Last night John Boehner announced that Republicans were abandoning an attempt to reach a $4 trillion deficit reduction deal with Obama because Obama inisted on $1 trillion in tax increases.
Obama always wants new taxes on the “rich.” As Michael Alan wrote here, Obama wanted tax increases before the credit crisis and when deficits were lower, and he wants them now. It’s an income redistribution thing; the debt ceiling “crisis” merely is the latest excuse.
Pretty much as I predicted on Thursday, Obama continues to insist on enormous tax increases as a prerequisite to dealing with entitlements, knowing that entitlement reform would not happen anyway allowing him to keep the tax increases.
Republicans balked, and sure enough, the MSM immediately started spinning it as a failure of Republicans to deal with the deficit, as in this WaPo op-ed issued just shortly after Boehner released his statement:
House Speaker John Boehner’s surprise announcement late Saturday that he was abandoning efforts to reach a comprehensive budget agreement brings a sudden end to what may have been the best opportunity in years to deal with the country’s looming fiscal crisis.
Boehner pulled the plug on talks with the White House on a package that would have called for cuts in major entitlements programs as well as new tax revenues. It was a stunning decision, coming a day before President Obama and congressional leaders were due to resume their negotiations.
Reuters issued this news alert almost immediately after Boehner’s announcement:
President Barack Obama will not back off in his efforts to solve U.S. debt problems and will make the case to congressional leaders in talks on Sunday for taking on “this critical challenge,” the White House said on Saturday.
Obama, the single most fiscally irresponsible president in modern history, is positioning himself as the only one who is serious about the debt.
While I can see the argument that Boehner had to play Obama’s game of Charades, Boehner had no choice but to hold the line on taxes. Hopefully that line will hold during talks today, because what’s old is new: For Obama, the only thing deficit reduction sounds like is more taxes.
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“Obama, the single most fiscally irresponsible president in modern history, is positioning himself as the only one who is serious about the debt.”
Why have conservatives allowed Obama to claim the high ground.
The problem is that by accepting smaller spending cuts, it means that the deficit continues to grow so is anything being accomplished by this deal? The reduction in spending cuts matters. It’s kicking the can down the road.
I hope House Republicans vote down any bill that does not reduce spending, balance the budget, cap spending and reduce the deficit. That is the latest promise that the Republican leadership is poised to renege on. After all, they caved on the $100B budget “compromise” arguing that they needed to get to the debt ceiling battle where they would hold the line for real. “Seriously. We mean it this time.”
If they hold the line, Obama will eventually cave at the last minute. If he doesn’t, the MSM and Dems will blame the GOP anyway. If the GOP caves, WE will blame the GOP and vote them out next year.
What is your’Legal Opinion’ on Barry O being able to do an end run on the Congress? Tim Scott says that that would be an’ Impeachable offence’.
All of a sudden, after spending us into third world status, Obama has become a fiscal hawk. Tell me, are liberals really so stupid they believe that crap? Perhaps if Obama was really serious about the budget, IT WOULD NOT BE OVER 800 DAYS SINCE WE HAVE HAD ONE. But the media will spin it to protect their socialist dream.
Then, under the radar, comes the story that should make cold chills go down the spine of every responsible American.
HOLDER LAUNCES WITCH HUNT AGAINST BIASED BANKS
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=577794&p=1
So the very same heavy-handed government policies, enforced under the Community Reinvestment Act, that caused the housing meltdown in the first place, and cause the banking industry to crater, is now, once again, being put on steroids. Eric Holder, trained under another incompetent Attorney General, Janet Reno, is once again placing the boot of the government on lending agencies to acheive affirmative action via finances.
Can someone explain to me how it is not racial profiling to require lending based on race?
The regional banks are stuck in a catch-22. They are under pressure to build their reserves while being closely supervised to follow tighter guidelines in qualifying mortgage applicants. Yet, they might be sued for “discriminating” against poor people in bad neighborhoods for not granting them subprime mortgages?
The “too big to fail” money launderers were bailed out, allowed to become even bigger, granted easier disclosure standards (“mark to make believe”) and in some cases, directed billions in profits for selling treasuries to the Fed (Government Sachs) and granted big crony contracts and deals (Government Motors, Government Electric) so all of the fallout for this crisis fell on the banks who were generally following the rules.
We really are a banana republic.
“They are under pressure to build their reserves while closely being supervised to follow guidelines in qualifing mortage applicants.”
Once again, Phil, you show that either you did not read the article I linked, or you are in total denial about what is really happening. I do think you should probably get some advise on how to handle your desire to show people how ill informed you are.
Now, considering that the NINJA loans were part of the reason that banks went under and the GSEs were holding on to mortgages that weren’t worth the paper they were written on, how is forcing lending agencies to continue granting loans when the applicant has no means of support, other than a welfare check, following any kind of reasonable guideline under standard lending practices? Do you think the majority of those current NINJA loans will ever be paid off? What happens when the interest rate goes up due to the fact that subprimes more often than not carry a variable rate, when property taxes and insurance increases and is added to the payment via escrow? What happens when welfare moms buy homes with a $800/month payment that is going to be $1,100/month in two years?
If you knew your butt from a biscut you would know that it was not the fault of most lending agencies that the housing market, and consequently our economic, crashed. It was the same damn tinkering with private industry by the federal government to bring about their dream of utopic, egalitarian nation. Affirmative action (which is racist in and of itself) in financing.
Are you aware that every lending agency in the U.S. (bank, savings and loan) are required to still have a CRA officer who reports to the federal government every quarter? The very law, and Clinton putting it on steroids, that cause the crisis we currently have, is still on the books and Holder is exercising it with reckless abandonment.
I’ve got no dog in the fight of what Holder’s currently doing, but your history’s way off. The CRA was not a cause of the crisis.
First you have to look at magnitude. Only a small percentage of risky loans originated due to the CRA. Institutions that were fully regulated by the CRA only made about 25% of sub-prime loans. The number of sub-prime loans which had problems dwarfed these numbers.
Second you have to look at capability. Delinquency rates were high in all neighborhood income groups, and CRA-related subprime loans performed in a comparable manner to other subprime loans. If CRA-related loans were, in fact, significantly more likely to have problems, these things would not be true.
Here’s someone who was on Bush’s Council of Economic Advisors explaining these things: http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm
Third is the multitude of things you have to overlook in order to state “It was the same damn tinkering with private industry by the federal government to bring about their dream of utopic, egalitarian nation.” You have to ignore Greenspan’s role in the cause of the housing bubble. You have to ignore the role of the unregulated shadow banking industry. You have to ignore the shenanigans among banks and ratings agencies. You have to ignore the outright fraud lending agencies committed, which has everyone scared of actually going through foreclosure for fear of finding out the extent of delinquent paper work.
But hey, blaming the CRA does let you feel mad about helping minorities, so it has that going for it.
I. Stone, I highly recommend you read Dr. Stan Liebowitz’s Anatomy of A Train Wreck. You can find it on line. And frankly, I really don’t give a tinker’s damn what excuse was offered by the Federal Reserve. Remember, Timothy Geithner was head of the New York Fed at the time and it was Patrick Kennedy who was the prime author of TARP.
If you think that lending money to people who have absolutely no ability to ever pay that loan back did not contribute to the toxic assets, you have your head in the sand. And I don’t ignore the unregulated banking industry although you seem to want to brush off the reasons those regulations were relaxed in the first place. Barney Frank’s former boyfriend was working at Fannie and writing banking rules.
You want to blame the bankers who are in the business of making money and one of the ways they do that is making loans that have a high possibility of being paid back. But when the Federal Goverment, under Janet Reno, is publishing the names of backs the government is accusing of redlining, or not meeting CRA standards, in local newspapers, costing that bank business, that is governmental intimidation, clear and simple.
Now, go read Professor Liebowitz’s article and learn something. You will be wiser for the effort.
(I hope I’m replying in the right spot, apologies if I’m not).
That article assumes that CRA-related loans were the prime cause of the housing bubble. That’s incredibly silly. Any argument which talks about the causes of the housing bubble and doesn’t talk about the Fed keeping interest rates incredibly low has credibility as low as the interest rates. Richard Posner (I keep using conservatives so that you just won’t dismiss them out of hand) is pretty clear on this: http://www.econtalk.org/archives/2009/11/posner_on_the_f.html
Additionally, how can you square Liebowitz’ argument with the fact that CRA-related subprime loans performed in a comparable manner to other subprime loans?
I’ll say this: the CRA, Fannie and Freddie policies probably made the crisis a tad worse than it would have otherwise been. But did they cause the crisis? No; it would have happened would those things never existed. Would the crisis still have been catastrophic absent those things? Yes. So they’re pretty minor in the scheme of things.
Finally, you keep talking about heads in the sand and knowing your butt from a biscuit (that’s kind of a great phrase, btw), but you just refuse to deal with the banking, regulatory, and ratings agency policies which are widely acknowledged to have caused the crisis and make it catastrophic. Here’s Greenspan, which you can’t really dismiss as a hippie dupe, talking about them: http://www.nytimes.com/2008/10/24/business/economy/24panel.html
I.Stone, I am not claiming that low interest rates did not contribute to the housing crisis, but it was only one factor, and since it is the federal government that sets the interest rates, another action on the part of the government, the blame laying competely at the government’s feet.
But the bottom line remains that all roads lead back to the CRA, the relaxation of standard lending practices (as mandated by the CRA), designer loans (designed to comply with CRA), lowering interest rates (to facilitate the CRA), consequently putting people into homes that had no possible ability to repay those loans should their house payment increase for any reason (taxes, insurance, higher interest rates).
Now, you may want to make the claim that the subprime mortgages represented only a small portion of the total mortgages, but even that is incorrect. Edward Pinto, cheif credit officer of Fannie May, wrote a 70 page report in 2008 stating that of all the mortgages held in the U.S. (55 million) 25 million were subprime or at risk loans. He later revised that number up to 27 million. Over 50% is hardly a small minority of those loans.
The Financial Crisis Inquiry Commission refused to accept Pinto’s report, as its intent was to not place blame on subprime mortgage holders as the cause of most defaults. But it was the subprime mortgage holders that started the domino effect; as they started losing their homes, employment started falling with others losing their jobs and consequently some of those mortgages that were not subprime began to default.
The mindset behind putting the CRA on steroids was that people who had less than stellar credit, and who were able to afford their mortgage at the time of the loan, would see a number of things happen; increased property values, normalized increase in earnings offsetting any increase in mortgage payments due to higher interest rates. That didn’t happen.
Banks and other lending agencies don’t set their own standards, the feds do, and you seem to want to lay the blame at the feet of those who had no control over what the feds did. Groups like ACORN and LaRaza were facilitating mortgages, with banks like CitiBank accepting their credit applications and recommendations. We now know that ACORN falsified many loan applications. Again, the approval for ACORN and LaRaza to handle loans had to come via the feds.
As to Greenspan, I have no interest in what that hack has to say. He was tasked with the job of making sure that our nation did not fall into an economic crisis, and he, and others, failed miserably. Anyone with a high school education would have known that when you create a glut in any market, prices will fall. And that is exactly what happened in the housing market. For Greenspan, and Ben Bernanke, to admit they did not see it coming, shows that living inside the Beltway removes all common sense.
The CRA needs to be abolished. The federal government, i.e. Eric Holder, need to get their fingers out of the mortgage pie. The CRA was nothing more than affirmative action using finances, and it did not work, and won’t work just because Holder is now in charge of raking banks over the coals to push his affirmative action policies. And now, part of the uncertainty is due to the Dodd-Frank Act that no bank even knows what the rules will be.
And tell me, how is it not prejudicial to require banks to lend money for mortgages based on race? What happens when the government requires a bank to lend money for mortgages based on demographics, when the percentages of those minorities who don’t meet standing lending practice requirements, are allowed to get loans they have no hope of ever paying back. When you reduce the amount of immediate equity (i.e. downpayment) there is nothing to lose if the mortgagee walks away from the loan.
Deficit reduction just means overspending less. The problem is not solved.
Update: Over at http://www.patterico‘spontifications.com Looks like they are backing off going aroun congress.
Another party enters the debate…
The Sugar Daddy Has Run Out of Sugar; Now We Need New Leaders
“Barack Obama’s big government policies continue to fail. He should put a link to the national debt clock on his BlackBerry. The gears on that clock have nearly exploded during his administration. Yesterday’s terrible job numbers should not be a surprise because it all goes back to our debt. Our dangerously unsustainable debt is wiping out our jobs, crippling our economic growth, and jeopardizing our position in the global economy as the leader of the free world.”
“The same “experts” who got us into this mess are now telling us that the only way out of our debt crisis is to “increase revenue,” but not by creating more jobs and therefore a larger tax base; no, they want to “increase revenue” by raising taxes on job creators who are taxed enough already! As Margaret Thatcher said, “The trouble with socialism is that eventually you run out of other people’s money.” That’s where we are now. Hard working taxpayers have been big government’s Sugar Daddy for far too long, and now we’re out of sugar. We don’t want big government, we can’t afford it, and we are unwilling to pay for it.
This debt ceiling debate is the perfect time to do what must be done. We must cut. Yes, I’m for a balanced budget amendment and for enforceable spending caps. But first and foremost we must cut spending, not “strike a deal” that allows politicians to raise more debt! See, Washington is addicted to OPM – Other People’s Money. And like any junkie, they will lie, steal, and cheat to fund their addiction. We must cut them off and cut government down to size.
To paraphrase Hemingway, people go broke slowly and then all at once. We’ve been slowly going broke for years, but now it’s happening all at once as the world’s capital markets are demanding action from us, yet Obama assumes we’ll just go borrow another cup of sugar from some increasingly impatient neighbor. We cannot knock on anyone’s door anymore. And we don’t have any time to wait for Washington to start behaving responsibly. We’ll be Greece before these D.C. politicians’ false promises are over. We must force government to live within its means, just as every business and household does.”
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Despite Boehner’s statement I do not have confidence that the House Republicans will hold firm on this, even though they are in control. They have complete power, in effect a veto over raising the debt-limit without real spending cuts. Their veto cannot be overridden. They have more procedural power in this matter than does the president.
Another batch of republicans to vote out, I see.
” … knowing that entitlement reform would not happen anyway allowing him to keep the tax increases.”
Exactly. And Republicans should say this as a preamble to every sentence they utter … I don’t care if they sound like a broken record to the point the stylus has worn through the record and is now tearing through the rubber disc below.
LukeHandCool (who has come up with the tentative slogan: “Be a turntable and turn the tables on them” … and who wonders if there will be a $300 a bottle wine summit headed by the two guys who were going for $3 in a recent raffle with the congressman who nosy liberal economists the world over all agree “drank stupidly” in attendance).
Boehner just made the first steps in a dance that will end in bogus cuts, increased taxes and NO change to our fiscal situation.
The first to blink in any negotiation session has already lost the deal and given his opposite the ‘tell’ that they’re willing to accept a lesser offer.
Boehner has shown himself to be weak and willing to strike any deal and that may be the death of the Republican party.
At best he is a lousy negotiator and worst he’s trying for a deal that gives him and establishment Politicians a few more years of screwing the country.
He’s worse than Newt.
Whatever happens at the end of this, we will get blamed for. Personally, I’d rather get pilloried for doing what was right.
Lies and damn lies
*Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decreased on a year-over-year basis was 1960
*97% of today’s funded debt has been accumulated since August 1971 – the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
*Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
*Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
*The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
*Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
*Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
*Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.
Zero Hedge
It appears–from various (R)-generated dispatches–that Obama is now playing Lucy for the Boehner/Charlie Brown place-kicker by taking entitlements off the table AND deep-sixing components of Biden’s own commission.
PowerLine opines that Obama is using the Minnesota Model and WILL detonate the country.
I think they’re right and that Prof. Jacobs is not nearly cynical enough.
[…] Le·gal In·sur·rec·tion: Obama’s deficit reduction Charades – “sounds like” more taxes […]
Did I read that first sentence right?
“…a $4 deficit reduction deal…”
Why do I think that’s not a typo and Obama wants to cut the deficit by four dollars?
Yes, typo of the year, fixed now.
THREE WORD PHRASE describing Democrat fiscal policy:
First word. Sounds like Ax.
Second word. Sounds like hand.
Third word. Sounds like bend.
“Obama, the single most fiscally irresponsible president in modern history, is positioning himself as the only one who is serious about the debt.”
The only thing that jug-ears is serious about is his next tee time, how to get re-elected when half his own base hates him, and how to get those tanks to the muslim brotherhood in Egypt.
Sounds to me like it wasn’t Obama that was positioning himself, but rather the press.
Sometimes I change news channels just to get a different vibe. Anyone watch HLN? I love that — in THIS economy — they’ve created a whole subsection of their reporting and their web site devoted to successful small businesses. Do you think they would be doing this with a Republican president?