Democrats & Liberals Archives

Free Market Republicans Favor Government Boost

President George W. Bush and his fellow Republicans never tire of telling us that we should not rely on government but on the private sector; that government is not the solution but the problem; and that we should allow the “private sector” to be “free.” They insist on this until there is a crisis and then suddenly they want help from the problematic government.

Now we are facing a recession. What should we do? Bernanke reduced interest rates by a huge amount: 3/4%. This may help banks and a few who borrowed money in a risky manner. It will not turn the recession around.

The greatest free-marketeer of all, Bush, now is worried about the "free market." The ever-powerful market needs help and it must get it from government. Mahablog quotes Jonathan Freedland about this:

The free marketeers have spent the past two decades preaching against the evils of state intervention, the dead hand of government, the need to roll back the frontiers, and so on. Yet what happens when these buccaneers of unfettered capitalism run into trouble? They go running to the nanny state they so deplore, sob into her lap and beg for help.

Sure, Bush wants to help business while the Democrats want to help ordinary people in trouble. But the Republicans and Democrats will compromise to produce a stimulus. Why? Because they are scared of what the public will do if the economy worsens.

Would it not have been better if the financial corporations were regulated so that risky loans would not be given to people who could not handle the credit, and that securities that obscure ownership relationships would not be allowed? Perhaps if we had such regulation this recession would not have happened.

Free marketeers say NO, NO, NO. Regulation is poison to the economy. I guess Republicans feel that recession poison is not as bad as regulation poison.

Our economy depends on greedy corporations. We cannot allow them to do as they please. In downturns they suffer little. It is the little guy who gets crushed. The government must regulate corporations in order to produce a more healthy economy.

Posted by Paul Siegel at January 23, 2008 7:00 PM
Comments
Comment #243686

Ahh, Paul, the gist is correct.

Right wing economic theory holds that the economy is strong as long as business profits are robust. This is what positions them against labor, and for taxpayer rescue of business when its own excesses and greed undermine its profitability going forward.

Left wing economic theory holds that all persons are equal and should be entitled to equal middle class share of the economic pie, with which they will consume products and services of those businesses which provide what they need and want. Those that don’t, will go under, but, that’s OK, because all taxpayers will pick up the tab for the workers laid off until they make other arrangements.

Of course, these are boiled down and simplistic characterizations, but, they do capture the fundamental value differences of the party of wealth, and the party of labor.

You rightly point out that there really is only one economic theory applicable for politicians when the economy is threatened, the theory that says the voters must be placated and reassured, at least until after the election. Doesn’t leave much room for adhering to a long-term strategy or set of economic principles which can insure the nation’s future when the options of government are diminishing (borrowing) and the tools to manage the economy are dulled balancing inflation against liquidity.

BTW, did you hear this week’s Bushspeak? Bush said the economy is strong and healthy, that is why we have to rescue it with a stimulus package. It is the best example yet of the kind of mind that is responsible for Iraq, the national debt, the breakdown in education, the abandonment of the law and Constitution as deemed protective of naked power without constraint by either Congress or the Courts.

Posted by: David R. Remer at January 24, 2008 5:02 AM
Comment #243689

You know the the misdubbed free-market motto: privatize gain, socialize loss.

Why should it stop now, while it works like a charm since decades already!?

People allow this to continue because every one hope they will be on the good side when gains are there.
When this hope will be seen as dystopia by more and more people, things may change. Maybe.


Posted by: Philippe Houdoin at January 24, 2008 6:28 AM
Comment #243707

Well, here’s an example of that wonderful economy Bush is always touting:

That was the first annual price decline on records going back to 1968. Lawrence Yun, the Realtors’ chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression of the 1930s.
Posted by: Rachel at January 24, 2008 12:09 PM
Comment #243709

“The government must regulate corporations in order to produce a more healthy economy”

The heck with that! Just make every corporation govt owned and operated and produce the greatest economy ever known.

hillary in 08!

Posted by: kctim at January 24, 2008 12:18 PM
Comment #243712

Paul,

You’re exactly right. Jonathan Freedland’s words, “what happens when these buccaneers of unfettered capitalism run into trouble? They go running to the nanny state they so deplore, sob into her lap and beg for help”, are worthy of framing.

I would add that our current response, in the form of a stimulus package, plays right into “starving the beast”. More debt, but debt (both personal or national) doesn’t matter right? The current financial mess goes far beyond just the subprime mess.

With median income at about $45,000 people are living beyond their means not only due to overindulgence but in large part because wages simply have not kept up with inflation. Easy credit kept people spending for a while, but now it’s all catching up to us.

Much of the problem has to do with income inequality, but I’ll let EPI address that:

http://www.epi.org/content.cfm/ib239

“Real income growth over this period [1979-2005] was minimal to moderate for most households. Income growth for the poorest households grew only 1.3% pre-tax but 6.3% post-tax, thanks largely to the increase in the refundable Earned Income Tax Credit over these years. Middle incomes grew 15% pre-tax and 21% post-tax, or less than 1% per year over this 26 year period. Income for the top fifth grew much more quickly in the 1979-2005 period: 75% pre-tax and 80% post-tax. But the most dramatic growth occurred at the very top of the income scale: Households in the top 1% saw their income triple over these years, up by 200% pre-tax and 228% post-tax.”

I hope you’ll take time to read that brief article and pay special attention to the comparison of pre-tax and post-tax income growth.

As EPI points out:

“Such concentration of income is unsustainable in a democratic society. The distribution mechanisms that have historically worked to ensure much more equitable outcomes appear to be wholly inoperative. Fixing them must be at the heart of any serious economic policy discussion.”

I’d say the words “unsustainable” and “wholly inoperative” pretty well sum up the whole mess.

Posted by: KansasDem at January 24, 2008 12:58 PM
Comment #243723

Paul,
“President George W. Bush and his fellow Republicans never tire of telling us that we should not rely on government but on the private sector”

Uhhh, where have you’ve been for the past 3 years?!! Conservatives have already called out Bush and his “fellow” repubs for overspending and big gov’t programs; that’s one of the reason’s why the repubs lost in 2006, conservatives were turned off to these “lost their way” repubs!

Posted by: rahdigly at January 24, 2008 2:48 PM
Comment #243728

Rahdigly, but the Congressional Republicans are still following Bush’s lead, now increasing the deficit again to another quarter trillion.

The Republicans are what their elected officials do. It no longer washes that Republicans are different from their elected leaders. If that were true, Republicans would vote out and replace these Congressional big government big spenders. The fact that Republicans don’t vote them out, speaks to either their ignorance, or consent to the actions of their big spending big government porking representatives.

I haven’t seen more than 2 Republicans who voted for the Medicare Rx drug plan, get replaced by Republican voters with a more fiscal conservative representative. No matter how you cut it, Republican voters agree to and keep reelecting these representatives they complain about. Actions speak far louder than words. Making their words a game or outright lie.

Posted by: David R. Remer at January 24, 2008 3:47 PM
Comment #243730

Leave it to the conservatives to spend BILLIONS of dollars on another country, cut taxes for the top 1% of the wealthy, push for radical constitutional amendments and ‘patriot act’ style government interference, and emergency economic bail outs for major corporations. Not to mention the placating act of finally giving lower class citizens a measly $800 after tremendous over spending.

Why is it that the ‘Liberals’ can maintain a responsible fiscal policy and eliminate the deficit, only to have a ‘conservative’ destroy all of it in 7 years. These two words NEED TO CHANGE, they are now sooooo meaningless. Let’s call ‘em what they really are: corporate loving SUV driving money greedy pigs and tree hugging Honda driving idealistic heads in the clouds hippies. (I’m open to other titles, just not conservative vs. liberal. What’s next, a racist that loves all races? Makes sense to me)

Posted by: angrymob at January 24, 2008 4:34 PM
Comment #243736

Real Estate is tremendously overvalued and over-mortgaged. Since about 2000, prices have basically doubled. There was bound to be a market correction at some point, since not enough people have had an increase in their incomes to pay for the increased prices. People have too much invested in Real Estate, not enough in savings or other investments.

Posted by: ohrealy at January 24, 2008 5:21 PM
Comment #243742

Please, calling liberals fiscally responsible is outrageous. Tax and spend has been their mantra for most of the past 40 years. The liberal appetite to spend taxpayer money is insatiable. Personally, I have no problem with slightly higher taxes on incomes over $500,000 to pay for some of our current spending excesses, but unfortunately that would be like giving a drunk another drink. One drink or one tax increase is never enough. Conservatives don’t want to feed the beast.

American corporations pay more in taxes than any other developed nation in the world and still, that’s not enough for liberals. Our corporations are not competing on a level world-stage and our good jobs are leaving. We already regulate our businesses excessively and liberals want to strangle them even more. Our energy reliance on foreign oil increases while our own resources are not tapped. Liberals decry proven and safe nuclear energy while other countries embrace it to our detriment. We convert our land use to growing corn for ethanol in a stupid attempt to mollify the man-made global warming crowd and food prices are driven up world-wide causing starvation in many areas. Death from starvation is acceptable to liberals to keep their hazy dreams and feel-good ego’s fed. Wages are stagnant as illegals take the income pressure off employers.

Show me the Democrat candidate who wants to end all of the above and I’ll vote for that man or woman, black, white or pink. That person will win in a landslide.

Posted by: Jim M at January 24, 2008 5:50 PM
Comment #243745
American corporations pay more in taxes than any other developed nation in the world

Please…compare the percentage corporations were taxed in the 1950s and in 2007…now look at the percentage of total tax revnue paid by individuals and what percentage of the total tax revenue they pay in 2007.

The tax burden has fallen tremendously on individuals…specifically individuals who work for their income…work income is fully taxed, investment income is not…

Working hard no longer has any reward…unless you’re a CEO.

Posted by: Rachel at January 24, 2008 6:04 PM
Comment #243749

“Please, calling liberals fiscally responsible is outrageous”
— Then what do you call eliminating the deficit

“The liberal appetite to spend taxpayer money is insatiable.”
—For things like education, technology and health care, yes. For war and corporate expansion, not so much.

no tax=big deficit
tax=no deficit
pretty easy to figure out

Posted by: angrymob at January 24, 2008 7:02 PM
Comment #243758

Anytime the government returns to the people their own money, it’s a good thing.

Posted by: Snardius at January 24, 2008 9:45 PM
Comment #243766

Wall Street News

“NEW YORK - Wall Street scored its second straight big advance Thursday after economic figures suggested the job market is holding up and as lawmakers agreed on measures that could ease concerns about consumer spending. The Dow Jones industrials rose more than 100 points, bringing its two-day gain to more than 400.”

“But those seeking good news found some in a Labor Department report that said the number of people seeking unemployment benefits last week fell for a fourth straight week. Applications for benefits dropped 1,000 to 301,000, pushing claims down to the lowest level in four months.”

“The Dow on Wednesday swung 631.86 points from its low point to its high — its largest single-day reversal in more than five years.”

Careful, lest you speak too soon, Democrats!

JD

Posted by: JD at January 24, 2008 10:48 PM
Comment #243771

From the National Association of Homebuilders website;
Background;
Fannie Mae and Freddie Mac, along with the Federal Home Loan Banks (FHLBanks), are government-sponsored enterprises (GSEs) that were created by Congress to reduce the cost of housing credit and improve affordable homeownership and rental housing opportunities.
Fannie Mae, Freddie Mac, and the FHLBanks play an integral role in federal housing policy and have evolved into extremely critical components of the nation’s housing delivery system. They sustain a well-established link to the international capital markets, eliminate regional disparities in mortgage interest rates/credit availability, and encourage a diverse array of mortgage lenders/originators. They also advance innovation in financing techniques and products to meet borrower, lender, and investor preferences and needs in both the single family and multifamily housing markets
Pursuant to the Federal Housing Enterprises Safety and Soundness Act of 1992 (the GSE Act), regulatory oversight for Fannie Mae and Freddie Mac is apportioned to the Secretary of the Department of Housing and Urban Development (HUD) for mission (new program approval and housing goals) and to the Office of Federal Housing Enterprise Oversight (OFHEO) for safety and soundness (capital regulations). Oversight for the FHLBanks (mission and safety and soundness) is the responsibility of the Federal Housing Finance Board (FHFB).
In recent years, several legislative proposals have been introduced that would restructure the present regulatory structure for Fannie Mae, Freddie Mac, and the FHLBanks. Congressional scrutiny of the GSEs was heightened following revelations in 2003 and 2004 of improper management decisions, accounting practices, and earnings smoothing at Freddie Mac and Fannie Mae.

They have been regulating housing loans all along.


Feds regulate, screw the market up, blame capitalism. Wasn’t they trying to tap into sub primes with HUD loans just before the crash.

“All the middle class deserve… their own home”

Insert whatever you want in the latter part of the quotations and you will see destructive taxation.

Posted by: Kruser at January 24, 2008 11:07 PM
Comment #243772
Careful, lest you speak too soon, Democrats!

It’s not just Democrats, this will only TEMPORARILY fix the issue while adding even more to our crushing debt and drag the country even further into the insolvency that we are currently in.

Until we cut spending we are just riding a fast train to Chineese control…

Posted by: Rhinehold at January 24, 2008 11:12 PM
Comment #243773
Would it not have been better if the financial corporations were regulated so that risky loans would not be given to people who could not handle the credit

Depends, if they were tighter, possibly millions of people who did not default would have been denied, by our government, access to owning a home.

Most of these people would have been poor or working people.

Aren’t the Democrats FOR helping those people?

Posted by: Rhinehold at January 24, 2008 11:14 PM
Comment #243782

BTW, can I just say something that came up in another thread?

“Bribing the poor and middle class in this country to spend more money by giving some of our own money back in the form of a LOAN is insulting.”

It’s a loan because it will increase the deficit and put us into further debt, increasing everyone’s share of the debt and increasing the amount we finance and have to pay interest on…

But, that’s probably too much explaining and I should have just stuck with the original statement… SORRY!

Posted by: Rhinehold at January 25, 2008 12:08 AM
Comment #243783

Well, Rachel has it exactly right. Taxation has shifted further and further from corporations and the wealthy onto the middle class, AND they’re still not happy.

We’ll keep playing this game until we wake up to the difference between a YOYO economy and a WITT economy.

http://www.epi.org/content.cfm/books_all_together_now

Posted by: KansasDem at January 25, 2008 12:17 AM
Comment #243784

KansasDem,

It matters little how much we tax corporations and the wealthy, they just get passed to the purchaser of services and goods in the end.

Until that fact gets accepted, it really doesn’t matter how much class warfare each party participates in, we’ll still end up in the same boat we are in now. Bankrupt as a nation and still trying to spend ourselves out of it.

Posted by: Rhinehold at January 25, 2008 12:29 AM
Comment #243789

“It matters little how much we tax corporations and the wealthy, they just get passed to the purchaser of services and goods in the end.”

Rhinehold,

You obviously didn’t check out EPI from the last link I provided. It shows both pre-tax and post-tax incomes. But, if you’re right wouldn’t that play into your “tax by choice” arguments.

I mean if the corporations taxes are too high and they charge more for their product wouldn’t that be basically the same as a sales tax?

Posted by: KansasDem at January 25, 2008 1:19 AM
Comment #243791
I mean if the corporations taxes are too high and they charge more for their product wouldn’t that be basically the same as a sales tax?

Yup. Only it is hidden, you do not know how much tax you are paying, so your choice is obscured.

Posted by: Rhinehold at January 25, 2008 1:28 AM
Comment #243803

Rhinehold said: “It matters little how much we tax corporations and the wealthy, they just get passed to the purchaser of services and goods in the end.”

I can easily see and agree regarding business taxes. But, you are going to have to explain to me how taxing wealthy individuals results in their taxes being passed on to retail purchasers. That does not make sense to me.

Posted by: David R. Remer at January 25, 2008 4:58 AM
Comment #243804

Kruser, and the onus to put in place regulations fell to the Republican led Federal Reserve. Greenspan didn’t have time for such as that.

Posted by: David R. Remer at January 25, 2008 5:01 AM
Comment #243806

Jim M said: “Please, calling liberals fiscally responsible is outrageous.”

Nope, sorry, you are wrong. Compared to the 3.67 Trillion dollars added to the national debt under Republicans in less than 7 years, Democrat’s record looks amazingly fiscally responsible in comparison. Republicans penchant and love for lowering taxes while raising spending like Democrats, creates debt Democrats would not have dreamed possible or tolerable.

The historical record speaks for itself. Republicans talk fiscal responsibility to get elected, but in office, they have proven themselves capable and willing to destroy our economic future for our children, instead of creating one for them. All in the name of pandering to stay in power. Stupid of them to have engaged in excesses like the undisciplined novices they are at governance, to the point of losing power so abruptly, and in Nov., so completely.

Republicans are all talk and no walk. Just like their opposition today to PayGO on the Alternative Minimum Tax correction. They continue to refuse to pay for their wishes. They lost in 2006, and haven’t learned a damn thing from it. I call that STUPID! Einstein called it insane. You can decide which is correct.

Posted by: David R. Remer at January 25, 2008 5:12 AM
Comment #243810

David-


The historical record does speaks for itself. Tax cuts have not historically produced the lost revenue you suggest, unless you are ready to make the argument that, “well we would have taken in more had we taxed more during the same period.”

More likely is that the tax cuts have not helped or hurt in any significant way, revenues increase or decrease during either scenario (1993-2000 with an increase and 2003-2006 with a tax cut), and, regardless of revenue, federal spending grows at an even higher rate.

This is Friedman’s trap. Republicans can’t politically support tax increases, and, in a strange twist of fate, Democrats have become Pay-Go Deficit Hawks. The only variable left is the most politically painful; to cut programs and spending.

I’ll bet the Democrats flinch first…..

Posted by: George in SC at January 25, 2008 6:39 AM
Comment #243814

I think we can all agree that taxation has NEVER led to anyone’s prosperity. He is giving back what is rightfully ours. The more he does so, the more I will spend or invest (create prosperity). There is nothing un-Republican there, is there?

What I don’t approve of would be bailing out ONLY the individuals whose poor choices have led to the mortgage mess.

Posted by: Greg Kirchman at January 25, 2008 9:21 AM
Comment #243820

“The historical record speaks for itself. Republicans talk fiscal responsibility to get elected, but in office, they have proven themselves capable and willing to destroy our economic future for our children, instead of creating one for them. All in the name of pandering to stay in power.”


Duh… Thank you.

And it may not have just been ‘lower taxes’ that created the deficit, but that coupled with 900+ lies from the bush regime to invade another nation, overspending $250 Million a day sure didn’t help. Shoot first, cover up later. I still say we need to buy Iraqui Dhinar and get some of our money back. That’s where my economic Stim. money is going, to another economy!

Posted by: angrymob at January 25, 2008 10:35 AM
Comment #243823

Love your anger angrymob, but why not share some love for the home team? Democrats suspended Pay-Go for the AMT tax a month ago, and now are suspending Pay-Go (Waxman said it was done on the radio this a.m.) for this stimulus package.

“We have little choice,” Rep. Richard Neal (D-Mass.), who sits on the Ways and Means panel, lamented from the House floor.

From the 2004 Democratic Platform: “We will restore common sense budget rules that this administration has abandoned, like ‘Pay-As-You-Go’ rules that require the government to pay for new initiatives. We will commit to living within tough budget caps — real and enforceable limits on what the government can spend. …

Posted by: George in SC at January 25, 2008 10:55 AM
Comment #243829

All this talk about who really pays the taxes and who doesn’t is ridiculous without any facts to back it up…

This is from the IRS.gov website…
(check out the bottom of page 3)

Distribution of Income and Taxes

As of 2002, 80% of the population pay 21-22% of all the taxes…If there is a shift in taxes, it has NOT been to the middle class…It has been to the wealthy…

In “fact”, 80% of the population used to pay close to 35% of all taxes 25 years ago…

Now, if this trend keeps up, we are in deep trouble…

Posted by: cliff at January 25, 2008 11:23 AM
Comment #243836

cliff, you are right, if we keep letting the wealthy off the hook more and more, we are in deep trouble, because the Middle Class can’t possibly meet the $44 trillion unfunded entitlement mandate crisis without tanking the entire American economy and taking the wealthy down with it.

The odd thing is, most of the wealthy don’t object to being taxed, (yeah, they were polled) and some say they should be taxed even more, Warren Buffet for example (google it). It is just a handful of wealthy families like the Bush’s and Cheney’s who insist they are paying too much for their privilege to be wealthy in America.

Posted by: David R. Remer at January 25, 2008 1:16 PM
Comment #243839

“The odd thing is, most of the wealthy don’t object to being taxed, (yeah, they were polled) and some say they should be taxed even more, Warren Buffet for example”

Yep. They believe “they should be taxed even more” so much, that they actually pay the extra taxes they “say” they should be paying, right?

IF they don’t, then they too must feel as if they pay enough or, pay too much, and that would make many more than a “handful.”

Posted by: kctim at January 25, 2008 1:50 PM
Comment #243841

George in SC, you are one helluva spin artist.

I watched those debates, and it was the REPUBLICANS that hammered the Democrat’s PAYGO stipulation on AMT reform. From a discussion on the topic at the time:

The Democrats want to do that [pay for it] by increasing a “carried interest” tax provision that mostly affects hedge fund managers and other Wall Streeters, while the Republicans say there shouldn’t be any tax increase to make up for an AMT expansion that was never supposed to happen anyway.

Truth and fact don’t cross your path often do they?

Posted by: David R. Remer at January 25, 2008 2:16 PM
Comment #243843

kctim, it is ridiculous of you to attempt to logic the polls. That is what the wealthy said in a poll. If you want to argue why they said that in a majority, that they were willing to see their taxes increased if it would help the economy, fine. But, you can’t logic that poll out of existence. Not and expect anyone to have any credibility in your effort.

Posted by: David R. Remer at January 25, 2008 2:19 PM
Comment #243849

I see David.
They “say” they should pay more taxes in a poll, so we should just take that to mean that they want to pay more in taxes, even though they pass up on the chance to do so.

I’m not trying to “logic” the poll. You used a poll to support your opinion that “most of the wealthy don’t object to being taxed,” when you should have said “most of the wealthy “say” they don’t object to being taxed more.”

Polls can be worded to support any position and using them to support a position is pointless.

Posted by: kctim at January 25, 2008 3:07 PM
Comment #243851

David-

I’ve got to rotate fast to dry up all of that blue kool-aid you’ve been spilling.

Which party is performing here and which party is folding like a lounge chair? The Republicans are marching right down the supply side road of Friedman with with the riddance of the AMT and now this government hand-out. And once again, given the opportunity to do what they said they would do, the Democrats fail in their pledge to “commit to living within tough budget caps.”

Oh us poor Dems we got hammered by them mean ol Repubs; we have little choice but to compromise our principals…..

The truth’s out there David, you’ve just wouldn’t recognize it….

Posted by: George in SC at January 25, 2008 3:19 PM
Comment #243861

Remer,

You’re too funny…
And the word play isn’t really that good…

Spin it the way you want, but evidently you are choking on the facts…

The wealthiest 20% of the population pay 80% of the taxes…

It’s a good thing the 80% do not exercize their right to vote…

Posted by: cliff at January 25, 2008 6:03 PM
Comment #243879

Thanks, David R. Remer, for all your clear statements of fact. Many wealthy people are liberal, and are used to paying tax bills that others would consider enormous. for example, they are used to paying huge property taxes, much of which goes to support schools which their children will never attend. The people who are almost wealthy are more numerous and problematic, and likely to go to great lengths to avoid taxes.

Posted by: ohrealy at January 25, 2008 8:12 PM
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