H.R. 5029 - Economic Freedom Act of 2010

[MaggieMae]

Fannie and Freddie were only one component of the whole, but they were part of the process to start the avalanche.

The problem started with a well intentioned bill in the Carter Administration - the CRA - that provided the necessary controls for responsible management of a program to help lower income Americans buy homes. Nobody can argue that home ownership is an important factor in economic stability, better schools, lower crime rates, a better quality of life, etc. But the CRA did not promote making loans to people who had no ability or track record for paying for them.

It took subsequent Congresses and Administrations to use the CRA as an excuse for some unwise deregulation and emphasis that bypassed the built in protections in the CRA and opened the door to government graft, corruption, and irresponsible financial acitivity. And because the economy was booming through much of the Clinton and Bush 43 years, our fearless leaders turned a blind eye to the deveoping housing bubble that had to burst sooner or later and all the wildly speculative and irresponsible packaging of those loans going on in the financial sector. When the whistle was blown--President Bush blew it repeatedly--the GOP was reluctant to upset the positive economic trends. After the Democrats took over, the likes of Barney Frank or Christ Dodd would go on camera to reassure us that all was well and there was no serious problem there.

The housing bubble burst and the whole house of cards built around it came tumbling down.

And here we are.

The Obama administration and current Congress have done absolutely nothing to correct the problems that caused it. They have pointed accusing fingers at everything and everybody except the actual cause and culprits.

We need different people as our elected leaders.

You always do quite well with your explanations, until you get to the part where you want to blame everything on Obama and the Democrats, as in your last paragraph and your all-inclusive wording used in your other posts. To say that the OA and current Congress "have done absolutely nothing" is patently absurd. A financial reform bill has already passed the House, and the Senate is finally in full debate over their bill.

But I give up. For anyone truly interested in what is being critiqued against what is actually IN the bill being debated, this is an easy read and you can make up your own minds:

Wall Street's Talking Points, Now Available in Memo Form | The White House

Perhaps you can show me where your link to a White House propaganda talking points link mentions that the CRA will never again to used as an excuse to encourage, nay even force, Fannie, Freddie, or any lending institution to make unsecured risky loans with little or no down payment to people with no track record of financial accountability or responsibility? Perhaps you can show me where banks and other lending institutions will be prohibited from bundling bad loans with a few good ones to sell to unsuspecting recipients? Perhaps you can show me where anybody will be allowed to risk their depositors money in high risk speculative derivatives/hedge funds? Perhaps you can show me where banks and lending institutions will be held to high standards of accountability and responsibility or their depositors money will be transferred to a responsible institution and their FDIC insurance will be revoked? Perhaps you can show me where TARP money will not be further used to rescue anybody who behaves irresponsibly and nobody will be deemed too big to fail?

I didn't see any of that in your link, but I could have overlooked it.

But those were the problems that brought down the house of cards.

I look forward to elected leaders who will actually address them instead of fixing something else and then boasting that they've solved the problem.

But yeah, you give up Maggie. It's so much easier to put blind faith in people who don't deserve it than it is to admit that they don't have a clue what they are doing or, if they do, they are being deliberately dishonest.

The link I provided doesn't give an entire history of the problem, dear. It is a brief analysis of what is being said vs. what is being done right now, TODAY, regarding financial reform. Do try to pay attention to what someone ELSE is actually saying and posting. Thank you.

 

[Foxfyre]

You always do quite well with your explanations, until you get to the part where you want to blame everything on Obama and the Democrats, as in your last paragraph and your all-inclusive wording used in your other posts. To say that the OA and current Congress "have done absolutely nothing" is patently absurd. A financial reform bill has already passed the House, and the Senate is finally in full debate over their bill.

But I give up. For anyone truly interested in what is being critiqued against what is actually IN the bill being debated, this is an easy read and you can make up your own minds:

Wall Street's Talking Points, Now Available in Memo Form | The White House

Perhaps you can show me where your link to a White House propaganda talking points link mentions that the CRA will never again to used as an excuse to encourage, nay even force, Fannie, Freddie, or any lending institution to make unsecured risky loans with little or no down payment to people with no track record of financial accountability or responsibility? Perhaps you can show me where banks and other lending institutions will be prohibited from bundling bad loans with a few good ones to sell to unsuspecting recipients? Perhaps you can show me where anybody will be allowed to risk their depositors money in high risk speculative derivatives/hedge funds? Perhaps you can show me where banks and lending institutions will be held to high standards of accountability and responsibility or their depositors money will be transferred to a responsible institution and their FDIC insurance will be revoked? Perhaps you can show me where TARP money will not be further used to rescue anybody who behaves irresponsibly and nobody will be deemed too big to fail?

I didn't see any of that in your link, but I could have overlooked it.

But those were the problems that brought down the house of cards.

I look forward to elected leaders who will actually address them instead of fixing something else and then boasting that they've solved the problem.

But yeah, you give up Maggie. It's so much easier to put blind faith in people who don't deserve it than it is to admit that they don't have a clue what they are doing or, if they do, they are being deliberately dishonest.

The link I provided doesn't give an entire history of the problem, dear. It is a brief analysis of what is being said vs. what is being done right now, TODAY, regarding financial reform. Do try to pay attention to what someone ELSE is actually saying and posting. Thank you.

I repeat. They are not even talking about, much less addressing the legislation, the core problems that created the current financial mess.

I am keeping up.'

Why don't you?

 

[MaggieMae]

All that is very nice and might even be true. Certainly it illustrates some of the reasons of how we got into the current mess and some of the criticisms we conservatives had with the former President.

But what does it have to do with the questions I asked?

President Bush isn't President now. He can't do a damn thing, right or wrong, about anything now.

The current government and the current administration can.

Why aren't they?

Sigh...It's like talking to a brick wall, as usual. YOU are the one who insists on giving everyone a history lesson, but you conveniently leave out parts that directly point to equal irresponsibility of the Bush Administration. And puleeze, don't give me that worn out "Bush isn't President now" bull. EVERYTHING he did for the prior 8 years is EXTREMELY relevant to what goes on today. Even fifth graders know that.

In any event, here is an analysis of the bill currently being debated by the Senate. Do your own reading and answer your own questions. I can't be bothered with someone who asks the same questions over and over again, already knowing the answers, just to goad someone into a debate that's already taken place. Plus you'd never admit to any facts contrary to your own anyway. Enjoy, and g'bye.

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[MaggieMae]

FICTION:

Lindsey Memo: “To date, public attention has focused on whether the bill is a “bailout” bill that will keep “too big to fail” alive. You be the judge. First, the bill contains a $50 billion fund for resolution of systemically risky institutions. “

FACT:
Nobody made that argument until Wall Street lobbyists decided that it was the best way to kill financial reform. The most important principle is that large financial firms – not the taxpayers – bear any costs associated with the failure of another large financial firm. Chairman Dodd’s bill meets that test. If a big financial firm fails, it is put into receivership, its shareholders are wiped out, its creditors are allowed to suffer losses, its management is fired. Taxpayers are completely protected.

FICTION:

Lindsey Memo: “The bill allows a 2/3 vote of the Financial Stability Oversight Council to deem any firm (financial or non-financial) as coming under its rubric and then authorizes the FDIC and Treasury Secretary to treat each of the firm’s shareholders and creditors as they choose, without regard to bankruptcy law.”

FACT:
Wrong on all the facts. First, only large financial firms whose failure could pose a serious threat to the U.S. economy would be subject to the bill’s enhanced bankruptcy-like process. Second, similar to a standard bankruptcy, creditors' rights will be respected in accordance with their statutory priorities. But make no mistake, under the bill, failed financial firms will be sold off, broken apart, or otherwise liquidated; culpable management will be fired, creditors will be allowed to suffer losses, and shareholders will be wiped out. This is no bailout.

FICTION:

Lindsey Memo: “Second, the bill gives the Treasury and the FDIC authority to grant an unlimited number of loan guarantees to systemically risky institutions. No Congressional authorization or appropriation is required.”

FACT:
Completely false. The bill restricts, not expands, the FDIC’s emergency guarantee authorities. The FDIC’s emergency authorities are restricted only to solvent firms and they are designed to keep the economy as a whole from collapsing in a financial panic. Those authorities can only be used during a financial crisis and after Congress has been given an opportunity to disapprove the use of the authority.

FICTION:

Lindsey Memo: “Third, the bill gives the Fed the authority to fund any “program” to assist these institutions accepting as collateral anything it deems appropriate.“

FACT:
Just not true. The bill would restrict the Federal Reserve’s emergency lending authority, requiring prior written approval by the Treasury Secretary and robust Congressional reporting requirements. Second, the bill, in unequivocal terms, states that the Federal Reserve may not use its 13(3) lending authorities to “aid a failing financial company” and requires that the collateral received for any such emergency loans be of “sufficient quality to protect taxpayers from losses.”

FICTION:

Lindsey Memo: “Needless to say, the large Wall Street firms aren’t complaining; they will permanently benefit from having lower borrowing costs thanks to these provisions, the same way Fannie Mae and Freddie Mac enjoyed implicit guarantees.”

FACT:
This criticism has it backward. Today, large financial firms benefit from the perception that they are “Too Big to Fail.” Because we lack the tools to shut down big, complex financial firms without putting the financial system at risk, the market assumes that the government will prop them up. And as a result, they have lower borrowing costs. This bill will put an end to that. Under this bill, the “implicit guarantee” that comes with being a large, complex financial firm goes away forever. And you don’t have to take our word for it: a recent Moody’s report acknowledged that the “greatest threat” to too-big-to-fail is “from pending legislative proposals that would allow the government to resolve failing but systemically important financial institutions.” This is serious reform.

FICTION:

Lindsey Memo: “The soon-to-be-released Derivatives section requires virtually all derivatives trading to be channeled through exchanges. While appropriate for some contracts, a lot of Derivative contracts are fairly esoteric, and like highly specialized corporate bond issues, unlikely to face a liquid market. That is why they are traded over the counter. It is important to note that some over the counter derivatives transactions, like corporate bond transactions, can be cleared safely while others are appropriately done bilaterally.”

FACT:
This bill brings derivatives trading out of the dark. The unregulated OTC derivatives markets were at the center of the recent financial crisis. The Wall Street banks that dominate this market want to keep it unregulated so they can make money off regular firms. This bill will bring transparency to that market and reduce the risk to the larger financial system by requiring tough standards for all derivatives dealers and major market participants, requiring trading and clearing for standardized and liquid contracts, and giving full authority to prevent market manipulation, fraud, and abuse. At the same time, the bill protects the ability of commercial companies to manage the risks that naturally arise in their businesses through customized contracts.

FICTION:

Lindsey Memo: ”The legislation mandates a six-month study of the Volcker rule by the Financial Stability Oversight Council followed by a nine-month period for the regulatory agencies to implement the results of the study. No Congressional review – the regulatory agencies’ interpretation of the committee findings are implemented directly through the Administrative Law process.”

FACT:
The bill will separate proprietary trading and hedge funds from deposit insurance and other services that are provided to banks to protect the important role of banking firms in the economy as providers of credit to businesses and consumers and to protect American families’ savings. The purpose of the study is to make sure the rule is implemented well. That's common sense.

FICTION:

Lindsey Memo: “The Financial Regulation reform bill is being rushed to the Senate floor, possibly as early as next week. Formal bipartisan negotiations on a number of issues were ended, reportedly at the request of the White House, although informal conversations are still proceeding.”

FACT:
For more than a year the Administration and members of Congress has been involved in a bipartisan discussion and public debate about the best way to reform Wall Street. The Administration released a comprehensive policy proposal and detailed legislation in the spring and summer of 2009. The White House has been unwavering in its desire to move forward on a bipartisan basis to common sense reform that will restore accountability on Wall Street, end taxpayer bailouts, and place the financial system back on a sound foundation for growth and prosperity for all Americans. Only in Washington could people still argue for delay more than two years after the start of the worst financial crisis in generations.

FICTION:

Lindsey Memo: “Labor gets ‘Proxy Access’ to bring its agenda items before shareholders as well as annual “say on pay” for executives.”

FACT:
These reforms would benefit every American whose savings, retirement account or pension fund is invested in the stock market. After a decade that began with Enron and Tyco, and closed with Lehman Brothers and AIG, it is difficult to believe that anyone would argue against giving shareholders a voice with respect to executive pay – or say that the SEC should not have the authority to let shareholders meeting reasonable ownership thresholds propose alternative board candidates. Shareholders are the owners. A basic principle is that they should have the ability to hold management and boards accountable. Giving shareholders a "say on pay" will help to ensure that compensation practices are aligned with the long-term interests of shareholders, not based on short-term profits that lead to irresponsible risk taking.

FICTION:

Lindsey Memo: “Consumer activists get a brand new agency funded directly out of the seignorage the Fed earns. No oversight by the Federal Reserve Board or by the Congress on how the money is spent. This is the first known Congressional raid on Fed cash flow to fund projects without oversight.”

FACT:
The consumer financial protection agency would put consumers back in the driver’s seat by forcing big banks and credit card companies to provide clear, understandable information so that Americans can make financial decisions that work best for them. We already tried putting the bank regulators in charge of preventing unfair bank practices. That system failed, allowing the big banks, credit card companies, and auto lenders to take advantage of millions of consumers. We need an agency that is independent, with the sole job of protecting American families from abusive financial practices and writing and enforcing clear rules of the road. In addition to supervising financial firms, the agency will have a critical role in improving financial literacy, running a single consumer complaint center, and monitoring the marketplace for new consumer protection problems.

The consumer agency will be subject to significant oversight, including annual audits and regular reports and testimony to Congress on its budget, rulewriting, and other activities. Its maximum budget will be capped, and the agency will be required to submit financial operating plans, quarterly financial statements, and forecasts to OMB.

Wall Street's Talking Points, Now Available in Memo Form | The White House

 

[The Rabbi]

The study didnt deal with "most people" but with working-class people. They seem to have been sold a bill of goods on this for the most part.

Whatever. As I said, I AM working class people. And my experience as well as that of almost all my friends, relatives, neighbors, and many associates, also all working class people, has been quite different as is the advice of believable economists that I have read. My experience is probably more dramatic than most as we are now living in our 19th house. (We've moved a lot and have never EVER had financial assistance from anybody to unload real estate or obtain new housing.)

There was once we were told on Thursday to report to our new job in a different state on Monday. We managed.

Now you can latch onto the opinion of a college student writing a disseration that flies in the face of all that other evidence if you want to.

But I don't think it is me that is being sold a bill of goods.

I hope you recognize that your personal experience, while inspiring and all, is not necessarily representative of the entire working class world.
Also she was hardly a college student but a PhD in Economics. There is a difference you know.

 

[Foxfyre]

The study didnt deal with "most people" but with working-class people. They seem to have been sold a bill of goods on this for the most part.

Whatever. As I said, I AM working class people. And my experience as well as that of almost all my friends, relatives, neighbors, and many associates, also all working class people, has been quite different as is the advice of believable economists that I have read. My experience is probably more dramatic than most as we are now living in our 19th house. (We've moved a lot and have never EVER had financial assistance from anybody to unload real estate or obtain new housing.)

There was once we were told on Thursday to report to our new job in a different state on Monday. We managed.

Now you can latch onto the opinion of a college student writing a disseration that flies in the face of all that other evidence if you want to.

But I don't think it is me that is being sold a bill of goods.

I hope you recognize that your personal experience, while inspiring and all, is not necessarily representative of the entire working class world.
Also she was hardly a college student but a PhD in Economics. There is a difference you know.

I'm sure she's a lovely girl and will make a great economist. However, I probably have more real world experience than she does, I probably define 'working class' differently than she (or you) does, and those I have read Williams, Sowell, Friedman, et al along with a number of those at the Heritage Foundation and CATO Institute who already have their PhDs in Economics , and they all disagree with her.

Now if you were me, you would accept the gospel of one relatively unknown college student against all of your own real world experience plus a bevy of real world experts who are at least as well educated as she is?

How do you decide to believe her instead of all the others?

 

[Foxfyre]

All that is very nice and might even be true. Certainly it illustrates some of the reasons of how we got into the current mess and some of the criticisms we conservatives had with the former President.

But what does it have to do with the questions I asked?

President Bush isn't President now. He can't do a damn thing, right or wrong, about anything now.

The current government and the current administration can.

Why aren't they?

Sigh...It's like talking to a brick wall, as usual. YOU are the one who insists on giving everyone a history lesson, but you conveniently leave out parts that directly point to equal irresponsibility of the Bush Administration. And puleeze, don't give me that worn out "Bush isn't President now" bull. EVERYTHING he did for the prior 8 years is EXTREMELY relevant to what goes on today. Even fifth graders know that.

In any event, here is an analysis of the bill currently being debated by the Senate. Do your own reading and answer your own questions. I can't be bothered with someone who asks the same questions over and over again, already knowing the answers, just to goad someone into a debate that's already taken place. Plus you'd never admit to any facts contrary to your own anyway. Enjoy, and g'bye.

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Yeah I know Maggie. Nobody's opinion counts except yours, especially when you seem to have a really hard time understanding that the point you're making is irrelevent to the point the other person is making.

Don't you wish you had just kept me on ignore? But do have a great day.

 

[Foxfyre]

P.S. to the Rabbi:

This is kind of fun since you and I don't lock horns on one of these issues all that often.
But even if I didn't think that there was so much intellectual integrity and ability out there who oppose this lady's thesis, I would not accept her opinion or conclusions based on her work without some pretty strong evidence to back it up. That is because it goes against the grain for me to shut one whole class of people out of the American dream based on her opinion that they need to keep themselves mobile.

 

[antagon]

I asked some very specific questions and I believe all are pertinent given the economic history in past century alone. I did not lay out any myths or examples of any kind. You chose not to answer the questions asked but rather deflected from the questions with a series of red herrings and straw men. Once you answer my questions, then we can proceed with answers to your questions.

you asked, fox, if taxes have these negative effects, if they'd be a good idea. i refuted the basis of those questions because they dont fit with reality. that they are myths. can you refute this characterization, beyond merely denying it?

You posted that you wanted to raise taxes across the board. I provided specific links of qualified expert opinion as to how taxes can have negative consequences. Among those consequences is diminished economic activity and diminished, even lessened federal revenues.

One example: In breaking his 'no new taxes' pledge in the late 80's, President Bush (41) agreed to impose higher taxes on luxury items such as yachts, private airplanes, high value jewelry, etc. The results were disastrous. The wealthy simply didn't buy or went elsewhere for their toys. Our airplane manufacturing industry was severely hurt, our boat building industry almost destroyed as 50,000 jobs were lost there alone, and most of our high value jewelry manufactuers/dealers left and moved off shore to places like Grand Cayman. And it is estimated that little or no additional revenues were added to the Federal Treasury.

You raise taxes on capital gains and you not only affect the stock market players but you impact the mom and pop operations, transfer of property, real estate at all levels, and not only slow down the economy but can result in less overall reveues to the Federal treasury.

The lesson is that raising taxes by 5 or 10 percent may or may not increase treasury revenues by 5 or 10 percent. Reducing taxes may or may not decrease treasury revenues by the same amount. The most profitable means of treasury revenues is a thriving, growing, strong economy. Taxes have to be structured to maximize that.

i find bush's concession on the necessity to tax to be the last act of conservatism from the republican party. republicans lack the balls to make hard decisions and have stuck to buying votes with the national debt through their tax-cut conservatism ever since.

i contest the basis of your argument that cutting taxes is the best means to structure the tax system to maximize the health, growth and strength of the economy - specifically, as we were discussing, the corporate tax rate. these are income taxes, i dont support excises, particularly on big-ticket items like boats and many other luxuries. our tax code can function sufficiently as a consumption tax system through the use of expensibility and deductibility. there is no value in excise.

with respect to corporate tax, targeted expensibility is the best means to affect the economic goals which you suggest would come about through merely cutting taxes. investment and profit-taking are converse activities, and cannot be supported by the same measures. tax cuts support profit-taking, and expensibility supports investment. your tax cut politics is lobbied by non-owner management in large business interests. they benefit most from capital gains cuts, sweeping tax cuts and out-of-domain transferability. these interests are converse to those of small businesses in many respects.

small business chiefs are considerably more likely to be owners of their enterprises, and function completely different at tax time. most of us use the expensibility of our business costs to ride down our tax liability, then take some cream from the top in back salary or bonuses, possibly owner equity at no gain, or some other fancy means. this mechanism is threatened by preference to tax cuts over expensibility.

since dubya removed the small business administration cabinet seat, there is little advocacy for small business' needs with respect to tax. its not a republican issue, alone. the senate committee on small business was headed by john kerry! i dont know if he still is in charge, but if you dont give a shit about something, you put a clown in the driver's seat. i dont think he has ever run a business, if he's even worked in the private sector in his lifetime. the result of not giving a shit about non-lobbied business interests is poor legislation and political agendas that dont consider these cumilatively largest of effectors on the economy.

dubya's tax-cut plan, widely criticized as a winfall for big-biz executive interests, was a perfect example of this misplaced legislation. many small businesses were impacted by his alternative minimum tax and corporate tax cuts because they featured commensurate reductions in expensibility, and shifted tax burden away from businesses, to the owners of small businesses. i have inevitable expense, and, in 2003, was growing businesses, adding otherwise expensible capital investments to their assets. while it was nice to see a few points less tax, the shallow deductibility resulted in additional unsheltered liability in the six-figure degree, which a couple years prior, i would have been able to better account for with higher deductions, albeit a higher rate.

39% of $35k is less than 31% of $220k... and that is no exaggeration. having been a chamber member where ever i've lived for the last decade, i share this guile with many small business owners who have lost tens of grands each in personal income, despite the empty tax cuts you advocate.

where small businesses do most of the hiring, investment, and constitute a huge share of the private economic activity in the US, tax-cut conservatism is spurred by big-biz lobbies who want lower capital gains and looser transferrability to affect the mechanism by which their execs could take more of their compensation home, and pull out their equity en masse after they screw the company they're managing and announce their retirement.

the connection between profit-taking by way of lower corporate tax is converse to investment (the jobs, equipment, bonusses, fringes, burdens etc) by way of deductibility.

if the feds want to chase both masters, the treasury will indeed suffer dismal returns. the treasury so suffered when dubya cut tax, reagan cut tax, whenever. the laffer-curve is simply plotted at a rate above our current one, and we are experiencing ever-diminishing returns on tax relief stimulus. since reagan halved the rate in the 80s has the economy ever responded to income tax relief? what tenuous responses you can find and try to link to tax policy - where those worth the deficits/debt they created in a very real, credible link? what mechanism in a tax cut has anything to do with raising employment and making capital purchases?

it is ignorant to believe that there is more potential for the economy to benefit from lower taxes, despite you and GA feeling it is a certain thing. it is similarly foolish to believe politicians when they present the logic you parrot, which claims tangible links between investment and tax rate relief, when they are converse, logically.

 

[antagon]

The study didnt deal with "most people" but with working-class people. They seem to have been sold a bill of goods on this for the most part.

eavesdropping on yours and fox's debate, i would say that homeownership for persons in employment, rather than self-employment, is one of the only and arguably the best means of improving net worth. i essentially agree with fox on that one.

i think, though, you are alluding to the 'why rent' mentality which swept the country, and there i would agree with your contention that that turned out to be bullshit for many. it was the motto of the boom-bust on street level.

taking the two together, building your net worth when you can hardly cover your expenses, and at a rate that varies, while your income does not, or so does on different parameters, is stupid.

knowing you like calling americans stupid, rabbi, i think you'll find that satisfying. too many americans essentially made that decision without looking at the naked implications. many others considered a better fit with their circumstances, and weren't stupid; when home values inflate a little, they're in the money.

 

[editec]

Every tax cut has resulted in larger revenue to the government, not smaller. If they choose to over-spend that revenue, which is what happened, that isnt the fault of tax cuts.
The economy began tanking when Democrats took control of Congress. There's the problem right there.

The economy began tanking when Democrats took control of Congress. There's the problem right there

Good point....But the economy recovered when the Democrats took control of the Congress AND the White House

Theres the solution right there

Unemployment rate when Obama entered the White House: 7.8%
Rate today: 9.7%

Seems to be some misunderstanding here.

Yes, there is.

You apparently don't understand the problem with reductionist thinking when approaching issues in the social sciences.

Let me guess...you're a hard science or engineering trained thinker, right?

Cause the reductionist thinking is an approach to problem solving that can be very effective when dealing with science, or engineering problems, but such thinking in social sciences questions is definitely going to mislead you.

 

[antagon]

engineering is not reductionist. it applies physics and math, while these fields are reductionist, independently.

rabbi is not a reductionist as much as a pundit - quite the opposite. given the smallest scraps of logic, he will spin them to larger conclusions attempting to employ them in his patisan hack agenda.

 

[Foxfyre]

you asked, fox, if taxes have these negative effects, if they'd be a good idea. i refuted the basis of those questions because they dont fit with reality. that they are myths. can you refute this characterization, beyond merely denying it?

You posted that you wanted to raise taxes across the board. I provided specific links of qualified expert opinion as to how taxes can have negative consequences. Among those consequences is diminished economic activity and diminished, even lessened federal revenues.

One example: In breaking his 'no new taxes' pledge in the late 80's, President Bush (41) agreed to impose higher taxes on luxury items such as yachts, private airplanes, high value jewelry, etc. The results were disastrous. The wealthy simply didn't buy or went elsewhere for their toys. Our airplane manufacturing industry was severely hurt, our boat building industry almost destroyed as 50,000 jobs were lost there alone, and most of our high value jewelry manufactuers/dealers left and moved off shore to places like Grand Cayman. And it is estimated that little or no additional revenues were added to the Federal Treasury.

You raise taxes on capital gains and you not only affect the stock market players but you impact the mom and pop operations, transfer of property, real estate at all levels, and not only slow down the economy but can result in less overall reveues to the Federal treasury.

The lesson is that raising taxes by 5 or 10 percent may or may not increase treasury revenues by 5 or 10 percent. Reducing taxes may or may not decrease treasury revenues by the same amount. The most profitable means of treasury revenues is a thriving, growing, strong economy. Taxes have to be structured to maximize that.

i find bush's concession on the necessity to tax to be the last act of conservatism from the republican party. republicans lack the balls to make hard decisions and have stuck to buying votes with the national debt through their tax-cut conservatism ever since.

i contest the basis of your argument that cutting taxes is the best means to structure the tax system to maximize the health, growth and strength of the economy - specifically, as we were discussing, the corporate tax rate. these are income taxes, i dont support excises, particularly on big-ticket items like boats and many other luxuries. our tax code can function sufficiently as a consumption tax system through the use of expensibility and deductibility. there is no value in excise.

You seem to miss the point I was making which is that all taxes are not equal in raising revenues and we are always wise if we consider how taxes affect people's behavior and develop a tax structure accordingly. Raising taxes across the board, as you suggested in your former post, can have negative consequences on both federal revenues and in many other ways. You now seem to exclude excise taxes from your proposal to raise taxes across the board. I think if you do just a little research, you will also see that taxing most capital gains can and does have more negative consequences than positive ones.

with respect to corporate tax, targeted expensibility is the best means to affect the economic goals which you suggest would come about through merely cutting taxes. investment and profit-taking are converse activities, and cannot be supported by the same measures. tax cuts support profit-taking, and expensibility supports investment. your tax cut politics is lobbied by non-owner management in large business interests. they benefit most from capital gains cuts, sweeping tax cuts and out-of-domain transferability. these interests are converse to those of small businesses in many respects.

small business chiefs are considerably more likely to be owners of their enterprises, and function completely different at tax time. most of us use the expensibility of our business costs to ride down our tax liability, then take some cream from the top in back salary or bonuses, possibly owner equity at no gain, or some other fancy means. this mechanism is threatened by preference to tax cuts over expensibility.

since dubya removed the small business administration cabinet seat, there is little advocacy for small business' needs with respect to tax. its not a republican issue, alone. the senate committee on small business was headed by john kerry! i dont know if he still is in charge, but if you dont give a shit about something, you put a clown in the driver's seat. i dont think he has ever run a business, if he's even worked in the private sector in his lifetime. the result of not giving a shit about non-lobbied business interests is poor legislation and political agendas that dont consider these cumilatively largest of effectors on the economy.

dubya's tax-cut plan, widely criticized as a winfall for big-biz executive interests, was a perfect example of this misplaced legislation. many small businesses were impacted by his alternative minimum tax and corporate tax cuts because they featured commensurate reductions in expensibility, and shifted tax burden away from businesses, to the owners of small businesses. i have inevitable expense, and, in 2003, was growing businesses, adding otherwise expensible capital investments to their assets. while it was nice to see a few points less tax, the shallow deductibility resulted in additional unsheltered liability in the six-figure degree, which a couple years prior, i would have been able to better account for with higher deductions, albeit a higher rate.

39% of $35k is less than 31% of $220k... and that is no exaggeration. having been a chamber member where ever i've lived for the last decade, i share this guile with many small business owners who have lost tens of grands each in personal income, despite the empty tax cuts you advocate.

where small businesses do most of the hiring, investment, and constitute a huge share of the private economic activity in the US, tax-cut conservatism is spurred by big-biz lobbies who want lower capital gains and looser transferrability to affect the mechanism by which their execs could take more of their compensation home, and pull out their equity en masse after they screw the company they're managing and announce their retirement.

the connection between profit-taking by way of lower corporate tax is converse to investment (the jobs, equipment, bonusses, fringes, burdens etc) by way of deductibility.

if the feds want to chase both masters, the treasury will indeed suffer dismal returns. the treasury so suffered when dubya cut tax, reagan cut tax, whenever. the laffer-curve is simply plotted at a rate above our current one, and we are experiencing ever-diminishing returns on tax relief stimulus. since reagan halved the rate in the 80s has the economy ever responded to income tax relief? what tenuous responses you can find and try to link to tax policy - where those worth the deficits/debt they created in a very real, credible link? what mechanism in a tax cut has anything to do with raising employment and making capital purchases?

it is ignorant to believe that there is more potential for the economy to benefit from lower taxes, despite you and GA feeling it is a certain thing. it is similarly foolish to believe politicians when they present the logic you parrot, which claims tangible links between investment and tax rate relief, when they are converse, logically.

And here since I'm not sure what point you're making, I won't attempt a rebuttal as I am likely to misrepresent your intent. The Bush Administration did err with the way they structured the AMT and they recognized it. But as so many of these things go, bad legislation is not always that easy to reverse. See:
http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/RL30149_01302003.pdf

But back on point, you either see the people as the servant of government and with obligation to feed the beast whatever it thinks it wants or needs, or you see the government as the servant of the people.

Modern American liberals/progressives seem to mostly want a government big enough to do for them whatever they do not do for themselves. They want a government that governs them. They tend to look at all wealth as the people's money for the government to dispense or distribute as it thinks best. And if the government is spending more than it takes in, then the people should rally and make up the difference. They don't seem to mind that the more the beast is fed, the larger it gets, the larger the appetite, and the more it demand and they don't seem to care how much money never accomplishes what is was advertised to accomplish.

Modern American conservatives go with the concept that liberty is the people governing themselves and government should be the servant of the people. The role of government is to secure the rights of the people so that they are inhibited from doing social, economic, or physical violence to each other, and then get out of their way and allow them to form whatever society they want. You accomplish that by feeding the beast no more than it absolutely has to have to do its job and leave the wealth in the hands of the people who will use it more wisely on their own behalf than will the beast.

H.R. 5029 is a conservative bill as a beginning of the process to starve the beast back into submission.

Again its a matter of whether government is the god to which the people submit or whether government submits to the people.

 

[antagon]

You posted that you wanted to raise taxes across the board. I provided specific links of qualified expert opinion as to how taxes can have negative consequences. Among those consequences is diminished economic activity and diminished, even lessened federal revenues.

One example: In breaking his 'no new taxes' pledge in the late 80's, President Bush (41) agreed to impose higher taxes on luxury items such as yachts, private airplanes, high value jewelry, etc. The results were disastrous. The wealthy simply didn't buy or went elsewhere for their toys. Our airplane manufacturing industry was severely hurt, our boat building industry almost destroyed as 50,000 jobs were lost there alone, and most of our high value jewelry manufactuers/dealers left and moved off shore to places like Grand Cayman. And it is estimated that little or no additional revenues were added to the Federal Treasury.

You raise taxes on capital gains and you not only affect the stock market players but you impact the mom and pop operations, transfer of property, real estate at all levels, and not only slow down the economy but can result in less overall reveues to the Federal treasury.

The lesson is that raising taxes by 5 or 10 percent may or may not increase treasury revenues by 5 or 10 percent. Reducing taxes may or may not decrease treasury revenues by the same amount. The most profitable means of treasury revenues is a thriving, growing, strong economy. Taxes have to be structured to maximize that.

i find bush's concession on the necessity to tax to be the last act of conservatism from the republican party. republicans lack the balls to make hard decisions and have stuck to buying votes with the national debt through their tax-cut conservatism ever since.

i contest the basis of your argument that cutting taxes is the best means to structure the tax system to maximize the health, growth and strength of the economy - specifically, as we were discussing, the corporate tax rate. these are income taxes, i dont support excises, particularly on big-ticket items like boats and many other luxuries. our tax code can function sufficiently as a consumption tax system through the use of expensibility and deductibility. there is no value in excise.

You seem to miss the point I was making which is that all taxes are not equal in raising revenues and we are always wise if we consider how taxes affect people's behavior and develop a tax structure accordingly. Raising taxes across the board, as you suggested in your former post, can have negative consequences on both federal revenues and in many other ways. You now seem to exclude excise taxes from your proposal to raise taxes across the board.

i see where the contention is. my original statement was not clear. across the board was a reference to across the spread of brackets, not across all possible means of tax. i feel that the jabs being made to ramp up the progression in our code are also at the ends of their diminishing returns, and that tax burden on income tax could bump up a few points in all brackets.

I think if you do just a little research, you will also see that taxing most capital gains can and does have more negative consequences than positive ones.

has your research stumbled across the CBO's appraisal of the '03 cap gains/dividends rate cut? they said it leaves $100 billion in revenues on the table. i think bush's treasury said the same. how can that be partisan? have you considered that nothing in the mechanism of capital gains tax spurs investment? that it only spurs profit-taking?

capital gains is income, and should not be shown preference to other income, particularly because it does not come from commerce, but from liquidation of assets. it does not employ anyone or add any equity directly. as a consumer behavior, chasing capital gains is explicitly chasing risk.

i welcomed you to take a real look at how behaviors are effected by tax. it must not have been clear. ive emphasized some points which the rest is only there to substantiate:

with respect to corporate tax, targeted expensibility is the best means to affect the economic goals which you suggest would come about through merely cutting taxes. investment and profit-taking are converse activities, and cannot be supported by the same measures. tax cuts support profit-taking, and expensibility supports investment. your tax cut politics is lobbied by non-owner management in large business interests. they benefit most from capital gains cuts, sweeping tax cuts and out-of-domain transferability. these interests are converse to those of small businesses in many respects.

small business chiefs are considerably more likely to be owners of their enterprises, and function completely different at tax time. most of us use the expensibility of our business costs to ride down our tax liability, then take some cream from the top in back salary or bonuses, possibly owner equity at no gain, or some other fancy means. this mechanism is threatened by preference to tax cuts over expensibility.

since dubya removed the small business administration cabinet seat, there is little advocacy for small business' needs with respect to tax. its not a republican issue, alone. the senate committee on small business was headed by john kerry! i dont know if he still is in charge, but if you dont give a shit about something, you put a clown in the driver's seat. i dont think he has ever run a business, if he's even worked in the private sector in his lifetime. the result of not giving a shit about non-lobbied business interests is poor legislation and political agendas that dont consider these cumilatively largest of effectors on the economy.

dubya's tax-cut plan, widely criticized as a winfall for big-biz executive interests, was a perfect example of this misplaced legislation. many small businesses were impacted by his alternative minimum tax and corporate tax cuts because they featured commensurate reductions in expensibility, and shifted tax burden away from businesses, to the owners of small businesses. i have inevitable expense, and, in 2003, was growing businesses, adding otherwise expensible capital investments to their assets. while it was nice to see a few points less tax, the shallow deductibility resulted in additional unsheltered liability in the six-figure degree, which a couple years prior, i would have been able to better account for with higher deductions, albeit a higher rate.

39% of $35k is less than 31% of $220k... and that is no exaggeration. having been a chamber member where ever i've lived for the last decade, i share this guile with many small business owners who have lost tens of grands each in personal income, despite the empty tax cuts you advocate.

where small businesses do most of the hiring, investment, and constitute a huge share of the private economic activity in the US, tax-cut conservatism is spurred by big-biz lobbies who want lower capital gains and looser transferrability to affect the mechanism by which their execs could take more of their compensation home, and pull out their equity en masse after they screw the company they're managing and announce their retirement.

the connection between profit-taking by way of lower corporate tax is converse to investment (the jobs, equipment, bonusses, fringes, burdens etc) by way of deductibility.

if the feds want to chase both masters, the treasury will indeed suffer dismal returns. the treasury so suffered when dubya cut tax, reagan cut tax, whenever. the laffer-curve is simply plotted at a rate above our current one, and we are experiencing ever-diminishing returns on tax relief stimulus. since reagan halved the rate in the 80s has the economy ever responded to income tax relief? what tenuous responses you can find and try to link to tax policy - where those worth the deficits/debt they created in a very real, credible link? what mechanism in a tax cut has anything to do with raising employment and making capital purchases?

it is ignorant to believe that there is more potential for the economy to benefit from lower taxes, despite you and GA feeling it is a certain thing. it is similarly foolish to believe politicians when they present the logic you parrot, which claims tangible links between investment and tax rate relief, when they are converse, logically.

And here since I'm not sure what point you're making, I won't attempt a rebuttal as I am likely to misrepresent your intent. The Bush Administration did err with the way they structured the AMT and they recognized it. But as so many of these things go, bad legislation is not always that easy to reverse. See:
http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/RL30149_01302003.pdf

legislation could be reversed easily with another legislation, however, politicians and parties fear seeing wrong in anything they do. furthermore the AMT was spot on for its benefit to big business interests, just like your capital gains message and your debt-burdening tax-cut message.

as for this...

But back on point, you either see the people as the servant of government and with obligation to feed the beast whatever it thinks it wants or needs, or you see the government as the servant of the people.

Modern American liberals/progressives seem to mostly want a government big enough to do for them whatever they do not do for themselves. They want a government that governs them. They tend to look at all wealth as the people's money for the government to dispense or distribute as it thinks best. And if the government is spending more than it takes in, then the people should rally and make up the difference. They don't seem to mind that the more the beast is fed, the larger it gets, the larger the appetite, and the more it demand and they don't seem to care how much money never accomplishes what is was advertised to accomplish.

Modern American conservatives go with the concept that liberty is the people governing themselves and government should be the servant of the people. The role of government is to secure the rights of the people so that they are inhibited from doing social, economic, or physical violence to each other, and then get out of their way and allow them to form whatever society they want. You accomplish that by feeding the beast no more than it absolutely has to have to do its job and leave the wealth in the hands of the people who will use it more wisely on their own behalf than will the beast.

im sorry to be so dismissive, but that is bullshit. conservatism is about reducing the impact of the government on the citizenry. the cost and the size. all of that poetic bullshit you and PoliticalChick like to tag on, i feel, is central to the issue that conservatives have lost a grip on the simple issues i put forth. i think i put it to you like this in another thread:

when i hit the brakes, i dont want a waft of floral essence, i want stopping power. when we put republicans in office in 94 and 2000, it was to emplace a BBA and bring about a wave of real conservatism that they were willing to put in writing. what i call bullshit is what we got.

H.R. 5029 is a conservative bill as a beginning of the process to starve the beast back into submission.

Again its a matter of whether government is the god to which the people submit or whether government submits to the people.

a conservative step is to reduce the beast from both ends, not via this starvation you fantasize about, but through legislation and reorganization, passing a balanced budget or not spending off-budget, then taking account for that action through tax relief.

a half-step aimed at shaking more big business hands is what this bill is in this condition.

if the HC bill can at once be a student loan rework, a federal contracts revision, and a healthcare mandate and restructure at once, surely this bill could say: lets cap spending on such and such to such in such until such and such time.... something, anything to do with reducing government cost.

your starving the beast shit is a fallacy, clearly youve noticed he eats the markets and the dollar and the rates if you dont feed him taxes.

 

[ihopehefails]

Where is the Economic Freedom? I see nothing that reduces the deficit, nothing to balance the budget, nothing on responsible spending.

Its just another irresponsible Republican tax cut

It amazing how you guys reason sometimes? The term freedom implies freedom for the people and lower taxes creates more freedom because it allows people to do those things without being taxed which makes it easier to do those things. You on the other hand heard freedom and assumed it was some do all positive thing like reducing the deficit, balancing the budget, and irresponsible spending. Those things have nothing to do with the freedom of the people but the activities of the government unless you have another explanation on how you reached that conclusion.

BTW, I would much rather have an irresponsible tax cut than irresponsible stim bill that did shit for the economy unless you still believe we have an economic recovery?

 

[Foxfyre]

Again, to Antagon, the bill cuts out about a trillion dollars worth of spending right off the bat. It starts starving the beast right where it is most bloated without causing any unintended consequences. It recognizes that everything can't be done just because it feels like a good idea. Some processes have to be done slowly and carefully and with much consideration to not create unintended consequences lest we make things much worse in one place while trying to make it better in another.

I was happy with the spending cuts included. If they could accomplish that, they could get the rest done in the right way too.

 

[boedicca]

The study didnt deal with "most people" but with working-class people. They seem to have been sold a bill of goods on this for the most part.

Working class people were sold a bill of goods by being encouraged to buy houses they couldn't afford with no down payment, teaser rates, and balloon payments. They were the pawns of the speculation fueled bubble encouraged by the government's promotion of home ownership for everyone, regardless of ability to pay.

 

[Foxfyre]

The study didnt deal with "most people" but with working-class people. They seem to have been sold a bill of goods on this for the most part.

Working class people were sold a bill of goods by being encouraged to buy houses they couldn't afford with no down payment, teaser rates, and balloon payments. They were the pawns of the speculation fueled bubble encouraged by the government's promotion of home ownership for everyone, regardless of ability to pay.

Exactly. When people are encouraged to save up for a substantial down payment--at LEAST 10% on lower value property, 20% on higher value property--and also have a track record of competent personal financial management and integrity of paying their debts, home foreclosures become a rare thing and not a substantial drag on the economy. Also, real estate values will remain strong and allow for the mobility that people sometimes need to support their families and/or advance their careers.

When you sidetrack that process, of course it is going to be the working class who experiences the worst consequences of unsound lending practices. The irresponsible and deliberately unethical don't care. They didn't have anything to start with and don't see that they lost anything. The wealthy take the hits but they are in a position to weather them. It will be the working class that gets hurt the worst every time.

It is another illustration of the wonderful world of good intentions producing unintended negative consequences.

And it in no way diminishes the value of home ownership when the process is financially sound and not sidetracked by incompetents in government.

 

[antagon]

Again, to Antagon, the bill cuts out about a trillion dollars worth of spending right off the bat. It starts starving the beast right where it is most bloated without causing any unintended consequences. It recognizes that everything can't be done just because it feels like a good idea. Some processes have to be done slowly and carefully and with much consideration to not create unintended consequences lest we make things much worse in one place while trying to make it better in another.

I was happy with the spending cuts included. If they could accomplish that, they could get the rest done in the right way too.

of course you are happy, fox. that is just the sort of conservatism neoconservatives are overjoyed with. there's no serious spending cuts in the bill, whatsoever. arbitrarily cut whatever was budgeted and not spent by the other guys' stimulus plan. yea and TARP, too... not only is that not a trillion dollars, but converting stimulus to tax relief stimulus leaves the beast untouched, but rather makes more permanent and volitile moves toward insolvency.

cut the amount of money the government spends, fox. not 'spend the stimulus this way'. wake up, buddy.

 

[Foxfyre]

Again, to Antagon, the bill cuts out about a trillion dollars worth of spending right off the bat. It starts starving the beast right where it is most bloated without causing any unintended consequences. It recognizes that everything can't be done just because it feels like a good idea. Some processes have to be done slowly and carefully and with much consideration to not create unintended consequences lest we make things much worse in one place while trying to make it better in another.

I was happy with the spending cuts included. If they could accomplish that, they could get the rest done in the right way too.

of course you are happy, fox. that is just the sort of conservatism neoconservatives are overjoyed with. there's no serious spending cuts in the bill, whatsoever. arbitrarily cut whatever was budgeted and not spent by the other guys' stimulus plan. yea and TARP, too... not only is that not a trillion dollars, but converting stimulus to tax relief stimulus leaves the beast untouched, but rather makes more permanent and volitile moves toward insolvency.

cut the amount of money the government spends, fox. not 'spend the stimulus this way'. wake up, buddy.

I think eliminating a trillion dollars of spending is a damn good start.

And once you start starving the beast of the funds for irresponsible spending, which the proposed legislation does, you have extra ammunition to tackle the rest.

You do NOT accomplish anything by feeding the beast with more and more tax increases. Congress has proved for a very long time now that it WILL spend whatever revenues come in and then some. There is no such thing in the U.S. government that translates to saving for a rainy day.