How will Republicans spin their refusal to extend the middle class tax cut into being all Obama's fault?

Our own resident conservative Jaxk has repeatedly argued that payroll taxes aren’t actually taxes! And why would Republicans vote to extend a non-tax cut when they’re so concerned about the deficit?

It isn’t supposed to make sense. Do not try to apply logic to insanity.

Wait. The Republicans negotiated to turn the bill into a weak piece of junk that everybody hates and then refuse to vote for it so everybody blames the Democrats for the crappy bill? NOOOO!

Happens every time.

@jaytkay You nailed it exactly, my friend. Once more, they make a mess, then claim it is a mess and that’s all someone else’s fault. I keep saying the former Party of Personal Responsibility merged with the Party of No and created the Party of No Personal Responsibility. No need to do anything positive, and when the negative they do blows up; their only responsibility is to invent spin that blames the fiasco on others.

They won’t, successfully.

Wow, What a screwed up interpretation. If I recall, both Democrats and Republicans have complained about congress steal in the money from Social Security to fund thier incredible spending spree. Now we want to steal the money from Social Security before it even gets to Washington to fund even more spending. Let’s not even mention that it hasn’t worked. The Stimulus didn’t work, the Payroll tax cut last year didn’t work and the payroll tax cut on the table won’t work. And the $33 billion cost will fund two months, while the payback is over 10 years. What kind of stupid math calls that ‘paid for’. And it is paid for by increasing mortgage payments. Just what the housing market needs, more headwind.

Personally, I’m against it for the reasons I’ve stated. Boehner and the house Republicans however, want the payroll tax cut to be for the full year. If the tax cut is to be done, it doesn’t make a lot of sense to make it for 2 months, we just get back to the same issue in February. Hell, we’ve seen this bullshit of kicking the can down the road for a short period and nothing gets resolved. Why would anyone want to take this road again? Do it or don’t do it but this bill is pathetic.

Only long-term tax cuts for the wealthy work, which is why—unlike payroll tax cuts for the middle class—you don’t need to pay for them. lololol

And you neglected to mention that Boehner and the House Republicans also want to load the bill with unrelated ideological legislation and are essentially holding the tax cuts as a hostage.

But whatever. I say let the payroll tax cut expire, and then let the Republicans explain to the American people why they are okay with that while seeking to give wealthy Americans trillions of additional tax cuts.

Also, @Jaxk, are you ever going to explain why you think the payroll tax cuts “didn’t work” on the one hand, but the Bush tax cuts did work on the other?

@Qingu

It’s really quite simple. Did the economy recover. It did under the Bush tax cuts, it didn’t under the Obama fiasco. Although I have to admit, Obama threw a lot more headwind onto any chance of recovery.

The Republicans will spin it at a Democratic president the same way the Democrats would spin it if it was a sitting Republican president.

When will folks realize that the only people who profit from My Side vs Your Side are the guys who get paid to do the spinning? I bet both Republicans and Democrats end up using the same spin doctors over the years. Pro-Wrestling mentality at it’s best.

Easy. With a straight face and by just being themselves.

The economy recovered after the “Obama fiasco” too. The economy is growing. Unemployment is slowly but surely ticking down.

It’s growing very fast actually, if you don’t count all the public jobs we’re losing (which aren’t really jobs, according to GOP, so you should be happy).

@Blondesjon, find me an example of a Democrat doing something similar during a Republican president.

And I’ve said it before and I’ll say it again: both sides are not equal, one side is demonstrably worse than the other, and the people who want to believe that they’re in some enlightened “middle” above the fray are just jerking themselves off. You contribute nothing to this discussion, or to political progress, by simply asserting over and over again “both sides are just as bad as each other.”

Saying the stimulus didn’t work, is like putting a band-aid on a gunshot wound, and then when the patient dies, saying Western medicine is bogus. It didn’t work because it wasn’t big enough to do what was needed. And if it had worked, the GOP would claim that it wasn’t needed anyway, since we were obviously in no danger.

@Qingu . . . I can sit here and trade Google search results for the next twenty years but it won’t make a bit of difference because you have taken the My Guys Are The Good Guys And Your Guys Are The Bad Guys Pro-Wrestling mentality to heart.

For you to even consider that the entire enchilada is rotten would mean admitting to yourself that you may have been fooled a few times along the way and your ego won’t support that. Hell, it reminds me of how most Christians view the world. In total absolutes.

Enlightened I am not, only honest with myself. I’ll at least admit to jerking myself off. You point with your left hand to hide the fact that your right is busy doing the same thing, a decidedly Republican thing to do.

It’s really quite simple. Did the economy recover. It did under the Bush tax cuts

Sinking the world into the worst depression in 80 years is “recovery”?

Lol conservatives lol You aren’t even trying anymore lol

I wouldn’t compare it to a bandaid. I think it’s more like ER treatment that stabilized the patient, removed the bullet, and stopped the bleeding… but then the patient didn’t have the money to pay for stitches so the body was left to heal the wound on its own.

@Blondesjon, you’re not honest. If you were honest you would try to support what you are claiming with facts and evidence. Jaxk, whom I deeply, deeply disagree with, and who I often accuse of dishonesty in how he interprets data, at least has the decency to do that and defend his points and I respect him for it.

There’s absolutely nothing “honest” about looking at a disagreement between X and Y and reflexively taking the position that they are both “equally bad.” You do the same thing in every religion thread, coming into a disagreement to say nothing of substance except “OMG you guys are both just as bad as each other because you’re having a disagreement.” Never do you bother yourself to actually evaluate the disagreement in question, evaluate the claims of either side, and explain where your beliefs fit in. In fact I’m not even sure you have beliefs at all. Because in every discussion I’ve had with you, your beliefs boil down to “I believe that people shouldn’t argue for or defend beliefs.”

I would call stopping a plunge into a second great depression and achieving a slightly growing economy a recovery, yes. Not a stellar improvement, but it counts nonetheless. Unless of course you think stopping an aeroplane from crashing into the ground and achieving a stable flight altitude is no improvement at all.

@Qingu . . . If you can “prove” that the masturbatory chest thumping that you and your esteemed colleague partake in, that never leads anywhere nor solves anything, is more than masturbatory chest thumping that never leads anywhere nor solves anything then I would be happy to agree with you.

Until such proof is presented to me I will stand by all of my statements and hope that perhaps one day, when you’re older, you’ll realize the difference between defending your beliefs and loving the sound of your own voice.

For the record, I love the sound of my own voice.

@Qingu & @laureth

You may be able to make a case for TARP. The banks were in dire straights and facing huge losses. Whether the bailouts were good or bad, they likely helped to stabilize the financial markets. Unfortunately Obama followed that with his campaign against banks. Changes to the reserve levels, which forced them to retain more cash. Followed by Dodd-Frank that added significant cost for them. Let’s not forget the mortgage adjustment program that didn’t work but froze the banks like a deer in the headlights. The result of all this is record low interest rates but no one is lending. It all cancelled out.

Then of course there was Stimulus. Once you add in the cash for clunkers, unemployment extensions, etc. we spent over a $trillion. Of course it’s easy to say, ‘well it just wasn’t enough’. Hell we could have spent much more and you’d still be saying the same thing. Pretty much the same as the ‘Jobs Saved or Created’ argument. Make anything you want out of those arguments.

I’m surprised you even bring up the unemployment number since the decline was a result of people that stopped looking for work rather than any real improvement. I’m not sure that’s something to brag about.

@Jaxk There is more to the economy than GDP and corporate profits though. The unemployment rate, stagnant/falling wages, and many other signs that only affect the bottom 60% of Americans point to the fact that our economy hasn’t recovered at all. Removing a tumor from a cancer patient and giving him AIDS does not mean he is healthier, if you catch my drift.

However, teh definition of “economic recovery” is subjective and any argument about it is beyond the scope of this discussion, so I don’t want to get into it here. Suffice it to say that everybody in Congress is a politician, and they care less about what happens to the country or the economy than they do about getting another term.

Economic recovery ain’t that subjective; GDP has been growing every month since the stimulus took effect and with a few exceptions unemployment has been ticking lower each month too.

I’m sadly not surprised that you’re coming out against the bank reforms in Dodd Frank, though I have yet to hear how you feel the status quo which caused the recession is a tenable situation. Are you still under the delusion that rising gas prices and not overleveraged undercapitalized banks making risky mortgage loans and trading them on an unregulated market caused the financial crisis?

And the trillion in stimulus spending comes from the demand shortfall caused by the stimulus. It wasn’t an invented number; neither were the CBO’s “created or saved” numbers. The CBO is nonpartisan… except when it contradicts GOP received wisdom, in which case it is a Democratic tool.

@jerv

I don’t disagree with your point about caring too much about being re-elected, it pertains to all politicians, not just congress. The truth is I don’t give Democrats much credit but I still believe they care about improving the economy. They just don’t seem to know how. I realize you likely feel the same about Republicans (at least the don’t know how part) but there is a dramatic divide between the different approaches to resolving the problems we face.

@Qingu

Unemployment has been at or above 9% for 8 of the past 11 months. It’s hard to say that is ‘ticking lower each month’. And just for the record, I’m not coming out against Dodd-Frank, I’ve been against it since it was passed (OK actually before it was passed). There is nothing in it that even addresses the financial collapse let alone fix it. It’s easy for you to just pretend it it does something as long as you don’t have to tell anybody what exactly it does. As usual, you just support because it is regulation, good or bad.

I am not surprised that you once again want to criticize what I say without really listening to what I said. What I actually said was that gas prices triggered the collapse. It is probably asking too much for you to understand that the rise in gas prices cost every American household an additional ~$230/month. You obviously think that had no impact but for some reason you think the lousy $7/week Obama gave as a tax break made the economy grow.

And I won’t even address your take on the CBO since you obviously don’t know how it works.

@Jaxk Yes; one side has an optimistic/Darwinistic view when it comes to personal success and how much opportunity there is and thus cares mostly about the economy as a whole while letting The Invisible Hand take care of the details regardless of how many people get hurt whereas the other side is so worried about people falling through the cracks that they don’t really notice much else, like the overall state of the nation.
Wasn’t there a time when those two forces kind of balanced out? I seem to recall a time when things were less extreme and partisan in DC…

@jerv

I probably wouldn’t put it quite so ‘black and white’ but the general theme I can agree with.

BTW, I heard a news story that manufacturing companies are screaming for Machinists. There is a definite shortage and Machinists are a hot commodity.

@Jaxk Old Machinists retire, kids want to be IT guys, CEOs, or Gangstas instead of machinists, flash forward a few years… I played a long game when I chose my field ;)

Thanks to all who have chimed in. It’s way too late tonight, but I;ll do my level best to sddress all comments tomorrow.

@Jaxk, your own chart for unemployment shows a clear downward trend. I would like to see that slope larger, but it’s still going down, and the economy has been steadily adding jobs—especially private sector jobs—since the stimulus.

You said of Dodd-Frank, “There is nothing in it that even addresses the financial collapse let alone fix it.” This is just nonsense. The capital requirements, the restrictions on the “shadow banking” of derivatives, and the new consumer-friendly rules on conveying information and risk in loans (assuming the REpublicans ever let Obama appoint a leader to enforce them)—all of these things directly caused the financial crisis.

Again, I have to ask if you simply reject the mainstream explanation for the financial crisis’ cause, because I’m still not sure what you mean by gas prices “triggering it.” Do you think overleveraged undercapitalized banks had anything to do with it? Do you think toxic loans made to unwitting consumers that led to systemic risk, that were then traded on an unregulated market which ballooned the risk, had anything to do with it?

I don’t think anyone would argue that high gas prices don’t put a major strain on the economy and consumer spending. But I don’t think any economists have argued that gas prices triggered the financial system’s collapse. We need to agree on the cause of the problem before we can even discuss the merits of the proposed solution.

@Qingu I wouldn’t call it a notable trend. It has crawled downward enough to be just below flat, but the trend you see is not statistically significant, and may well reverse when the holiday help loses their temporary positions. Don’t get me wrong, I’m optimistic, merely cautiously so.

@Qingu

Here is a response I gave to you months ago about the gas triggering the collapse.

”

@Qingu

The end of 2005 the housing bubble began to deflate. The housing market was saturated and everyone that could buy a house had one (some had 2 or 3).. By 2007 the market had begun to stabilize and some were predicting we had reached the bottom and a recovery was in sight. Then in 2008 gas prices rose dramatically to over $4. The middle and lower income folks simply couldn’t afford the extra several hundred dollars a month and something had to give. Mortgage foreclosures more than doubled in 2008 as families had to decide between gas, food and rent. To add to the problem the sub prime loans peaked in 2005 and the 3 year ARMs were beginning to adjust. The combination of gas and increasing mortgage payments was simply too much.

By the middle of 2008 the escalating foreclosure rate exposed our weak financial system and the system collapsed. The price of gas also collapsed in 2009 dropping back to less than $2. By 2010 Biden was predicting ‘The Summer of Recovery’. unfortunately gas skyrocketed again to $4. The recovery fizzled and the predictions of a double dip escalated along with the gas prices. It seems foolish to ignore the connection between these events.”

The derivatives were not a cause of of the collapse but rather a compounding event. If the housing market had not collapsed, the derivative problem would not have been exposed. It’s like having your house burn down with no insurance. If the house never burns, the lack of insurance isn’t a problem. But when it does, the lack of insurance becomes a major problem. Either way, insurance is not the cause of your house burning down.

As for Dodd-Frank, credit card regulation has little or nothing to do with the collapse. And when Freddie and Fannie are the single biggest lenders for mortgages, regulation that excludes them doesn’t fix anything. Hell, they account for 50% of mortgage loans and aren’t even included in the bill. In fact Freddie and Fannie are the only ones being sued for the financial meltdown and they are the biggest loss for the government bailouts. Yet regulation doesn’t pertain to them. They were up to thier knickers in the derivatives trading, yet the regulation doesn’t pertain to them. How in hell, can regulation be considered effective when it doesn’t even apply to the biggest offenders?

Ugh, I don’t know where to start. I also don’t remember reading that, but whatever.

Yes, I agree, the “cause” of the collapse was the housing bubble. But to dismiss the derivatives market as a mere “compounding effect” is the understatement of the century; the reason bank runs were a real concern, why the government had to pump in trillions to the fniancial system (which we both agree was a necessary evil), was largely because that derivatives market both hid and massively compounded the risk inherent in the system.

But that market was, for a time, fabulously profitable, banks knew it, which is why they made and packaged risky loans. So in that sense it wasn’t simply a “compounding effect” of the underlying cause, it was a prime motive for the cause.

The cause of the bubble itself—banks making risky loans without sufficient capital—if I am not mistaken the Volkner rule limits the amount of risk and undercapitalized loans banks are now allowed to make, which would have greatly decreased the size of that bubble if not prevented it outright. Also important, the consumer protection provisions in the bill would (if the GOP ever allows Obama to enforce them) probably have made it difficult to make many of those loans to unsuspecting consumers. Not saying that consumers don’t bear fault for taking on stupid loans, but the rules would have made the risk more transparent.

I’d appreciate it if you could explain to me where and how you disagree with what I’ve just posted, because I’m still confused as to the extent of the parallel universe of facts we live in. Then we can move on to Fannie and Freddie.

@Qingu

First you say “But to dismiss the derivatives market as a mere “compounding effect” is the understatement of the century”.

Then you say, “because that derivatives market both hid and massively compounded the risk”.

So I assume our difference lies in the use of the word ‘Massively’. OK I’ll give you that.

Here is a quick summary of the Dodd-Frank bill from Harvard Law School.

“Following the bill’s passage, the regulatory implementation phase will begin. By our count, the bill requires 243 rulemakings and 67 studies. While few provisions of the bill are effective immediately and Congress has designed the bill to become effective in stages, regulators and market participants will need to begin responding to the legislation immediately after its passage. U.S. financial regulators will enter an intense period of rulemaking over the next 6 to 18 months, and market participants will need to make strategic decisions in an environment of regulatory uncertainty. The legislation is complicated and contains substantial ambiguities, many of which will not be resolved until regulations are adopted, and even then, many questions are likely to persist that will require consultation with the staffs of the various agencies involved. Agency rulemaking will, however, set the parameters of the new regulatory framework. The new regulatory framework will contain both new elements and elements drawn from the patchwork of current U.S. financial regulation. An understanding of the older layers of regulation will be indispensable for understanding the new law.

In addition, regulatory implementation will be a dynamic process. Market participants will change their behavior in response to the new regulations and to the rules issued by other regulators and by international bodies. The regulators will be challenged to conform the required regulations to a follow-on technical bill, as promised by Chairman Frank. We expect that there will be both severe challenges for financial institutions as well as significant market opportunities, both at home and abroad, and that regulators and market participants will be dealing with the bill’s consequences, both intended and unintended, for many years to come.”

As Pelosi once said, ‘We won’t know what’s in the bill til we pass it.’ And for a long time after.

I think we are talking past each other. I am also upset that the bill’s provisions have not yet been set. Though I think we fundamentally disagree on the extent to which this “uncertainty” is harming the economy.

But, I thought we were talking about the cause of the crisis, and I was trying to figure out what you personally belief ought to be reformed or regulated, if anything.

So let me rephrase:

1. Do you think banks and other financial institutions should be required to have significantly more capital on hand alongside risky loans than before 2008?

2. Do you think the credit default swap market and similar derivatives markets should be regulated?

3. Do you think that banks should be required to make certain information, such as the inherent risks and payment structure of ARM loans, significantly more clear to consumers?

@Qingu

First, Glass-Steagall should be reinstated. Break these guys down so that banking, brokering and insuring are separate. That means the banks can’t use thier huge assets to leverage trading or derivatives activities. It also greatly diminishes the ability to become ‘too big to fail’.

The ‘Risky’ loans you reference, weren’t seen as risky. The default rate for these were actually quite low. And the derivatives they traded were rated AAA same as the US Government (neither is still rated AAA by the way). And I would eliminate the CRA that incentivized these guys to lower thier lending standards to begin with. As for the derivatives market, it actually provides a very real benefit to the economy. I will post this for anyone that doesn’t understand derivatives. The result of breaking apart the banks and the elimination of the CRA is that the derivatives market can operate as it should. The banks no longer have a conflict of interest with the brokerage industry and can’t use the immense assets to leverage derivatives trading (and they are no longer incented to do so). They basically became the broker, speculators and consumer of these credit defaults which was self generating. Breaking them up breaks that chain.

And lastly, I think the inherent risk on sub-prime loans is and was widely known. It just turned out to be more than anyone expected. I think there is way too much information dumped on the consumer at the closing already. If we were to eliminate 90% of what we currently have, the important information would be more obvious. It’s like listening to a drug commercial with all the disclaimers. Most people just ignore them because they are way too much. So supplying even more information at closing won’t solve anything. We need to require less and only the vital stuff. You can always request more but deluge of information at closing is just too much.

Sorry for rambling.

Hi all. This has been a great discussion and I appreciate each and every one who has contributed. Unfortunately, as much as I would like to, work pressures right now simply do not permit me the time to answer each post individually. I will compensate by giving each of you a GA for each post.

It seems to me that the Tea Party Republicans in the House are getting the blame for the collapse of the deal. Yes, they initially insisted that it be only a short term deal like 2 months. Yes, they also wanted no taxes on multimillionaires. And yes, they wanted the potentially environmentally devastating Keystone Pipeline deal as part of any compromise. Well, they got all of that, and 39 Republicans in the Senate voted for it, thinking the win on the Keystone Pipeline was good politics for them.

Now they can’t declare victory. Why? My personal opinion is that blaming the Tea Party Republicans alone is unfair. They have consistently voted in lockstep with the rest of the House Republican caucus. It is the entire House Republican establishment and Speaker Boehner in particular that are planning to raise taxes by $1,000 to $1,500 on the middle class after signing a pledge to lobbyist Grover Norquist, apparently a pledge even more important that their oath of office and pledge to uphold the Constitution They pledged to Norquist that they would never raise taxes. Well, apparently that only counts if the tax increase hits millionaires. It’s perfectly all right to raise taxes on the middle class and poor.

What’s really going on is that the House Republicans carry such a vehement hatred of Barack Obama, his race, his intelligence, his effectiveness, and his successful policies that they will do ANYTHING to derail the recovery in hopes Obama will get blamed for it and they can win power in 2012. They are betting that the electorate is stupid enough that this strategy of deliberately undermining the recovery and blaming Obama for it will work.

They know that almost all economists, even conservative ones, say the payroll tax cut should be extended at this time. So they will find some excuse to NOT do that, and then try to blame Obama for their obstruction.