want to fix this country.

No one, because it's all one party. The party of the rich.

the Goldman Sachs party
The Great American Bubble Machine | Rolling Stone Politics

That's about it in a nutshell.

---------- Post added at 04:24 PM ---------- Previous post was at 04:19 PM ----------

That writer uses terms like "shitloads" and "bullshit" pay no attention to him.

he also says "fuck"...can you point me to a better article ? I've listened to the "bad bank" and "the giant pool of money" on This American Life...much more technical language might be over my head.

I mean, is this guy wrong ? or his use of crude terminology takes him out of relevance somehow ?

Just substitute:

shitload: "myriad"
bullshit: "nonsense"
fuck: "I do say, sir, that I have utter contempt!"

Now read the ideas and don't get so caught up on words.

heh, I'm not, but I was thinking of printing it for my mom, who's 85 or so and dosn't have the internet.

Read He also wrote The Blind Side and Liars Poker and Moneyball. When there's swearing, it's a direct quote of someone interviewed for the book.

This one's not so much about the guys that caused the fall (and thought they were so smart that they ended up buying their own shitty products) than the guys that realized what was going on and figured out how to make money off the inevitable crash.

Taibbi always swears....it's just his style. The facts are all in there, though, so don't let the choice of adjectives distract you from his main points

Well, you know things are in the crapper when you get the Chairman of the Federal Reserve still talking about instituting quantitative easing (QE) (i.e. "printing money" to buy bonds to ease pressure on banks). When rates are bottomed out and things still aren't on the mend, this is more or less a last ditch effort to kick-start the economy.

It is, of course, not without its risks. The biggest, namely, is inflation.

If you paid attention, you will have noticed that stocks have had their best September since the Great Depression—and this despite a rocky economy—in addition to gold being at its highest value ever. It is hoped that the QE will push both stock and gold with the benefit being that profits will be made (i.e. taken) and reinvested elsewhere thus bolstering the overall economy.

However, the risk is that they're printing money—expanding the money supply. This could put further downward pressure on the American dollar. More money supply = lower unit value. Plus, it could cause people to sell off their U.S. currency holdings further reducing its value. The net effect? Inflation. The worst-case scenario? Hyperinflation. The dollar has already lost value based on Bernanke's speculations.

The stock market seems to like it, though. Someone's making money.

can anyone point out to me where it gives the federal government the power to act like a corporation and make profits off the involuntary investments of the tax payers?

i don't think the founders wrote anything about systemic collapse in the context of global capital flows into the constitution.
i don't think the founders wrote anything about capitalism at all into the constitution.
i don't think capitalism in the united states had really taken shape in 1789.
maybe we shouldn't allow capitalism.

It might be easier to find where it says the federal government doesn't have said power.

And, roachboy, the United States Constitution was written during the economic pipe dream of mercantilism, right?

Where do we go from here?

there's lots of alternatives that go well past the reactive, ill-considered actions of the bush people, who remain the gift that keeps on giving.


and if the idea is to remain within the degenerate capitalist system because there's no other-than-fascist alternative at this particular historical juncture because there's no basis to think one......i think it's well past time to shove the right out of the way and do something with clearly stated objectives of expanding activity, refiguring the geography of production and putting people back to work with an overall objective of creating a more stable, equitable form of life.

for example, in the shorter run revamping infrastructures and rethinking the transportation model seems self-evident as an important undertaking. beyond it lay the rethinking petrocapitalism....

washingtonpost.com

this takes you to the report:

Beyond Stimulus: Toward a New Transportation Agenda for America - Miller Center of Public Affairs


there are models aplenty for an industrial policy and some form of industrial policy seems the only hope of a way out of the present economic morass:

UNU-WIDER : Japan?s Model of Economic Development: Relevant and Nonrelevant Elements for Developing Economies

for example.

Yet another story about how Obama's giveaways haven't fixed much of anything.

Hasn't it yet occurred to these guys that since people have discovered that maxing out your credit card or your home equity is a stupid idea, that the economy has shrunk and is going to stay that way for a while? Obama trying to inflate the economy turned out to be a failure.

and the reason people have maxed out their credit cards and home equity is because wages have been stagnant/dropped vs. inflation, which means there is less buying power, thus less demand, thus a recession

The idea is that it hasn't done enough—not enough was done. On the other hand, it likely prevented a deeper catastrophe. I won't go so far as to say Keynesian spending hasn't done anything at all.

I read an article today that reported how Americans are seeing a reduction of personal debt. Much of this is via defaults, meaning banks are writing off millions. But this means that future growth is expected. I only hope this is achieved through prudent financial practices. I sincerely hope the average American has sobered up on the idea of using too much credit and spending home equity. If this is the case, the recovery will be modest, which is to be expected anyway.

While this isn't likely universally so, it is generally so I bet. It's becoming more of a middle-class thing to do this too. It's not just the low-income earners trying to get by with too little income. Many households, even those earning six-figure incomes, are racking up debts and over extending themselves. They are reaching to lifestyles that their incomes can't cover.

This is a problem of indulgence and trying to live to some lofty standard of American Life—the good ol' American Way of Life. It's ridiculous. Americans—in general—are going to have to start leading different lifestyles, and this will remake the American economy. There is a shift coming, and whether it's modestly positive or disastrously negative will depend on whether the average American can live modestly. They need to return to the idea of actually saving some of what you earn instead of spending more than you earn. People in every wealth class is guilty of this.

That's pretty poor money management to run up your credit balance to buy toys instead of waiting until you have the cash on hand to pay for them.

If you pay cash, you're effectively paying less for whatever you're buying and you keep those evil banks from making as much profit.

---------- Post added at 05:59 PM ---------- Previous post was at 05:53 PM ----------

So how much should have been spent on Obama's giveaways? $5 trillion? $10 trillion? Just how much of a kick in the ass does the taxpayer have to take by way of increased inflation or higher taxes to pay off Obama's debt to satisfy Obama's fantasy of stimulating the economy.

That's the problem with this stimulus nonsense. First you spend $1 trillion and it doesn't work. Then people start clamoring for even more spending because the first try didn't work. Then even more because the second attempt didn't work. Pretty soon you have pretty serious money thrown down a rathole and no ability to ever recover from it short of national bankruptcy.

considering that the founders were all about 'the people' maintaining a firm hold on all of their earned wealth and property, most logical people could rightfully assume that capitalism was at the root of the constitution.

see the above.

capitalism was it's purest form in 1789. It was only when that government started controlling the economy did capitalism start to fail
pray tell, what should we allow?

I can't answer that question, the question of a fixed sum of money. And it's the taxpayer who's been kicking themselves in the asses this whole time. The government didn't cause the economic crisis. It could be argued that a lack of government allowed it to happen. But I don't have much else to say about this because you seem to think that spending doesn't stimulate economies.

Most stimulus spending takes a while to work its way through. In addition, the net effect could be more about lessening of the steep dips of downturns in the business cycle than being responsible for a recovery. I think the stimulus is more about getting the ball rolling, not "fixing things," especially considering stimulus spending is a temporary measure.

This is funny, for a couple of reasons:

1. You say that American capitalism started to fail even before the vast majority of the capitalist-driven economic expansion---more than the world has ever seen.
2. You seem to think that American capitalism was negatively affected by the government controlling the economy, and yet you failed to mention anything about the people. It's people who are responsible for corruption under capitalism, not the government. The government and the people who influenced it should be praised for developing the American economy into something more bearable than the disaster-waiting-to-happen under lassez-faire.

Maybe we wouldn't be in the financial mess that we are in if that was the case.

If instead of having to sell public buildings, they could rent them out. Instead of selling drug patents the NIH and public universities come up with to private drug companies. Maybe allow NASA to take a space tourist or two into orbit. How about joy rides in military planes for people willing to pay. Or maybe some people would like to go to a weekend boot camp just for the experience. There are a lot of things the government could be making a lot of money on, and a lot of things that just sit unused that taxpayers have paid for and could be earning money.

1. That 'economic expansion was able to happen because of two reasons...
   1)corporatism had already influenced government enough to provide them every advantage..
   and
   2) it hadn't been quite long enough for the feds to have really serious power to control the lives of individuals.
   
   
   Quote:

   Originally Posted by Baraka_Guru (Post 2828477) You seem to think that American capitalism was negatively affected by the government controlling the economy, and yet you failed to mention anything about the people. It's people who are responsible for corruption under capitalism, not the government. The government and the people who influenced it should be praised for developing the American economy into something more bearable than the disaster-waiting-to-happen under lassez-faire.

total appeal to insanity.

can people be corrupt? of course, but like most totalitarians, you are unable to accept the premise that law breakers should be punished, so you push for any and every regulation possible to hopefully prevent criminal action. so far you have totally and completely failed as is being shown by the last 30 years of government growth and political cronyism.

---------- Post added at 07:10 PM ---------- Previous post was at 07:09 PM ----------

I guess we can now add you to the list of people that didn't learn from history.

So wait, the rise of unions, labour rights, and consumer protections was giving corporations every advantage? Was this controlling the lives of individuals? Because, you know, corporations weren't at all controlling....like ever.


Wait, did you just call me a totalitarian? If I'm a totalitarian, then you're an anarchist. That doesn't make a lot of sense, does it? Or are you an anarchist? If so, then my comparison doesn't work.

Um, anyway, I'm not quite sure what you're getting at, because I do indeed accept the premise that law breakers should be punished. However, I also believe that reasonable regulation works well to prevent corruption and immoral behaviours. [I don't think "reasonable regulation" is a term that would appear on the radar of the totalitarian mindset.]

As for the last 30 years of government growth and cronyism, I think you're referring to the U.S. more so that Canada. Regardless, I'm again not sure what you're getting at. Are you saying that the American totalitarian regime has failed to buckle down on anarcho-capitalism and now the government is too big and full of cronies?

:confused:

Someone has fallen into the common trap of thinking along the lines of binary opposition.... if it's not "pure unadulterated freedom," it must be totalitarianism. Of course, it's more apt to say if it's not anarchy, it must be totalitarianism.

I don't think anarchy would be a suitable salve for American society, and I think totalitarianism is virtually impossible. Call me an idealist. I don't mind that label.

k, baraka, i feel a little stupid now because i was writing under the premise you're in England. I forgot you're in Canada. my bad.

Woah, okay. I thought something was off.... it was confusing.

so either you don't know what capitalism is, dk or the special language that libertarians use to talk about things is so confusing that it creates the impression that you don't.

"corporatism" is what most of the world refers to capitalism since, say, 1870, so since the development of publicly offered stock. or maybe since the 1880s and affirmation of the corporate person. it's definitely a us-centered pseudo-history.

corporations and the state are intertwined. big scary and out of control i assume.

so before that, there was this other thing, which is apparently capitalism?

but if the distinction above holds, then capitalism isn't steel production, say. because that's "corporatism"?

what's even more confusing is that corporatism has a meaning already. it refers to organic theories of the division of labor modelled more or less on a nostalgia saturated image of the guild system. it was dear to italian catholic fascists in the 1920s-1930s. it's pretty well known, that meaning. whence the static the insistence on libertarian private language generates.

capitalism, then. how do you define it? separation of ownership from production? standardization of production processes? tendency to exploit economies of scale? alienation? wage labor?

or is it just the reverse of "corporatism" (bad)? so a synonym for "good"?

I would actually state the claim that you don't know what capitalism is, that or your insane hatred of it is clouding your judgement of it. Or you could be trying to use your pseudo-intellectual professor mumbo jumbo talk to confuse the terms on purpose.

isn't that fascism?

more attempts to obfuscate and confuse the terms. I refuse to play the game you're setting up. you know what capitalism is, you know what corporatism is, and you know what fascism and totalitarianism is. accept it or continue to use deception to further your socialism, it's up to you. most people can easily ignore your tripe.

uh dk...capitalism is typically defined around actual feature.
but here, i'll make it easy for you to find some of them:

separation of ownership from production
generalization of wage relations (the selling of labor power for a wage)
standardization of production processes/standardization of products.
tendency to exploit economies of scale
deskilling of work



in 1789, the only sectors that were in any sense "capitalist" were textiles and that primarily in england. the **mass production** of cloth is an initial capitalist venture. mass produced fabrics. early capitalism was primarily about selling cheap shit to the poor.


by 1830, when tocqueville traveled around the states gathering the material he later used for "democracy in america" he was well aware that most of the united states was **not** capitalist. capitalism at the time was--and remained until after world war 2--primarily an urban phenomenon. for tocqueville, the coming of capitalism, the spread in influence of the cities and the modes of social organization particular to them (in significant measure because they were remodeled in the image of capitalist relations of production) spelled a mortal threat to the american democratic experiment. and he was, i think, correct.

in the late 18th century, apart from textile production, capitalism existed in the late 18th century almost entirely in the imaginings of writers of texts on political economy. and there it was largely an intellectual collage.

there were lots of features/emergent aspects of social organization that came to be associated with capitalism that were floating about in fragments doing their things---for example the physiocrat-inspired "markety" ideology of turgot that inspired the temporary abolition of the guild system in france in the 1760s and again in 1791 with the le chapelier law---which is, anachronistically, "about" creating a more capitalist-friendly work-force by breaking the power of working people to control the production contexts in which they operate by breaking the organizations that enabled it. but that doesn't mean that france "was" suddenly capitalist one fine day in 1791.



you go on and on about capitalism in some 18th century "pure" form when even a rudimentary understanding of what capitalism as a mode of organization of production would tell you didn't fucking exist.

but maybe that **is** the most functional type of capitalism, the one that doesn't exist materially.


on corporatism: you don't know what the term means. i tell you what it means and you get all snippy. reality is difficult.

on fascism: you don't know what that word means either. fascism is a variant of militarized nationalism. it relies on essentializing images of the community and its Others and uses the figure of the Other (typically its exclusion) to solidify a sense of identity. it relies on a mass media apparatus that provides an illusory simultaneity of experience and synchronizes mass identifications with the person of the Leader. not necessarily the state as such...in fact typically not the state as such...the person of the Decider. fascism operates from a state of emergency.



and don't waste time with cheap red-baiting, dk.

I think the mythology built up around capitalism post-Rand is centred around the idea that "capitalism is good" because "capitalism means freedom," and "America is a capitalist nation." So it stands for many that more capitalism means more good because it means more freedom, and who doesn't want to be free?

The problem with that mindset is that it distracts from the core problem of today's economic situation: capitalism is also corrupt. So when the wholesale failure of capitalists to mitigate their own risks causes the global system to spin out of control, it's suddenly the fault of something else. Because it can't be the fault of capitalism, because it's an ideal. It's freedom, and freedom is good. Anything else is an assault on liberty and risks turning into authoritarianism or, worse, totalitarianism. As though for some reason there is no middle ground between totalitarian communism and oligarchical lassez-faire. Middle grounds are for progressives, and we all know what they want, right?

So the blame shifts away from the First Movers: the holders and controllers of capital, and it shifts towards the end users or "clients" or "customers," if you will. Except they're not quite that, exactly. In this case, specifically with the sub-prime disaster, they weren't so much clients as they were profit centres that went awry. So when the profit centres fail, the shift easily falls on what's left: the people left holding the bag (which happens to have bottomed out, and which happens to be their homes) and the people who act to do something to prevent the whole system from failing entirely. So why not blame people who took these mortgages and government that tried to keep the wider system going? Surely it's their fault for messing things up. And the blame that still rests on the troubled banks who issued these products—and whether they were bailed, will be bailed; will survive, will fail—is inconsequential; once the dust settles, it will be business as usual.

Capital and its holders and users, on the other hand, are what makes things possible, they move things forward, they keep the nation free. Who cares how they go about it, so long as the money keeps flowing. So why not just keep out of their way? Things would be so much better if that were the case, would they not?

Perhaps you don't care, but I find this statement offensive, as it implies that those who have capital did so through ill-gotten means. This implication is made frequently in threads here. You and others will never stop using this implication because it is a means towards achieving your goal. However, I am going to call you out for using it. Most, and I mean almost all, Americans who have capital received that capital through honorable and moral means - unlike the politicians you are so fond of.

how do you know that, cimmaron?
there's a perfectly legitimate view of capitalism that sees profit as presupposing exploitation of those who sell their labor power for a wage. the ethical alternative is to suppress the division between those who own the instruments of production and those who do the actual production. they call it revolution.

from that viewpoint, it is more or less impossible for capital to be generated without ethical problems.

this is more coherent than your position because it opens onto actually talking about how capitalism works. and it doesn't stop with some simplistic fetishism of property relations ("well, capitalist own factories and it's legit because the paper sez so.")

One example of what I was talking about is how few people seemed to care about the money flowing through the sub-prime mortgages before the shit hit the fan.

And I'm sure there are many who see nothing wrong with it in principle even after the fact.

On a wider view, I'm also talking about capitalism beyond how most may perceive it, which is more along the lines of what roachboy is talking about. There are those who call for free markets, all the while forgetting what free markets tend to bring.

Don't make me reference robber barons again.

I don't think all capital is used unscrupulously. However, I also don't think capitalism has an inherent moral compass. I think it's amoral, which is why letting capitalism run amok (i.e. run societies) is insanity.

something from the ny review of books that argues for a break with the reactionary "conventional wisdom" about deficits and for long-term state fiscal action/policy on a japanese model to address the structure-wobble within contemporary capitalism:

The Way Out of the Slump by Paul Krugman and Robin Wells | The New York Review of Books

The comparisons to personal credit cards and home equity is baseless. The factors in making policy regarding the national economy is just not that simple.'

A growing consensus of economists are of the opinion that the full package (TARP, ARRA, Fed policies) prevented a further collapse of the economy and in fact were significant factors in its stabilization....added significant number of jobs to counter the loss of 8 million in the previous eight years and resulted in stead GDP growth as opposed to the negative growth in 07 and 08.

The TARP payback is a plus, but was expected.

And, the financial reform act passed this year does address, at least to some degree, the problems that got us into the mess. I agree it doesnt go far enough, but is better than no financial reform at all.

Lastly, to all your posts about Obama's spending, the CBO's estimate of the FY 10 (ended last week) budget deficit of $1.3 trillion is LESS than the previous year's record of $1.43 trillion...;and Obama's proposed FY 11 budget put a freeze on most discretionary spending.

But it will mean nothing and the deficits will soar if the Bush 01 and 03 tax cuts, particularly on the top bracket, are extended....add another $trillion to next year's deficit (and each subsequent year).

Of course not. When the government runs out of money, it just prints more and that adds to inflation. Governments have to live within their means too.

If consumer demand doesn't come back because stupid people have learned their lesson than they shouldn't max out their credit then the government is supposed to spend trillions of dollars buying useless crap until Obama gets kicked out?

If he's frozen discretionary spending, that's a small start. He still has deficits well above what Bush was running for every year except his last year in office. That's what I think has a lot of voters angry, not that he's running a deficit but that he's set a new standard for what is acceptable.

So he's still got plenty of room to cut. And that includes entitlements since those are not Constitutionally protected.

If that's how it works why did Bush spend all those years borrowing money from China. He should have just "printed more."

Well, considering the American economy is at a real risk of deflation, this might not be such a bad idea. Actually, maybe that's one of the main reasons why Bernanke might go through with the quantitative easing. It's preferable to have a modest inflation rather than problematic deflation.

Obama could have kept the Iraq/Afghanistan spending off budget like Bush did and pretend it didnt add to the deficit (nearly $1 trillion over six years off budget as if it didnt exist)...but he didnt.

No one has suggested that entitlements are Constitutionally protected but that they are NOT unconstitutional as Tea Party crowd and libertarians insist...and the Supreme Court has affirmed that on more than one occasion.

So instead of complaining, if you want to see entitlement cut, how about offering a suggestion in a manner that wont adversely impact those in need.

IMO, core benefits shouldnt be cut; the programs should be made more cost-efficient. The health reform bill started the process for reforming Medicare by cutting nearly $1/2 trillion of over-payments to Medicare Advantage providers; forcing MA providers to compete and offer the core services at less than 15% above allowable limits (the overpayment).

Fix Social Security? Simple, you dont have to cut benefits...just raise the payroll tax on those making over $100 K, who pay $0 FICA taxes after the 6% on the first $100k

Even if it was another trillion dollars over 6 years and Obama isn't playing simialr games with other budget items, Obama has doubled the deficit per year over that.

Whether they affect people or not, they need to be cut. Entitlements are getting out of hand. Case in point being the increase in the food stamp programs over the past few years.

There has only been one year (FY 10) under an Obama administration budget and as I noted, the deficit was lower the previous year....so I dont where you get your numbers that Obama has doubled the deficit per year.

The SNAP program (food stamps) is probably one of the more stimulative programs.

A WSJ column explains it well.
Or this from CNN - Moody's Economy.com:
So you dont think people who become unemployed through no fault of their own should get temporary food assistance? even the kids? And no more unemployment insurance? Too bad if you're out of work and cant afford to pay your mortgage or feed your family?

Nearly 1/3 of the total stimulus package was for these type assistance programs...the most effective third...not only temporarily helping people in need, but providing the best stimulus as well.

And how would you cut Medicare? Or how will seniors otherwise get affordable health care from the private sector who has no interest or willingness to take on that highest risk group?

let them all die, apparently our economy doesn't need em. if they protest, build more jails, ha ! employ them to build their own jails !!

See that's the problem when you start messing with the economy. First you have to rig the economy so that inflation doesn't go too high. Then you have to rig the economy so inflation doesn't go too low.

You realize all your proposals here would "mess with the economy" too, right?

Bush's deficits were running in the $400-$500B per year range up to 2008. Obama's deficits are roughly double that and projections I've read are that the deficit doesn't get back to the $400B range until something like 2015, three years after Obama has been kicked out.

As I've posted before, no more stimulus programs. Let the economy sort itself out to the level that it will naturally run at. I don't think the kind of consumer demand we saw in the last decade or two is coming back for a long time since a whole bunch of stupid people found out the hard way that it's bad to max out your credit and not save any money.

What were those people doing with their income before? Were they people who were maxing out their credit tying to live a higher lifestyle than their income could support? Were they even trying to save money for difficult time? If so, boo hoo. It's not my responsibility to support them. Any politician who thinks otherwise will lose my vote. I live within my means and have had zero debt for over 15 years. I have savings that will carry me across temporary unemployment. It's not unreasonable to expect others to do likewise, using debt only for major purchases.

The idea that the economy can fix itself is far more problematic. That's why no one tries it out by just leaving it alone.

---------- Post added at 08:08 AM ---------- Previous post was at 08:00 AM ----------

Could you cover your expenses with no income for six months? Do you think the average person can? Do you think this is easy to plan for on low wages and a high cost of living?

What are your thoughts on starvation and crimes related to poverty? Do you support the idea of debtors prisons?

So we're back to the conservative meme of "the poor deserve to be poor".

Circle of life, Hakuna Matata

It's more than that; it's also the conservative mantra, "It's not my problem," as though the poor have no direct connection to the rest of society. It's as though being poor is a departure independent of anything else...except "my money."

I can cover my expenses for more than 6 months. If the average person made it a goal to put savings aside instead of spending their income and then possibly maxing out their credit buying stuff they wanted, possibly. It may mean not living the lifestyle you like. You might end up with roommates, etc.

If someone steals something of significant value (not petty theft), then poor or not, as far as I am concerned they go to jail.

And no, I don't believe in debtors prisons.

---------- Post added at 10:09 AM ---------- Previous post was at 10:05 AM ----------

Some do, some don't. I know a bright kid, 17 years old that's thinking about dropping out of his last year of high school. If he does, that's his problem.

Others don't. Stuff happens.

Regardless, the trillions the US government has spent on helping the poor over the last 40-50 years hasn't fixes the problem. Spending trillions more isn't going to fix it either.

Okay, so you more or less take an anticonsumerist stance. How do you think this will affect the economy in the long run? I mean, you are basically advocating a drastically reduced economic activity, a kind of activity that is responsible for generating a bulk of the wealth in the United States. The demand shift would result in fewer imports, but it would also result in lowered domestic demand for goods. This also means lower tax revenue.

At this point in time, it would hobble the recovery. Actually, that's kind of what's going on right now, since people are reeling from their debt and high unemployment. Unemployment remains high largely because of suppressed spending.

Would you support regulations restricting the kind and amount of credit issued to borrowers based on income and other factors?

Maybe the crisis was more than just a mortgage bubble, maybe it was a consumerist bubble in general, where the economic strength of America was built too much on credit. What this means is that Americans seem more well off than they actually are, and this includes the middle class to a large extent. I think perhaps we're going to see a correction in the American economy where the GDP growth over the next decade will be dwarfed not just by BRIC but by much of the developed world too.

I think overall the quality of life in America is going to either stagnate or drop on average. Too much of the comfortable American lifestyle that everyone covets has been accomplished by artificial means, and now it's time to pay up. I guess these things are best left to the rich.

Demand is going to settle at some honestly sustainable level. That means lowered revenue for businesses. But if there's not a Starbuck's on every corner and a Walmart in every neighborhood, I'm OK with that.

Less tax revenue means less government spending.

This also has the side effect of less damage to the environment since less perfectly good product gets thrown out to buy new. I drive a 16 year old sub-compact that is reliable transportation. I can easily replace it today but why should I waste the materials and energy used to build my current car before it's permanently broken?

I'm not a fan of nanny state regulations, including current nanny state regulations demanding that banks make credit more available, which is part of how we got here.

I'd leave it to the banks with the penalty that if they screw up, the government doesn't bail them out. Smart bankers will wise up pretty quickly. Stupid ones will be out of business.

The Washington Monthly

so what we have here from the nihilist right is an attempt to generate a problem for the obama administration by blocking extension of one of the more important aspects of the stimulus package that has, as the article above notes, put about 200,000 people back to work in order to then point at the administration and say "you didn't do anything."

this isn't really about the "be a dick" school of "thinking" about social problems that---god knows how---might actually be a matter of faith for folk like dogzilla.

this is about a craven attempt to exploit conservative media domination in order to generate a problem that the right can then spin with the idea in mind of getting the only thing that matters to conservatives, really---->power.

You aren't a fan of "nanny state" regulations, or you aren't a fan of those you don't benefit from?

One benefit of a reasonable regulatory environment is a stable banking system. Failures are disruptive, and are largely preventable. This has been the case in the Canadian system, which hasn't seen a failure in decades. And with the exception of two small regional banks, there haven't been any bank failures since before the Depression.

Now, I don't know about you, but I'd prefer to have a set of rules that banks must follow to avoid the kind of shit that happened in the U.S. beginning in 2008.

Call them "nanny state" regulations if you want, but they serve their purpose and they do it well. An ounce of prevention is worth a pound of cure.

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Things are going to get interesting in November. :thumbsup:

So exactly what program was the Obama administration willing to cut in order to fund this program? Exactly how many of these 320,000 jobs were nothing more than busy work jobs or no-show that the government is fond of creating to give politician's buddies some spending money.

If the state of the economy is such that it can't support these jobs, just how long is this program supposed to exist? 10 years? 20 years? 50 years? 100 years? You do understand the concept of a temporary program, don't you?

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I'm not fond of nanny state rules in general. There's ways to avoid the risk of a single investment going bust, by diversifying your investments in as many places as you can. For instance broad market based mutual funds.

And yeah, I could have done without the nanny state rules where the government encouraged banks (thanks to Barney Frank and others) banks to grant loans to people who had no business obtaining credit long before 2008.

Hope and change is finally coming in November :D

busy work jobs?

Investing in rebuilding the infrastructure that is long overdue is busy work?

Investing in a national broadband network or clean energy technologies...areas that the US is whoafully behind Europe, China, India.....is busy work.

The 1/3 of the stimulus program that provided TEMPORARY assistance for those 8+ million who lost their jobs in the previous eight years..and puts money back into the economy faster than any other stimulus...is busy work?

How to pay for it...Ending the TEMPORARY Bush 01 annd 03 tax cuts on the top bracket would more than pay for it.


Barney Frank was in the minority party between 1994 and 2006 and had little or no power in the Republican controlled House....and was one of the few who voted against the the financial reform act that led to the abuses.

The libertarian notion of "letting the economy sort itself out" is a recipe for both short and long term economic stagnation or worse. It has never worked and certainly wont in a global economy.

Well, the "nanny state" seems to have served America well so far. I don't see why you'd be so against the idea in general. Against specifics, I'd understand.

I dunno. I think it'll be more along the lines of pessimism and obstruction.

Depends on what you are rebuilding. There's a section of highway on my commute to work with perfectly good pavement, no potholes, no bumps to drive over, that somebody decided to be ripped up and repaved. There's no structural problems with the stone/gravel layers under the road because all they are doing is running one of those asphalt munching machines to tear up the old pavement and put in new asphalt. I can't find the project on the recovery.gov website or the NY State Dept of Transportation website so I can't figure out who is paying for that busywork boondoggle. I hope it's not Obama.

I don't think it's the government's business to be building a broadband network either. If one of the broadband companies see a business opportunity they will build one. They did here ten years ago, and this isn't exactly big city territory.

Raising taxes to pay for another Obama giveaway program is not an acceptable option.

The liberal/socialist programs to redistribute income don't work either and can bankrupt the country. Taken to the extreme, there's no reason for anybody to work since the government will give you everything you need to live.

There's a quote attributed to Thomas Jefferson that I like

The democracy will cease to exist when you take away from
those who are willing to work and give to those who would not.

But borrowing more money to pay for the Bush Jr. tax cuts is perfectly acceptable?


Can you tell me when he said that or where he wrote that?

You know why you can't?

Because he never said that... but it's great you're able to parrot the talking points. Nice work.

Tyranny, as I was saying, is monarchy exercising the rule of a master over the political society; oligarchy is when men of property have the government in their hands; democracy, the opposite, when the indigent, and not the men of property, are the rulers.

--Aristotle, Politics, Book III

A proper democracy is a form of rule that comes from the people as a whole, not one particular class, whether it be politician or those in the upper ranks of wealth. This despite those who would prefer an oligarchy or, like Aristotle, an aristocracy.

The poor cannot be left as abject remnants of an overbearing capitalist system; this is because even the poor can vote, and so do their sympathizers, and together they vastly outnumber the rich.