Obama's Tax Plan and the Law of Unintended Consequences

[RobInKuwait]

I'm writing this thread because I actually want to hear if any Obama supporter has thought about how he is going to address what I see as one of the fundamental problem with his tax plan. I'm not interested in discussing the merits of a taxing the rich strategy (everyone who has read my posts knows I disagree with the plan). I'm really interested in hearing about what Obama's plan will mean in real terms, and whether it will have unintended consequences, similar to the ones I predict below.

Kruger mentioned in one of his posts that he thought what would happen under Obama is that Wall Street and the private sector will just look for ways to get around his ungodly high taxes. It got me thinking.

This is what I think will happen:

-Anyone making under $300,000 but over $250,000 will ask their employer to lower their salary to $249,000 as after taxes it will probably be around the same number.

-Anyone making significantly more money than $249,000 will probably look into getting a portion of their income in stock options, benefits, and other forms of compensation to skirt around taxes.

-Small businesses will almost uniformly make $249,000 a year, while reinvesting the rest into the business and in tax write offs. Thats just good business.

-I'm sure big business will have similar strategies as well.

What this will cause:

-Obama is counting on using the current situation for his tax plan to succeed, even though I think there will be a significant dip in over 250k income after his plan is implemented.

-This means that there will be further revenue shortages. Debt will increase. We will be in worse shape.

Any comments?

 

[Rugger]

I just don't understand how Obama thinks increasing taxes on the 1% who own 90% of the wealth will stimulate growth. People don't invest and spend more when they earn less. Pretty simple.

 

[Urban Monk]

Have you thought this through in real terms?

Maybe the accompany chart will help:

Here's how the average tax bill could change in 2009 if either John McCain's or Barack Obama's tax proposals were fully in place.


MCCAIN OBAMA
Income Avg. tax bill Avg. tax bill
Over $2.9M -$269,364 +$701,885
$603K and up -$45,361 +$115,974
$227K-$603K -$7,871 +$12
$161K-$227K -$4,380 -$2,789
$112K-$161K -$2,614 -$2,204
$66K-$112K -$1,009 -$1,290
$38K-$66K -$319 -$1,042
$19K-$38K -$113 -$892
Under $19K -$19 -$567

As you can see, even if someone made 250k, their effective tax would increase by...$12.

Oh NOEZ!

 

[RobInKuwait]

Have you thought this through in real terms?

Maybe the accompany chart will help:

Here's how the average tax bill could change in 2009 if either John McCain's or Barack Obama's tax proposals were fully in place.


MCCAIN OBAMA
Income Avg. tax bill Avg. tax bill
Over $2.9M -$269,364 +$701,885
$603K and up -$45,361 +$115,974
$227K-$603K -$7,871 +$12
$161K-$227K -$4,380 -$2,789
$112K-$161K -$2,614 -$2,204
$66K-$112K -$1,009 -$1,290
$38K-$66K -$319 -$1,042
$19K-$38K -$113 -$892
Under $19K -$19 -$567

As you can see, even if someone made 250k, their effective tax would increase by...$12.

Oh NOEZ!

Funny Obama always says 250k is the magic cutoff point, not 227. I understand your point of view, but the issue is not the tax increase, its the difference between someone making 226k and 228k in taxes. People already manipulate their income to avoid taxes. If you have a sharp difference between incomes, it will be easier to manipulate your taxes.

Now that you deflected what I said, I think you can agree that many Americans will try to avoid paying taxes as much as possible. I do. I do whatever I can within the confines of the law to pay as little as possible to Uncle Sam.

That being said, back to the original question, how does Obama's plan work if people manipulate their income and he doesn't bring in enough revenue.

 

[BodyWizard]

Have you thought this through in real terms?

Maybe the accompany chart will help:

Here's how the average tax bill could change in 2009 if either John McCain's or Barack Obama's tax proposals were fully in place.


MCCAIN OBAMA
Income Avg. tax bill Avg. tax bill
Over $2.9M -$269,364 +$701,885
$603K and up -$45,361 +$115,974
$227K-$603K -$7,871 +$12
$161K-$227K -$4,380 -$2,789
$112K-$161K -$2,614 -$2,204
$66K-$112K -$1,009 -$1,290
$38K-$66K -$319 -$1,042
$19K-$38K -$113 -$892
Under $19K -$19 -$567

As you can see, even if someone made 250k, their effective tax would increase by...$12.

Oh NOEZ!

Did you make that up yourself, or did you have help? :whip:

Really, this has no more substance than any of the other "ZOMGZ SKEERY GUY!!!1" stuff thrown from the monkey pit so far.

 

[BodyWizard]

Rob, you raise an interesting set of questions:

- I really don't see anybody trying to LOWER their income in anticipation of an Obama tax plan - shifting income to non-taxable forms, yes; looking for non-cash bennies and perks to "make up the difference", yes.

- Speculation on small-business taxes seems to assume gross receipts, rather than adjusted revenue; personally, I think that's a huge leap - a bridge too far, if you will.

- Big business is in the business of getting around ANY LEVEL of taxation; we could call it the Prime Directive of corporate business: deflect all costs away from the company. OF COURSE they have plans - most of them do not pay the "exorbitant" US corporate taxes in full measure NOW - and will never do so in the future if they can avoid it.

- DEBT WILL INCREASE AND THINGS WILL GET WORSE no matter who's in the White House, no matter who controls Congress. It's far too late to keep these chickens from the roost.

 

[BodyWizard]

I just don't understand how Obama thinks increasing taxes on the 1% who own 90% of the wealth will stimulate growth. People don't invest and spend more when they earn less. Pretty simple.

I understand that you don't understand it. The explanation is in your first sentence: "the 1% who own 90% of the wealth."

Whether those percents are accurate or not, it's a true thing that since Reagan won in '80, the wealth-distribution has shifted dramatically in this country, with the bulk of the wealth becoming concentrated into an ever-shrinking number of ultra-wealthy families.

I no longer have my texts from the period, but historically, too much wealth concentrated in too few hands has a destablizing effect on any society. Extreme concentrations such as we're talking about now reduce the poor to peonage, reduce the middle-class to the level of the working class, and in doing so create a very feudal style of social stratification - and the equivalency between wealth and power that has fueled revolutions through out the world for centuries.

Look around for books by Dr. Ravi Batra - there's a lot to disagree with about his framework & his conclusions, but a lot of the basic research data is sound.

When all wealth is in the hands of the very rich, then all prosperity must flow from the largesse of the very rich; in such a situation, there are really only 2 long-term responses: coddle the lords & ladies and obey them, or topple them & open up the game to others. We fought a revolution ourselves involving these same principles (among others).

Whatever your politics or economic zone, it's a serious consideration.

 

[DougMan]

I'm writing this thread because I actually want to hear if any Obama supporter has thought about how he is going to address what I see as one of the fundamental problem with his tax plan. I'm not interested in discussing the merits of a taxing the rich strategy (everyone who has read my posts knows I disagree with the plan). I'm really interested in hearing about what Obama's plan will mean in real terms, and whether it will have unintended consequences, similar to the ones I predict below.

Kruger mentioned in one of his posts that he thought what would happen under Obama is that Wall Street and the private sector will just look for ways to get around his ungodly high taxes. It got me thinking.

This is what I think will happen:

-Anyone making under $300,000 but over $250,000 will ask their employer to lower their salary to $249,000 as after taxes it will probably be around the same number.

-Anyone making significantly more money than $249,000 will probably look into getting a portion of their income in stock options, benefits, and other forms of compensation to skirt around taxes.

-Small businesses will almost uniformly make $249,000 a year, while reinvesting the rest into the business and in tax write offs. Thats just good business.

-I'm sure big business will have similar strategies as well.

What this will cause:

-Obama is counting on using the current situation for his tax plan to succeed, even though I think there will be a significant dip in over 250k income after his plan is implemented.

-This means that there will be further revenue shortages. Debt will increase. We will be in worse shape.

Any comments?

I think you are misunderstanding tax law. A persons tax bracket and their effective tax rate are two different things. I believe what Barack intends to do is keep taxes for the first 250K the same, but then raise afterwards. So the first 250K you get with say a 35% tax, and then from 250,001+ you will be taxed at 39%.

The first 25K or is taxed at one rate, then the next 15K at another rate etc.

http://money.howstuffworks.com/personal-finance/personal-income-taxes/tax-brackets1.htm

[nomedia="http://www.youtube.com/watch?v=ElPBxiVxVEw"]YouTube - Broadcast Yourself.[/nomedia]


I am not really a Barack fan, but his position on this is not terrible. I would prefer tax and spend versus tax cut and spend. I would much rather prefer a person who would cut spending and taxes, but that seems to be a dream.

 

[Mulletsoldier]

I understand that you don't understand it. The explanation is in your first sentence: "the 1% who own 90% of the wealth."

Whether those percents are accurate or not, it's a true thing that since Reagan won in '80, the wealth-distribution has shifted dramatically in this country, with the bulk of the wealth becoming concentrated into an ever-shrinking number of ultra-wealthy families.

I no longer have my texts from the period, but historically, too much wealth concentrated in too few hands has a destablizing effect on any society. Extreme concentrations such as we're talking about now reduce the poor to peonage, reduce the middle-class to the level of the working class, and in doing so create a very feudal style of social stratification - and the equivalency between wealth and power that has fueled revolutions through out the world for centuries.

Look around for books by Dr. Ravi Batra - there's a lot to disagree with about his framework & his conclusions, but a lot of the basic research data is sound.

When all wealth is in the hands of the very rich, then all prosperity must flow from the largesse of the very rich; in such a situation, there are really only 2 long-term responses: coddle the lords & ladies and obey them, or topple them & open up the game to others. We fought a revolution ourselves involving these same principles (among others).

Whatever your politics or economic zone, it's a serious consideration.

:goodpost: !

 

[EasyEJL]

Whether those percents are accurate or not, it's a true thing that since Reagan won in '80, the wealth-distribution has shifted dramatically in this country, with the bulk of the wealth becoming concentrated into an ever-shrinking number of ultra-wealthy families.

Do you have any statistical evidence of this you can point to? Not disagreeing, just would like to see it. Its one of those talking points that is easy to make, but I haven't seen evidence of.

 

[BodyWizard]

It first came to my attention via the previously-mentioned Dr. Batra, who was tracking shifts in wealth-concentration since the Depression, & comparing those shifts w/ shifts in previous periods. Can't recall the names of his books, though - sorry!

I'm currently trying to plow my way through a bunch of statistical reports (when I'm not trying to earn a living) in an effort to gain more up-to-date info; however, I do from time to time run across references to the shift having accelerated since the 80s, but no data I can confidently point to @ this moment.

I do recall one thing from Batra: that as of the mid 80s, we'd passed the concentration of wealth extant @ the time of the '29 crash - and he thought this was a big ol' alarm bell.

 

[Dwight Schrute]

One statistic I did see and remember is that the poor (forget the income levels) actually has stayed the same in the last 30 years and the middle class has shrunk with the majority moving to a more upper class.

So its actually opposite what most think....I forget where I read it but stuck in my mind.

 

[Mulletsoldier]

One statistic I did see and remember is that the poor (forget the income levels) actually has stayed the same in the last 30 years and the middle class has shrunk with the majority moving to a more upper class.

So its actually opposite what most think....I forget where I read it but stuck in my mind.

Bifurcation of the Middle Class! I have seen this as well; as you said, there is a divergence of the upper-middle class to the 'elite status', and a subsumption of the 'middle class' into the 'working poor'. Slowly, but surely, the Middle Class is ceasing to exist.

 

[EasyEJL]

Is that really true is or is more that the details of what makes up the "standard of living" for a middle class family has gone up faster than middle class income? What I mean are things like size of house, cellphones, cable tv, cars, etc. When I look at it, thats what I tend to see. I look at what people had in 1970 as a middle class family and it seems that more of the gap seems from higher expectation of material objects.

 

[RobInKuwait]

One statistic I did see and remember is that the poor (forget the income levels) actually has stayed the same in the last 30 years and the middle class has shrunk with the majority moving to a more upper class.

So its actually opposite what most think....I forget where I read it but stuck in my mind.

Does anyone else think its no coincidence that this chart correlates with the last thirty years and the lack of class mobility?

I think welfare programs have engendered feelings of helplessness in the poor and made class mobility that much more difficult due to the easier alternatives to working in poor areas.

 

[mmorpheuss]

Does anyone else think its no coincidence that this chart correlates with the last thirty years and the lack of class mobility?

I think welfare programs have engendered feelings of helplessness in the poor and made class mobility that much more difficult due to the easier alternatives to working in poor areas.

The graphs don't coincide, yet both show that we are currently back to pre 1970 levels.

 

[Mulletsoldier]

Is that really true is or is more that the details of what makes up the "standard of living" for a middle class family has gone up faster than middle class income? What I mean are things like size of house, cellphones, cable tv, cars, etc. When I look at it, thats what I tend to see. I look at what people had in 1970 as a middle class family and it seems that more of the gap seems from higher expectation of material objects.

Two factors:

a) The rate at which conspicuous and competitive consumption occurs have raised exponentially - that is, people consuming retail goods in order to aspire to a certain ideal maintained in popular culture (as you said).

b) Real Wage increases ceased in the 1970s, and there is a now a disproportionate relationship between value and purchasing power.

In objective terms, though, the disproportionality between highest 10% and lowest 10% wage classes are due to the bifurcation of the Middle Class.

 

[RobInKuwait]

The graphs don't coincide, yet both show that we are currently back to pre 1970 levels.

Yes, but the damage was already done. I read that welfare helped destroy the nuclear family in urban areas due to the fact that benefits were often tied to being single mothers.

I'd say the best way to ensure the poor stay poor is engender an attitude that if you're a single mother, you will get paid for your troubles. Culture hasn't changed in many urban areas. I see it in Baltimore all the time. 40 year old grandmothers are not a good thing.

 

[RobInKuwait]

Mullet, do you think "progressive" tax plans like Obama's will help or hurt or not effect this class bifurcation?

 

[Mulletsoldier]

Mullet, do you think "progressive" tax plans like Obama's will help or hurt or not effect this class bifurcation?

Honestly, hurt: Obama's temporary fix will only exacerbate the issue for future generations; just as Clinton's Bills have caused this one.

As inept as W. is, this financial crisis is nowhere near his fault, nor the fault of the Republican congress over the past eight years.

 

[glg]

Personally i think everyone is jumping the gun on this. Every election talks about tax reform yet very few actaully move on the issue or if they try they aren't particulary successful. The executive powers do have limitations (regardless of what Bush has or hasn't done). Obama will still have to deal with congress on the issue as well as the courts and ultimately the people/business'. There are so many issues that will confront him i.e the war in Iraq, Afganistan, the push for healthcare reform etc that he will be lucky if tax reform actually makes it to the table much less has the effects he wants or is campaigning on. just review any of the last 1/2 dozen elected executives and reciew their pre-election platforms vs what they actaully did while in office I beleive the issue is actaully moot.

 

[Mulletsoldier]

Personally i think everyone is jumping the gun on this. Every election talks about tax reform yet very few actaully move on the issue or if they try they aren't particulary successful. The executive powers do have limitations (regardless of what Bush has or hasn't done). Obama will still have to deal with congress on the issue as well as the courts and ultimately the people/business'. There are so many issues that will confront him i.e the war in Iraq, Afganistan, the push for healthcare reform etc that he will be lucky if tax reform actually makes it to the table much less has the effects he wants or is campaigning on. just review any of the last 1/2 dozen elected executives and reciew their pre-election platforms vs what they actaully did while in office I beleive the issue is actaully moot.

I agree to a certain point, however: Clinton's policies had a large impact on the current crisis. That being said, he did much more good than harm.

 

[RobInKuwait]

Personally i think everyone is jumping the gun on this. Every election talks about tax reform yet very few actaully move on the issue or if they try they aren't particulary successful. The executive powers do have limitations (regardless of what Bush has or hasn't done). Obama will still have to deal with congress on the issue as well as the courts and ultimately the people/business'. There are so many issues that will confront him i.e the war in Iraq, Afganistan, the push for healthcare reform etc that he will be lucky if tax reform actually makes it to the table much less has the effects he wants or is campaigning on. just review any of the last 1/2 dozen elected executives and reciew their pre-election platforms vs what they actaully did while in office I beleive the issue is actaully moot.

Do you really think a democratic house and senate will be obstacles to Obama's tax plan?

 

[RobInKuwait]

That being said, he did much more good than harm.

In what respect?

 

[glg]

The other point I would put out there is that any economis policy has a large degree of lag time. What is stared under one administration becomes the issue of the next. it is very difficult to change course of such a large ship no matter what the reson 9think about the Titanic). there really isn't such a thing as a quick fix. consider how long it took FDR's programs to really shift the economy even with the public support...some would argue that it really took a war to swing things and then we had a recession afterwards.

 

[EasyEJL]

I agree to a certain point, however: Clinton's policies had a large impact on the current crisis. That being said, he did much more good than harm.

I'll agree that he did some good, HIPAA and NAFTA being good examples, but i'm not sure he didn't do more harm than good. The current financial crisis is largely his fault, the 2001 internet advertising recession was parially his fault, and in many ways 9/11 could be viewed as his fault for not taking action earlier when he had opportunity to. There were a number of prior Al-queda attacks previously including one on the world trade center that weren't followed up on as they should have been, as Clinton was busy trying to entirely dissassemble our military. So i'm not sure that overall his policies were a net positive for us long term. However, I'd gladly take bill clinton again over obama.

 

[glg]

Do you really think a democratic house and senate will be obstacles to Obama's tax plan?

Although it may seem that Bush was able to push through at lot of actions because of the replubican majaority...at the time a lot of his actions were outside of the congressional process/approval. He exerted or created a number of "executive priviledges" that may not stand up to a democratic majority. He also proposed a number of changes that "his" congress shot down. Remeber that the congress is a self serving body not beholden to the executive branch and is very concerned with re-election before any other priority and having a majority will not necessarily give Obama exactly what he wants. for example there will always be "riders" attached to any bill passed by congress that may actually be oppiste or at least in conflict with what the primary portion of the bill might be. So obama will get some of what he wants while at the same time having to accept 'pork' and other riders that he will object to but has to accept along with what he wants. thats why every president has tried to in some way get a line item veto power. bush tried to bypass this by writing on the bills that he didn't have to abide by it thru executive priviledge. what a BS position, congress passes a law that the courts uphold and the Bush says I don't have top if i don't want to..where is the concept of obeying the law?

 

[RobInKuwait]

Although it may seem that Bush was able to push through at lot of actions because of the replubican majaority...at the time a lot of his actions were outside of the congressional process/approval. He exerted or created a number of "executive priviledges" that may not stand up to a democratic majority. He also proposed a number of changes that "his" congress shot down. Remeber that the congress is a self serving body not beholden to the executive branch and is very concerned with re-election before any other priority and having a majority will not necessarily give Obama exactly what he wants. for example there will always be "riders" attached to any bill passed by congress that may actually be oppiste or at least in conflict with what the primary portion of the bill might be. So obama will get some of what he wants while at the same time having to accept 'pork' and other riders that he will object to but has to accept along with what he wants. thats why every president has tried to in some way get a line item veto power. bush tried to bypass this by writing on the bills that he didn't have to abide by it thru executive priviledge. what a BS position, congress passes a law that the courts uphold and the Bush says I don't have top if i don't want to..where is the concept of obeying the law?

9/11 didn't hurt Bush's ability to push through bills either. I see what you're saying though. I have a hard time believing that Dems in congress wouldn't support Obama's spread the wealth plan.

 

[glg]

9/11 didn't hurt Bush's ability to push through bills either. I see what you're saying though. I have a hard time believing that Dems in congress wouldn't support Obama's spread the wealth plan.

The Dems in Congress have the wealth...the Kennedy's just to name one. There are very few "normal/middle class/average income" if any for that matter. Do you really think they are going to vote to spread their wealth? I don't think so.

Don't get me labeled here as I have already mailed my ballot off and this is the first time I marked the slot for president since I voted for Nixon (look how that turned out).

I'm a conservative democrat or a liberal republican...mostly I'm an independent who could not support another 4 years of the current type of administration 9gives you a hint).

I'm just trying to temper my idealism/romanticism with a healthy dose of optimism/pessimisim and hope that it gets better soon!!!!

 

[mmorpheuss]

Yes, but the damage was already done. I read that welfare helped destroy the nuclear family in urban areas due to the fact that benefits were often tied to being single mothers.

I'd say the best way to ensure the poor stay poor is engender an attitude that if you're a single mother, you will get paid for your troubles. Culture hasn't changed in many urban areas. I see it in Baltimore all the time. 40 year old grandmothers are not a good thing.

According to your graph, the dramatic dip back to pre 1970 levels happened before Bush Jr. was ever sworn into office.

So the rise would apparently have been nurtured during the 12 straight years of Reagan/Bush Sr.

 

[RobInKuwait]

According to your graph, the dramatic dip back to pre 1970 levels happened before Bush Jr. was ever sworn into office.

So the rise would apparently have been nurtured during the 12 straight years of Reagan/Bush Sr.

I don't think you can attribute welfare rates to a president. The program was empowered through LBJs Great Society in the late 60s, however, you can see from the graph that it really took off in the early 70s after he left. You'll see there's approximately 25 years between 1970 and 1996, where 5% of the American population is on welfare.

5%. That's a huge number of people. That IS an inner city culture. I'd say that 25 years is more than enough time to engender values in a segment of the population, and if they're getting free money, that value is not working, its that the government is responsible for your subsistence.

I'm not saying this is the only cause of class mobility being lost in the United States, but 5% of the poorest people in the country, losing the values of family, work, and independence certainly didn't help matters.

 

[mmorpheuss]

I don't think you can attribute welfare rates to a president. The program was empowered through LBJs Great Society in the late 60s, however, you can see from the graph that it really took off in the early 70s after he left. You'll see there's approximately 25 years between 1970 and 1996, where 5% of the American population is on welfare.

5%. That's a huge number of people. That IS an inner city culture. I'd say that 25 years is more than enough time to engender values in a segment of the population, and if they're getting free money, that value is not working, its that the government is responsible for your subsistence.

I'm not saying this is the only cause of class mobility being lost in the United States, but 5% of the poorest people in the country, losing the values of family, work, and independence certainly didn't help matters.

Of course you can attribute this to administrative policies.
Either the implementations empower individuals to wean themselves of dependence or they don't. In between those two distinct opposites the pendulum is definitely swung one way or the other.

 

[Mulletsoldier]

I'll agree that he did some good, HIPAA and NAFTA being good examples, but i'm not sure he didn't do more harm than good. The current financial crisis is largely his fault, the 2001 internet advertising recession was parially his fault, and in many ways 9/11 could be viewed as his fault for not taking action earlier when he had opportunity to. There were a number of prior Al-queda attacks previously including one on the world trade center that weren't followed up on as they should have been, as Clinton was busy trying to entirely dissassemble our military. So i'm not sure that overall his policies were a net positive for us long term. However, I'd gladly take bill clinton again over obama.

Well, let us not elaborate too much, lest we appear bias. Clinton's administration did not pull the trigger - so to speak - on al-Queda when they had that chance, however: They handed their intelligence to the Bush Administration on a silver platter.

9/11 was the result of a lack of foresight and arrogant foreign policy approach by Bush and his advisors - really, a misinterpretation of secret intelligence that so characterized that particular administration as a whole.

In terms of Military, I believe that is simply factually incorrect: In 1999 Clinton called for a 110-billion increase in Military spending over six years; disassemble - or even attempt to disassemble - the Military he did not. While this is a common misconception about the Clinton administration it is simple factually inaccurate. And, in fact, Republicans at the time lauded that particular portion of the Clinton Act (though disliked others, naturally).

Finally, in respects to the current financial crisis, Clinton's introduction of several pieces of legislation that 'encouraged' large, government-backed Insurance Firms (such as Freddie Mac) to aggressively loan did in fact contribute here. However, I find it quite ironic that as such a proponent of free-markets, rational self-interest, and a 'pick yourself up by your bootstraps mentality', you readily abandon the aforementioned viewpoints in this scenario; apparently, in your eyes, former President Clinton forced individuals to take on mortgages they could not afford!

 

[Dwight Schrute]

In terms of Military, I believe that is simply factually incorrect: In 1999 Clinton called for a 110-billion increase in Military spending over six years; disassemble - or even attempt to disassemble - the Military he did not. While this is a common misconception about the Clinton administration it is simple factually inaccurate. And, in fact, Republicans at the time lauded that particular portion of the Clinton Act (though disliked others, naturally).

But this was after his major decreases that funded the large majority of the increased in spending on welfare and education. He cut military spending by a large % his first term. His second term was mainly a fix of some his worst mistakes of his first term....but thats also consistent with most two term Presidents.


...plus much of this arguemtn is based on the premise the President actually does have a major impact on the economy. Looking back thorugh history, they rarely have a major effect. There was nothing Clinton did during his terms that had a major impact on the economy (during that time) and as you can see most economic problems/fixes have a pretty long delay in terms of effects.

 

[mmorpheuss]

Well, let us not elaborate too much, lest we appear bias. Clinton's administration did not pull the trigger - so to speak - on al-Queda when they had that chance, however: They handed their intelligence to the Bush Administration on a silver platter.

9/11 was the result of a lack of foresight and arrogant foreign policy approach by Bush and his advisors - really, a misinterpretation of secret intelligence that so characterized that particular administration as a whole.

In terms of Military, I believe that is simply factually incorrect: In 1999 Clinton called for a 110-billion increase in Military spending over six years; disassemble - or even attempt to disassemble - the Military he did not. While this is a common misconception about the Clinton administration it is simple factually inaccurate. And, in fact, Republicans at the time lauded that particular portion of the Clinton Act (though disliked others, naturally).

Finally, in respects to the current financial crisis, Clinton's introduction of several pieces of legislation that 'encouraged' large, government-backed Insurance Firms (such as Freddie Mac) to aggressively loan did in fact contribute here. However, I find it quite ironic that as such a proponent of free-markets, rational self-interest, and a 'pick yourself up by your bootstraps mentality', you readily abandon the aforementioned viewpoints in this scenario; apparently, in your eyes, former President Clinton forced individuals to take on mortgages they could not afford!

:goodpost:

And you can get your focus dirt right here folks!

:toofunny:

 

[Dwight Schrute]

...and lets not forget that a good amount of the surplus created in the first 2 years was a result of the first Bush's tax increases....an increase that got him booted out of office.


"Read my Lips, No New Taxes".


Economies don't ebb and flow within 4 year time periods.

 

[EasyEJL]

apparently, in your eyes, former President Clinton forced individuals to take on mortgages they could not afford!

Well the CRA forced the banks to write loans to unqualified individuals. Part of the reason the people were unqualified for loans of the size of mortgage loans was because they showed no history of responsible credit use. So although Clinton (and that is showing my partisanship as the republican led congress is also to blame) didn't force individuals to take the loans, he did force the banks to write the loans to them which they previously wouldn't do. My feeling is that the bailout shouldn't have happened, at best the government should have given a special exemption for allowing banks to write off double their actual loss on forclosures if they were all complete by say 12/31/2008 and flushed all this out of the system. The problem hasn't solely been the foreclosues themselves, but its the length of time they have been dragging on, and the slow nature of the sales. The banks are not enjoying the losses they have to take, so they are slow on sales, slow to lower prices which is extending the length of time this will go on.

I feel that anyone who bought a house they can't afford should be foreclosed on. Its not a case of "people loosing their homes" as for the most part its not like they have been in the home more than a few years. Its no different than someone making 40k a year somehow managing to get financing approved for a Maserati, and realizes they can't make the $1500 a month payment - it gets repossessed.


And as far as dissasembling the military, as a percentage of GDP our spending on military went down significantly. So although there was an increase that wasn't keeping up with GDP.

 

[Mulletsoldier]

But this was after his major decreases that funded the large majority of the increased in spending on welfare and education. He cut military spending by a large % his first term. His second term was mainly a fix of some his worst mistakes of his first term....but thats also consistent with most two term Presidents.

True, I suppose I should have clarified: In aggregate terms, Clinton did not deconstruct the Military.

...plus much of this arguemtn is based on the premise the President actually does have a major impact on the economy. Looking back thorugh history, they rarely have a major effect. There was nothing Clinton did during his terms that had a major impact on the economy (during that time) and as you can see most economic problems/fixes have a pretty long delay in terms of effects.

The next President will have less substantial impact on the direction of the economy than many Presidents of TNCs, and Supra-nationals; the economy, in some respects, is a 'behind-the-scenes' affair, while being presented in large parts as being driven by spontaneous order.

That being said, the lack of regulation on Freddie Mac and Fannie Mae during his administration directly precipitated the current mortgage crisis. Lending Institutions do not make a profit on Maverick tactics; they stay afloat by making investments they will receive a return on. Lending to whomever is not a market-driven choice, but somewhat the result of Government action.

 

[Dwight Schrute]

True, I suppose I should have clarified: In aggregate terms, Clinton did not deconstruct the Military.

In his first 4 years he certainly "gutted it". Tax increases and cuts in miltiary spending created his surplus that so many people like to talk about. That's about the bulk of the Clinton economic policy in terms of balancing the budget. Much of the later numbers are inlfated due to the internet boom.

That being said, the lack of regulation on Freddie Mac and Fannie Mae during his administration directly precipitated the current mortgage crisis.

Which is similar to asking Wall Street to regulate Wall Street....

The sad part is the people who created this mess are creating the fix for it and most people simply have no idea that its occurring.

Lending Institutions do not make a profit on Maverick tactics; they stay afloat by making investments they will receive a return on. Lending to whomever is not a market-driven choice, but somewhat the result of Government action.

I'm speechless. Mullet actually repeating what I've been stating for months!!

...but in a historical perspective, this was a perfect storm that happens very rarely.

 

[EasyEJL]

And as far as dissasembling the military, as a percentage of GDP our spending on military went down significantly. So although there was an increase that wasn't keeping up with GDP.

 

[Dwight Schrute]

I feel that anyone who bought a house they can't afford should be foreclosed on. Its not a case of "people loosing their homes" as for the most part its not like they have been in the home more than a few years. Its no different than someone making 40k a year somehow managing to get financing approved for a Maserati, and realizes they can't make the $1500 a month payment - it gets repossessed.

The difference is the Maserati doesn't have an effect on the value of your neighbors car.

Foreclosures kill surrounding property values.

 

[Mulletsoldier]

In his first 4 years he certainly "gutted it". Tax increases and cuts in miltiary spending created his surplus that so many people like to talk about. That's about the bulk of the Clinton economic policy in terms of balancing the budget. Much of the later numbers are inlfated due to the internet boom.

First four years, most definitely! However, as you said, in his later term this trend was in large part rectified.

Which is similar to asking Wall Street to regulate Wall Street....

The sad part is the people who created this mess are creating the fix for it and most people simply have no idea that its occurring.

Very unfortunate, indeed. Wall Street has more blame in this than either the populous, or any administration, however; we must always remain aware to all factors that may precipitate an event. Greed + Government encouragement for unsound loans + an 'American Ideal' of home ownership = current situation.

I'm speechless. Mullet actually repeating what I've been stating for months!!

...but in a historical perspective, this was a perfect storm that happens very rarely.

One must speak the truth where it is needed! While I am by no means a free-market propagator, banks are the business of making profit vis-a-vis exchanging values; they are not going to habitually exchange high-value investments with low-value returns without some type of external encouragement. Interest Rates are all well-and-fine as profit mechanisms, but they do not serve a function without the initial loan being payed back in full!

 

[EasyEJL]

The difference is the Maserati doesn't have an effect on the value of your neighbors car.

Foreclosures kill surrounding property values.

True, but most of the property values over the last x years have been unrealistically inflated, so this is all part of a necessary correction.

 

[Dwight Schrute]

True, but most of the property values over the last x years have been unrealistically inflated, so this is all part of a necessary correction.

Not necessarily. The majority of the value increase was 2002-2005. Many of these values now are dropping to pre 2000 values. You are seeing a half decade of home buyers get screwed....because of a 2-4% default rate.

 

[Dwight Schrute]

First four years, most definitely! However, as you said, in his later term this trend was in large part rectified.

Wasn't even close. It was minimal at best.

Very unfortunate, indeed. Wall Street has more blame in this than either the populous, or any administration, however; we must always remain aware to all factors that may precipitate an event. Greed + Government encouragement for unsound loans + an 'American Ideal' of home ownership = current situation.

It was more government led to greed exploiting it. The ideology behind this wasn't greed. It was a push to be more fair all the way back to Carter. Liberal policies almost always have "good intentions" but often contrast reality.

One must speak the truth where it is needed! While I am by no means a free-market propagator, banks are the business of making profit vis-a-vis exchanging values; they are not going to habitually exchange high-value investments with low-value returns without some type of external encouragement.

In short, fines.

 

[EasyEJL]

It was more government led to greed exploiting it. The ideology behind this wasn't greed. It was a push to be more fair all the way back to Carter. Liberal policies almost always have "good intentions" but often contrast reality.

there is no fairness in injecting socialism into one of the core areas of capitalism - lending + credit.... The entire purpose of the CRA was in theory to avoid discriminatory lending yet the only evidence of discriminatory lending was a single faulty study done which showed low income blacks as disproportionately being denied loans. When the study was reviewed and credit scores were counted as part of the study, there were no signs of discrimination.

 

[Mulletsoldier]

It was more government led to greed exploiting it. The ideology behind this wasn't greed. It was a push to be more fair all the way back to Carter. Liberal policies almost always have "good intentions" but often contrast reality.

Well, this is exactly what I stated, lol.

The encouragement for shaky loans was government-backed, due to the ideology that each American should own a home. This drive, as you have stated, extended far back prior to Clinton. The greed aspect was the private sector capitalizing (some would say, rightfully so) on this foolish government initiative.

Almost every governmental body in the 'free world' operates under the assumption that their policies are 'good intentions'; the absurdity of how each position is disconnected from reality is ubiquitous as well. Assuming one position or the other is more connected with reality is an act of bias, rather than objectivity.

 

[EasyEJL]

Assuming one position or the other is more connected with reality is an act of bias, rather than objectivity.

True, in a political choice between two candidates you are making the choice of "Do I want to get fcked in the ear, or do I want to get fcked in the eye", its not pretty either way.

 

[Mulletsoldier]

True, in a political choice between two candidates you are making the choice of "Do I want to get fcked in the ear, or do I want to get fcked in the eye", its not pretty either way.

LMAO.

Very eloquently and accurately put it; could not have said it better myself!

 

[BodyWizard]

Not necessarily. The majority of the value increase was 2002-2005. Many of these values now are dropping to pre 2000 values.

Not quite.

I bought my house (1600 sq.ft, 3BR, 2BA, single-floor) in June, 2000. By 2006, the street value went up from 140K to 170k. 5 years before, my sister had sold a house in the same neighborhood for slightly more than half what I paid for mine: 75k. She bought it around '88, when this was "a neighborhood in recovery", for roughly 38k.

Right now, the much-larger house next to me (5BR, 3BA, 3 floors, in-law suite) has been on the market for months, and they're trying to get 195k. The 'value' of my house now is somewhere between 95k & 120k - at best, 10k less than I owe on it. At worst, the amount of the cash down-payment my ex-wife stole from me.