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Dear Congress, Do Something Part 2

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September 02, 2011 – Comments (14) | RELATED TICKERS: SPY

On Wednesday next week there is a Republican Presidential debate.  You will hear that we can't raise taxes and the government can't spend money.  You'll also hear that cutting the debt will stimulate economic growth.  That's garbage.  Complete foolhardy dogma.  

It is time for Congress to stop focusing on getting rid of a President who helped bring moderate common sense regulation back the financial industry whose lack of regulation under the last President helped cause the biggest financial collapse in global history, who made going to college more affordable, who brought health insurance to millions of children and young adults, who improved oversight of oil drilling in the gulf while increasing domestic drilling, who made the federal government more efficient, who increased small business lending, who gave small business hope with regard to health insurance cost reductions, who started to wind down Iraq and Afghanistan... and start focusing on doing their damn job.

The current Congress, the House in particular, is the problem with government, not the President.  This new group of Republican Reps and the Speaker are both engaging in political brinksmanship that threatens, see today's jobs news, to plunge us from a soft patch to an outright downward spiral that leads us back to the brink of a deep depression.  They are more focused on next year's election than doing what is necessary to help America through.  That is not only wrong, it is immoral to the point of stirring measurable violent outbreaks throughout America by people who are disaffected and feel that is their only course.

Let's be very clear, while the President can propose all he wants to, the Congress has to act.  It is Congress' responsibility to deal with financial policy.  They need to do it.  Now.  The problem is that a group that is part from the group that led up to the collapse and part even worse, are in a position of power again and going back to the old playbook.

In my fairly well educated economic opinion, we need five things:

1. We need a long term infrastructure building program that not only includes roads and bridges, but also several major water projects, i.e. in Chicago and on the east coast, and an accelerated modernization of the energy grid.  Something on the level of a trillion dollars over ten years, front loaded.

2.  We need a subsidy to banks that write down debts on mortgages where they refinance for somebody who currently does not have enough equity to currently refinance.  This would make millions of people eligible to refinance who otherwise qualify, put the floor in on real estate and set the stage for stability and growth again.

3.  We need an energy policy that completely eliminates ethanol subsidies as that will add stabilization to food prices and drive the move to alternative energies subsidy free- improved technologies are at the door as any real fool knows.  

4.  We need to make the income tax code permanent.

5.  We need to close the loopholes in the tax code to pay for it all.  IN particular, we need to get rid of the cap gains, carried interest and stock options in place of income cheat.  Income is income and should be taxes as such.  If you don't have your own invested money at risk, you should not get the cap gains rate.  Special interest breaks need to be almost completely wiped out, there are only a few that add to employment, which ought to be the barometer.

To all those who want to cry, "the government doesn't create jobs, business does, all the government can do is create an environment, blah, blah, blah."   Wake up.  Shut up.  Read a book.  Here's your new environment. 

Of note, I am a long time very avowed moderate.  I have voted both ways.  It is clear to me that the Republicans, who mostly made the financial and economic mess are erring badly right now. We need a strong Republican party.  Today's party is not the party of Teddy Roosevelt, Ike or Reagan.  It is the party of George W. Bush, which is beyond an idiotic strategy as Bush will go down as one of the worst Presidents, if not the worst, in history. 

For the Republicans, it starts by being smarter.  It has started to show up all over how dumb and blinded by ideology that the Republican right has become.  Please, please, let the debate be guided by Ron Paul and especially John Huntsman who at least are smart.  Get rid of Rick Perry, Michelle Bachmann and Sarah Palin who are ideological whack jobs seeking power for personal gain with minimal intellectual power.

By the way, if House Republicans continue to stonewall and stick to anti-common sense mantra,they will lose next year, massively as the disaffected and irritated hit the polls in record numbers.  If for no other reason than saving the Republican Party, please Repubs, move to the center, and allow Congress to do something that makes sense.

14 Comments – Post Your Own

#1) On September 02, 2011 at 10:03 AM, edwjm (99.87) wrote:

This either is, or is very close to, the best political post ever to appear on CAPS !!

 

If the Republican party insists on sticking to it current idiotic tea bagger idiology, it will self-destruct and loose its ability to function as the loyal opposition to the Democratic party.

 

I suggest that those that have difficulty understanding the way these things work get out their history books and study what happened to the Whig party in the mid 1850's.  The Whig party was the previous opposition to the Democrats.  It was its demise that led to the rise of the current Republican party.

 

If you want to go back further, study the 1820's, another period when the Democratic party had no significant opposition.  If this country is to have a meaningful two party system, the current Republican party with its current idiology will have to be revised or replaced.

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#2) On September 02, 2011 at 10:52 AM, PeteysTired (< 20) wrote:

There is really no fundemental difference between Repubs and Dems.  They all love a very large and controlling federal gov't and the proof is its current size.

If you think a larger federal gov't is needed or they somehow need to do gov't better at its current size, then I think that is nuts.  I have no idea what the right size of the federal gov't should be, but this clearly is too big for me.

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#3) On September 02, 2011 at 10:55 AM, kirkydu (92.86) wrote:

way to address nothing in the post Petey.  BTW, the federal gov'ment got smaller under Clinton and Obama, but bigger under G.W. Bush.  Interesting huh.

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#4) On September 02, 2011 at 11:12 AM, mtf00l (49.00) wrote:

"nuts"

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#5) On September 02, 2011 at 12:13 PM, ocsurf (< 20) wrote:

"In this present crisis, government is not the solution to our problem; government is the problem."-Ronald Reagan

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#6) On September 02, 2011 at 12:28 PM, JaysRage (89.07) wrote:

I agree with some of what you said.     I'm a Repulican, and I'm not a fan of the current Republican economic positions.    I'm no fan of the Democratic positions either.   Frankly, neither party has made jobs a priority, which is horrifying, considering the current economic climate.    I don't see how the President cannot be held accountable for doing nothing for 2 1/2 years.   His agenda priorities were clear.   Pass health care.   Push through a liberal social agenda.    Expand the war in Afghanistan.  Expand the EPA and it's control on environmental issues.   Done.   There was a stimulus in there, but it wasn't focused on job creation and it FAILED.   On top of that, the Health Care and EPA moves had stifling effects on the economy.    Obama ignorantly could not determine the difference between spending and stimulus.  Color me unimpressed.     

Obama is not a leader, he's a campaigner.  He does not create full proposals.   He does not create compromise.    He does not understand deep economic issues.  In the one instance where he actually had a chance to create compromise, he backed out from his position and left the Republicans hanging out to dry on the debt compromise.....WHICH was only an issue because he has not submitted a budget, which is where this type of debate is supposed to happen.   Obama has no plan.   So.....we'll see what happens on Thursday.   We'll see if he has real innovative ideas on how to spur job growth......ideas that are targeted job creation agendas and not just spending.     We just suffered through the most liberal Congress in recent history, so it's not like the Democratic position is one of compromise here.    

OK.   Now the Republicans.     While I have no issue with the debt ceiling increase being the place where budget issues are addressed, since it is the only avenue allowed when the President doesn't actually submit a budget, I also don't like the stance that they ended up taking.    Refusing to increase taxes under any circumstances really is a non-starter.   Refusing to raise taxes on the rich in an era where we are currently at one of the lowest tax rates in history does not make sense.    Using a repeal of the Bush-era tax cuts on the uppser class as a point of a bargain for spending cuts makes so much sense it hurts.   Refusing to support banking reform after the near-Depression that we just endured makes no sense.   Spending needs to come down, but taxes also clearly need to rise.    Too-big-to-fail needs to be taken off the table.   The war in Afghanistan needs to end now and therefore military spending needs to decrease dramatically.  Oil and Ethanol subsidies need to die.   In an era of $80 oil and $3.50 gas, there is no need for subsides for energy.   This is not a problem.   

I agree with you that the Republican party is broken, but I'm no fan of the unbridled ultra-left Democratic agenda that we currently sit with either.   The Dems controlled Congress for 2 years and spent wildly and produced nothing but a liberal social agenda and a horrible and unconstitutional Health Care plan and an expanded Afghanistan war that now appears unwinnable, despite the elimination of the primary target in Osama Bin Laden.    

In summary, the position of both parties stink, and reasonable common ground is ruled out before it begins.    BOTH SIDES neeed to move to the middle for any compromise to begin.    Let's not pretend that the Democrats are moving to the center and the Republicans aren't.   Both sides have dug in. 

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#7) On September 02, 2011 at 12:34 PM, mtf00l (49.00) wrote:

Speaking of Bin Laden, I'm sure we'll find Gaddafi in Pakistan as well.

Vote for none of the above.  Or, write in mtf00l in 2012. :D

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#8) On September 02, 2011 at 6:16 PM, rofgile (99.44) wrote:

I am actually surprised, several years later, to consider that maybe Paul Krugman was right with arguing for a 1.2 trillion stimulus instead of the 700 billion.  

Looking back, I think that number of 1.2 (with 500 billion more in infrastructure such as high speed rail), perhaps would have been the correct fit for how bad things really are.

---

 Here's my list of world wide issues currently burning:

  1) European mismanagement.  Solvency issues for 3 major countries.

  2) UK and Ireland issues.  Austerity, and solvency.

  3) Euro austerity.

  4) Japan having the worst nuclear crisis since Chernobyl.

  5) China slow down, as worldwide demand from Euro and US is slowing due to austerity, etc.

  6) 2010 issue - gulf oil spill and resulting economic damage.

----

 These last 2 years have been full of potholes.  If we wouldn't have had the Japan crisis and the Gulf crisis, perhaps we would be much further now.  Similarly, if we didn't have the Eurozone crisis we would all be doing much better.

 These were unforseen issues, but in hindsight, a bigger package started in 2009 could be helping a lot now in 2011 and 2012.

 -Rof 

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#9) On September 02, 2011 at 8:36 PM, devoish (96.00) wrote:

Kirkydu,

I think Government could do more, but I would take that in a second if you restore Clintons taxes, and in a two seconds over any other deal on the table even without sustainable taxation.

Best wishes,

Steven

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#10) On September 03, 2011 at 8:26 AM, MoneyWorksforMe (< 20) wrote:

If more fiscal stimulus is the answer, why was the $800 billion stimulus package such a profound failure?

"We need a long term infrastructure building program that not only includes roads and bridges, but also several major water projects, i.e. in Chicago and on the east coast, and an accelerated modernization of the energy grid.  Something on the level of a trillion dollars over ten years, front loaded."

Isn't this almost exactly what politicians were touting the $800 bill stimulus would do if enacted? 

And, lastly , someone arguing for more stimulus, without mentioning the U.S. national debt once, and recent levels of deficit spending, is sidestepping the greatest issue... 

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#11) On September 03, 2011 at 9:35 AM, kirkydu (92.86) wrote:

@mtf

on your nose?

@ocsurf

no, the problems in this country were lack of regulation which allowed a lot of people to steal and a tax code which rewarded hoarding over productivity.  We need good gov'ment, not no gov'ment.

@Money

apparently you listen to Faux.  No, the stimulus mainly went to keep state and local governments functioning.  It made no sense to shut those down and pay the folks unemployment instead.  Only about $150m went to building things. We should have done a large infrastrucutre bill over a year ago though.

The debt is not America's greatest issue.  Not by a long shot.  While over time we need to pare debt, it is not some emergency we face today.  The emergency today is getting people back to work and growing the economy. 

It takes capital to do that.  What government needs to do is contract out and/or provide loan guarantees for the things we need done anyway.  Quickly.  That would put a couple million back to work within a year and five to ten million more within a few years. 

Presuming the world keeps growing in order to raise standards of living, i.e. BRICs and their neighbors, all we need is to rebuild our infrastrucutre as a bridge to better time.  We'll need the infrastrucutre anyway right. There will be new manufacturing, service and alternative energy jobs from a boom in the 2020s and 2030s to keep it all going.

BTW, to all the debt hawks, if we simply flatten the budget and get growth back to about 4% all of our debt issues fade away.  That''s why the debt is a big issue, but far from the biggest.  As for entitlements, which I know is the buzz word the past year, yes, we need to tie welfare to work for the able bodied and almost eliminate COLA on social security and medicare.  We also need to flatten defense spending.

@rof

absolutely Krugman was right, again.  

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#12) On September 03, 2011 at 12:30 PM, MoneyWorksforMe (< 20) wrote:

"apparently you listen to Faux.  No, the stimulus mainly went to keep state and local governments functioning.  It made no sense to shut those down and pay the folks unemployment instead.  Only about $150m went to building things. We should have done a large infrastrucutre bill over a year ago though."

So wait a second....You're telling me that less than 2% of the stimulus went to infrastructure projects?! I'd love to see a source on that...But for arguments sake lets say you are correct... In your proposal you want 1 trillion to go to infrastructure projects, but that would mean letting states and local governments fail, as they are in even worse shape than they were prior to the last stimulus bill. And you just said that bailing out state and local governments was a priority, so something's gotta give...

"The debt is not America's greatest issue.  Not by a long shot.  While over time we need to pare debt, it is not some emergency we face today.  The emergency today is getting people back to work and growing the economy."

You're not understanding my point. It is the greatest issue in terms of being able to get the political will to implement more stimulus...

I also believe the debt is the greatest mid to long term issue, and jobs are the priority in the immediate term. I think you are understating the current path we're on. This isn't like just over the past year or so that debt and deficits have been getting out of control. This trend goes back decades, and it is accelerating, quickly. A few more years of this, and we'll have A LOT more to worry about than just jobs...

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#13) On September 05, 2011 at 3:17 AM, kirkydu (92.86) wrote:

@money

$150m into $800m is18.75%

http://www.cbo.gov/publications/collections/collections.cfm?collect=12

As it turns out, my numer was high by about double.

Yes, I agree, there is a lack of will driven by ideology, political aspiration and stupidy, this time, primarily on the Republican side.  

I don't know if I posted it here, but every 1% of GDP growth if we bend the spending curve towards flat over a decade and we at balanced budgets in a decade and back in very good shape.  We can't get there with cuts alone, no matter what Republican Presidential candidates say.  It will take a stimulus plan, budget cuts and increased tax revenue.  If any of those things are missing a year from now, we are headed down a bad path because things will start to spiral out of control, in which case, we might in fact lose another decade, or two.

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#14) On September 05, 2011 at 3:18 AM, kirkydu (92.86) wrote:

ooops, every 1% of GDP reduces the budget deficit about 20% if we bend the curve back.

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