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Old 02-05-2009, 04:24 PM   #1
Nimrod's Son
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Default The "Stimuluses"

CNN || Commentary: Libertarian ideas to stimulate economy

Commentary: Libertarian ideas to stimulate economy

By Jeffrey A. Miron Special to CNN
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UPDATED: 10:12 AM EST 02.05.09

CAMBRIDGE, Massachusetts (CNN)
When libertarians question the merit of President Obama's stimulus package, a frequent rejoinder is, "Well, we have to do something." This is hardly a persuasive response. If the cure is worse than the disease, it is better to live with the disease.

In any case, libertarians do not argue for doing nothing; rather, they advocate eliminating or adjusting policies that are bad for the economy independent of the recession. Here is a stimulus package that libertarians can endorse:

Repeal the Corporate Income Tax: Repeal would spur investment, improve the transparency of corporate accounting, slash compliance costs, and avoid the distortions caused by the special-interest provisions in the tax code. Repeal can work fast, by raising companies' share prices, increasing cash flow, and allowing corporations to lessen their need for bank lending.

Thus repeal provides short-run stimulus and enhances long-run efficiency. Recent estimates suggest that tax cuts are at least as effective as spending increases in raising GDP. The adverse impact on the deficit is likely to be less than the $300-$350 billion in revenue the corporate tax takes in per year, since repeal spurs growth and therefore the revenue from other taxes.

Increase Carbon Taxes While Lowering Marginal Tax Rates: Reasonable people disagree about how much the U.S. should reduce its use of fossil fuels, but crowded highways, air pollution, and global warming all suggest that some reduction is desirable.

The effective way to accomplish this is higher gasoline or other carbon taxes, not the messy, complicated green spending in the Obama plan that will morph into pork in many cases. If higher carbon taxes are combined with lower marginal tax rates, the private sector faces better incentives on both counts. This approach avoids the higher deficits implied by Obama's green initiatives.

Moderate the Growth of Entitlements: The elephant in the room amidst the stimulus debate is the impending imbalance in Social Security and Medicare as the baby boom generation moves into retirement. Without reductions in benefits, taxes will have to increase substantially, generating a major drag on the U.S. economy.

A reasonable response is to raise the age of eligibility for Social Security and Medicare, consistent with the increases in life expectancy and health that have occurred in past decades.

This restructuring would reassure markets about the U.S.'s long-run fiscal balance. This means foreigners will continue to be willing to hold U.S. debt, so U.S. borrowing costs will remain moderate.

Eliminate Wasteful Spending: Most discussion of the stimulus focuses on areas where, according to proponents, government spending should be higher. Much current expenditure, however, is wasteful.

Examples ******* agricultural subsidies, bloated transportation projects like the Big Dig in Boston, misguided infrastructure projects like the New Orleans levees (why encourage people to live below sea level?), ineffective weapons systems, pork barrel spending, and subsidies for Amtrak and the Post Office (buses are more efficient than railways, and Fedex is more efficient than the Post Office).

Everyone knows the U.S.'s long-run deficit picture is dismal. We should address this by cutting inefficient spending now.

Withdraw from Iraq and Afghanistan: President Obama plans to withdraw U.S. forces from Iraq over the next eighteen months, while expanding U.S. involvement in Afghanistan. It is hard to see, however, that any good arises from dragging out our Iraq exit or from staying in Afghanistan. The government should move toward faster withdrawal, and from both countries. The U.S. can redeploy these troops where useful, or release the resources to civilian uses.

Limit Union Power: Later this year, Congress is likely to vote on the card check bill, a new law that facilitates unionization. The law eliminates the presumption of a secret ballot, which means union organizers can pressure employees into accepting representation.

Laws that protect unions are problematic. Unions raise wages above market levels, increasing unemployment. Thus the Obama administration can signal American business that it cares about efficiency, not just redistribution of wealth, by opposing the card check bill. Better yet, it can repeal the Davis-Bacon Act, which inflates labor costs in federal contracts.

Renew the U.S. Commitment to Free Trade: One crucial danger in the current environment is that the U.S. and other countries will embrace protectionist policies. The U.S. enacted prohibitive tariffs during the Great Depression, and many trading partners retaliated. World trade plummeted, contributing to the economic misery.

The Obama fiscal stimulus risks reviving this insanity, since both the House and Senate bills require that certain stimulus-funded projects use U.S. equipment and goods. The administration should oppose these provisions. More generally, President Obama and his economic advisors should state -- no, scream -- that America is unambiguously committed to free trade.

Expand Legal Immigration: Radical changes in immigration policy seem unlikely in the near future, but one specific change is compelling: an increased quota for H-1B visas, which go to workers with technical skills seeking employment in U.S. industry. The annual quota for such visas was 195,000 as recently as 2000, but it now stands at only 65,000.

A major increase in this quota would be a boon to American scientific and engineering productivity. More broadly, expanding immigration is the most effective method the U.S. has for aiding poor citizens of foreign countries and for influencing repressive governments.

Stop Bailing out Businesses that Took on Too Much Risk: Popular opinion blames deregulation and private sector greed for the financial meltdown, but the reality is more subtle.

Existing regulation was ineffective at preventing excessive risk-taking, and the private sector did its best to profit from the incentives that were in place. The extreme increase in risk-taking, however, would not have occurred absent policies that encouraged such risk (e.g., Fannie Mae or the Fed's reassurances about housing bubbles) or past bailouts that cushioned the losses from private risk-taking.

One crucial response to any crisis is learning to avoid the next one. The lesson this time is that rewarding risk generates more risk. The U.S. should therefore stop bailing out banks, automakers, homeowners, or anyone else.

The libertarian view, then, is that many desirable policy changes involve less government, not more. Even changes that are inconsistent with the Keynesian stimulus framework, such as reductions in military spending, make sense when the spending is wasteful.

It is tempting to believe that every problem has a solution, but the reality is not so nice. It is possible, even likely, that the best we can do is fix things we know how to fix, and then get out of the way. This may not ameliorate the current situation, but it avoids making things worse. In economics as in medicine -- first, do no harm.

The opinions expressed in this commentary are solely those of Jeffrey Miron.

 
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Old 02-05-2009, 06:03 PM   #2
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did you read that at all because i'm going to bet you just saw the headline and cut and pasted it.

 
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Old 02-05-2009, 07:26 PM   #3
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Of course I did. I disagree with a couple of points but overall it's a hell of a lot better than what's currently proposed.

 
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Old 02-06-2009, 11:12 AM   #4
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I believe the part about getting rid of the "buy American" clause. That alone would really improve the quality and lower the cost of what is being purchased in this bill. The south Koreans are capable of making some things that are vastly superior to the comparable US product, and they should not be kept out of this process. Same is true with Japan and Germany.

This guy is on the right track but is still wrong. The only way to truly stimulate the economy would be to bring all federal taxes down to 0% for 2 years, including corporate, income, and capital gains taxes. No income tax at all, not even on rich people. Then you have a small 3% national sales tax on all items, and use that money to service the debt for the next to years. All other government spending is financed for 2 years. This would spark the greatest rebound since mankind existed.

 
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Old 02-06-2009, 12:32 PM   #5
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amazing why didn't anyone think of this before

 
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Old 02-06-2009, 02:23 PM   #6
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Originally Posted by Debaser View Post
amazing why didn't anyone think of this before
People have but something like that would never happen while the two parties are beholden to handing out money to their personal special interests.

 
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Old 02-07-2009, 04:23 AM   #7
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that and the fact that nobody wants to know what happens when a country goes bankrupt.

i mean someone has to pay for the federal budget and if we suspend federal income taxes we're still taking out a trillion dollar loan so fuck are you really this dumb

 
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Old 02-07-2009, 06:50 AM   #8
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Originally Posted by Nimrod's Son View Post
I disagree with a couple of points but overall it's a hell of a lot better than what's currently proposed.
...

 
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Old 02-07-2009, 12:28 PM   #9
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Only positive of this bill is the housing stimulus we were able to get pushed through.

That'll be more beneficial than anything else in this heaping pile of shit.

 
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Old 02-07-2009, 12:48 PM   #10
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the $15,000 housing credit is just screaming for abuse by house flippers.

 
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Old 02-07-2009, 01:00 PM   #11
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It must be repaid (with interest, in some cases) if the house is sold/transferred within two years.

 
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Old 02-07-2009, 01:13 PM   #12
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how many people are going to game this by selling their home to a relative or friend just to get that 15k?

 
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Old 02-07-2009, 01:42 PM   #13
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Maybe 1 or 2 percent? Even by doing so, it's creating income for a huge sector (arguably the most important in the country) that is in desperate need of a lift.

 
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Old 02-07-2009, 02:55 PM   #14
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i hope your right. It will at least push anybody that is sitting on the fence to buy a home, but its not like there's a housing shortage. I don't imagine that this will actually spur more houses to be built since the supply is elastic.

 
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Old 02-07-2009, 08:29 PM   #15
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It'll help the massive unsold inventory, which will down the road lead to new home construction. In order to get there, though, the unsold inventory has to go.

This will greatly enhance that key opportunity.

 
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Old 02-07-2009, 09:01 PM   #16
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is there any other economy in the world that depends so much on new houses?

this is ridiculous.

 
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Old 02-07-2009, 09:54 PM   #17
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The scary thing about this stimulus is that we are basically letting other countries (i.e. China) own an even bigger chunk of the US, because we sure as hell don't have the money.

But if we do NOTHING, the consequences are even worse.

It's a damned if you do, fucked if you don't kind of situation. And it scares the shit out of me.

Economically speaking, America is going down the spiral fast...
What is this country going to look like in ten years?

 
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Old 02-08-2009, 04:26 AM   #18
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I wont pretend to know economic theory to the level of some of you. Its clear there are the two camps on this, I lean on the krugman/keynesian side. Either way, a bill that tries to do some of each strikes me as fairly stupid. It's doing something half-assed, half of which wont really work to begin with (regardless of which side is right). That seems to be what this bill is. I mean that was some great sounding rhetoric Obama gave before the dems the other day, and yet we end with this muddled garbage (surprising..). Rightly criticizes the past 8 yrs, but starts out compromising before they even attack the bill. I hope the Krugman side is wrong, then maybe things aren't so fucked.


What the centrists have wrought - Paul Krugman Blog - NYTimes.com

What the centrists have wrought

I’m still working on the numbers, but I’ve gotten a fair number of requests for comment on the Senate version of the stimulus.

The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad.

 
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Old 02-08-2009, 09:28 AM   #19
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It shocks me that the reasons for the collapse are so obvious, and the proposed solutions have failed numerous times in both our recent history and the recent history of other countries, and yet still this is the course we are pursuing. The ignorance of the general public and the stubbornness and arrogance of those in power is incredible.

 
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Old 02-08-2009, 11:06 AM   #20
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maybe we could make better decisions if economy wasn't so damn boring and complicated

 
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Old 02-08-2009, 05:04 PM   #21
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Originally Posted by jczeroman View Post
It shocks me that the reasons for the collapse are so obvious, and the proposed solutions have failed numerous times in both our recent history and the recent history of other countries, and yet still this is the course we are pursuing. The ignorance of the general public and the stubbornness and arrogance of those in power is incredible.
Just like you can argue the libertarian ideal was never taken far enough, I can argue that the socialist ideal was never taken far enough in past failures.

 
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Old 02-08-2009, 07:03 PM   #22
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Just like you can argue the libertarian ideal was never taken far enough, I can argue that the socialist ideal was never taken far enough in past failures.
Of course you can, but your argument would be stupid because we can causally trace the effects of socialism quite easily - both from the empirical and axiomatic points of view. You can look at the problems faced right now and see the big fat central bank (among other interventions) right in the middle of it, both qualitatively and quantitatively. You don't have decades of increasing interventions in the housing and financial market in the favour of certain groups and sectors of the economy and then NOT have an equal and opposite reaction when the tsunami effect of the market finally busts back through.

So yes, you can say - "but they didn't nationalise the banks" or some other "more socialist" measure - but nationalising the banks (or whatever measure) is in principle the same philosophically as, say, creating Fannie and Freddie and giving them supra-market power. The deduction here is that "taking the socialist ideal farther" would have made things worse.

 
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Old 02-08-2009, 08:16 PM   #23
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that and the fact that nobody wants to know what happens when a country goes bankrupt.
speak for yourself.

 
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Old 02-09-2009, 12:25 AM   #24
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Anybody who tries to pin the housing crisis on Fannie Mae and Freddie Mac don't know what they are talking about.

Quote:

Private sector loans, not Fannie or Freddie, triggered crisis

By David Goldstein and Kevin G. Hall | McClatchy Newspapers

WASHINGTON — As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.

This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party's standard bearer, President Bush, didn't criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

In 1999, the year many critics charge that the Clinton administration pressured Fannie and Freddie, the private sector sold into the secondary market just 18 percent of all mortgages.

Fueled by low interest rates and cheap credit, home prices between 2001 and 2007 galloped beyond anything ever seen, and that fueled demand for mortgage-backed securities, the technical term for mortgages that are sold to a company, usually an investment bank, which then pools and sells them into the secondary mortgage market.

About 70 percent of all U.S. mortgages are in this secondary mortgage market, according to the Federal Reserve.

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac — who in turn pressured banks and other lenders — to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.

In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today's problems.

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans," she said. "The CRA has increased the volume of responsible lending to low- and moderate-income households."

In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, "that this new lending is good business."

McClatchy Newspapers 2008

 
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Old 02-09-2009, 01:33 AM   #25
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Paul Krugman says the package is too small, and Republicans say it's too big.

Stimulus will lead to 'disaster,' Republican warns - CNN.com

WASHINGTON (CNN) -- Leading Republicans warned Sunday that the Obama administration's $800 billion-plus economic stimulus effort will lead to what one called a "financial disaster."

The country will "pay dearly" if it executes the president's stimulus plans, Sen. Richard Shelby says.

"Everybody on the street in America understands that," said Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. "This is not the right road to go. We'll pay dearly."

Shelby, of Alabama, told CNN's "State of the Union" that the package and efforts to shore up the struggling banking system will put the United States on "a road to financial disaster."

But Lawrence Summers, the head of the administration's National Economic Council, said Republicans have lost their credibility on the issue.

"Those who presided over the last eight years -- the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that's collapsing more rapidly than at any time in the last 50 years -- don't seem to me in a strong position to lecture about the lessons of history," Summers told ABC's "This Week."

President Barack Obama, his advisers and the Democratic leaders of Congress argue the roughly $830 billion measure will help pull the U.S. economy out of its current skid. Much of the package involves infrastructure spending, long-term energy projects and aid to cash-strapped state and local governments.

The nonpartisan Congressional Budget Office reported last week that the measure is likely to create between 1.3 million and 3.9 million jobs by the end of 2010, lowering a projected unemployment rate of 8.7 percent by up to 2.1 percentage points.

But the CBO warned the long-term effect of that much government spending over the next decade could "crowd out" private investment, lowering long-term economic growth forecasts by 0.1 percent to 0.3 percent by 2019.

In a concession to Republicans, about a third of the bill involves tax cuts. But the measure is expected to have only minimal GOP support when it goes to a scheduled vote early this week. Video Watch South Carolina Gov. Mark Sanford warn of "disastrous consequences »

The version of the bill that passed the House of Representatives had no Republican votes.

"We need to spend money on infrastructure and on other programs that will immediately put people to work. But this is not it," said Sen. John McCain, R-Arizona, last year's GOP presidential nominee.

Senators reached a tentative agreement Friday on a compromise bill largely negotiated by a handful of moderate Republicans whose votes are needed to prevent a filibuster. But McCain told CBS' "Face the Nation" that the package should have been about half the size of the one now before senators, and should be balanced between tax cuts and spending.

"We're going to amass the largest debt in the history of this country, by any measurement, and we're going to ask our kids and grandkids to pay for it," he said.

The stimulus bill includes about $45 billion in transportation spending, much of which can be spent on projects "that can be implemented immediately," Transportation Secretary Ray LaHood told CNN. LaHood, a former Republican congressman from Illinois, said he would talk to his former colleagues on Capitol Hill "and do all that I can to persuade them that this bill really will put people to work."

He said he invited state transportation chiefs to Washington for a Wednesday meeting on how to create jobs using funding from the stimulus bill.

"There aren't going to be any boondoggles. This money will be spent correctly, by the book, with no shortcuts," LaHood said.

The administration is also readying a second phase of the financial bailout program launched by the Bush administration last fall.

Shelby said Obama and his advisers need to address the staggering problems in the U.S. banking system first.

"Until we straighten out our banking system, until there is trust in our banking system, until there's investment there, this economy is going to continue to tank," he said.

Shelby also has been critical of other efforts by the federal government to help the struggling economy, including legislation that would have provided a bailout to the auto industry.
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But Sen. Kent Conrad, the chairman of the Senate Budget Committee, told CBS the current recession -- which has already produced an unemployment rate of 7.6 percent -- is in danger of a deep downturn "like we saw in the Great Depression."

"If there is a failure to give a significant boost to this economy, this crisis will only deepen and become far more serious," said Conrad, D-North Dakota.

 
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Old 02-09-2009, 01:46 AM   #26
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Limit Union Power: Later this year, Congress is likely to vote on the card check bill, a new law that facilitates unionization. The law eliminates the presumption of a secret ballot, which means union organizers can pressure employees into accepting representation.

Laws that protect unions are problematic. Unions raise wages above market levels, increasing unemployment. Thus the Obama administration can signal American business that it cares about efficiency, not just redistribution of wealth, by opposing the card check bill. Better yet, it can repeal the Davis-Bacon Act, which inflates labor costs in federal contracts.

Renew the U.S. Commitment to Free Trade: One crucial danger in the current environment is that the U.S. and other countries will embrace protectionist policies. The U.S. enacted prohibitive tariffs during the Great Depression, and many trading partners retaliated. World trade plummeted, contributing to the economic misery.

The Obama fiscal stimulus risks reviving this insanity, since both the House and Senate bills require that certain stimulus-funded projects use U.S. equipment and goods. The administration should oppose these provisions. More generally, President Obama and his economic advisors should state -- no, scream -- that America is unambiguously committed to free trade.
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Look at this union contract! Benefits...perks...a green cookie on St. Patrick's Day...Oh, it wasn't always like this, Smithers...it wasn't like this at ALL!

 
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Old 02-09-2009, 04:37 AM   #27
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Originally Posted by Debaser View Post
Anybody who tries to pin the housing crisis on Fannie Mae and Freddie Mac don't know what they are talking about.
Who here is trying to "pin the housing crisis on Fannie Mae and Freddie Mac?"

And that article is crap debaser. I would have hoped that you were past this reactionary phase were whenever you perceive someone is attacking whatever it is the Democrats are currently supporting (which, by virtue of your apparent lack of independent thinking you rush to support before even asking basic questions), you pull some completely irrational article out of a union journal or something.

I mean, crikey, you think that these points:

Quote:
* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.
demonstrate unequivocally that "the private sector" (whatever that means in this quasi-nationalised system we have anyway) was "behind" the housing market collapse? The guy posits that "the private sector" is the cause and then cites surface statistics which don't even address the cause. Does this guy even understand the integrated nature of markets - even "socialist" ones?

Does he think that interventions don't have any unintended consequences and only do exactly what they intend to do? Of course! This is why there is no gang crime surround drug prohibition, or why terrorists just hate our freedom for some unknown reason. It has nothing to do with the effects of our policies rippling outwards! We can intervene in the housing market and financial sector for almost a century, obliterate reliable price data, obliterate reliable credit prices and there will be no crash from the bubble that this creates!

If a law was made that said, either sell kids doughnuts or go to jail, this guy would say - "It's not the law that's at fault here - it's the fact that evil people sold kids doughnuts!"

 
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Old 02-09-2009, 07:04 AM   #28
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Originally Posted by jczeroman View Post
The deduction here is that "taking the socialist ideal farther" would have made things worse.
Maybe to you. You're still basing your logical deductions on personal preference.

 
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Old 02-09-2009, 09:08 AM   #29
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Originally Posted by Trotskilicious View Post
Maybe to you. You're still basing your logical deductions on personal preference.
No, there is no "to you" or "personal preferences" here. Please show me where I am using "personal preferences" - I am making a reasonable and logical case. If it were "personal preferences," my post would have merely constituted the sentence you quoted. However, I wrote two paragraphs - and yet you deal with none of it and just throw out an accusation. And you are going to imply that I am being unreasonable here?

 
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Old 02-09-2009, 12:22 PM   #30
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Quote:
Originally Posted by jczeroman View Post
If a law was made that said, either sell kids doughnuts or go to jail, this guy would say - "It's not the law that's at fault here - it's the fact that evil people sold kids doughnuts!"
What law are you talking about? I don't understand where this comes from -- this notion that the government somehow forced banks to lend bad loans. If you're basing this notion on the CRA, it's simply not true.

Furthermore, the most damage to this economy came from the completely unregulated parts of the financial industry -- credit derivatives and mortgage backed securities.

 
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