Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktSenator Doctor Coburn has an op-ed at CNN about ending “welfare for the wealthy.” Perhaps some of us have an opinion on the good doctor’s prescription.
Every year, politicians on both sides engage in a process of reverse Robin Hood in which they steal $30 billion from low- and middle-income Americans and provide handouts to the rich and famous.
Millionaires receive tax earmarks and deductions crafted by both parties that allow them to write off billions each year. These write-offs include mortgage interest deductions on second homes and luxury yachts, gambling losses, business expenses, electric vehicle credits and even child care tax credits.
Meanwhile, direct handouts for millionaires have included $74 million in unemployment checks, $316 million in farm subsidies, $89 million for preservation of ranches and estates, $9 billion in retirement checks and $7.5 million to compensate for damages caused by emergencies to property that should have been insured. Millionaires have even borrowed $16 million in government-backed education loans to attend college since 2007.
The goal of highlighting these excesses is not to demonize those who are successful. Instead, by highlighting the sheer stupidity of pampering the wealthy with lavish benefits through our safety net and tax code, I hope to make a moral and economic argument for real entitlement and tax reform.
The most troubling gap in America today is not an income gap. It is an integrity gap — and even intelligence gap — between Washington and the rest of the country.
Families are struggling to make ends meet and are making painful economic choices as politicians in Washington borrow billions to provide welfare to the wealthy. Politicians on both sides refuse to fix big problems and defend stupid policies because changing those policies would involve upending a comfortable political status quo.
Filed under: Uncategorized |
All Things in Moderation 
What?!?! Someone pick me up off the floor. Nice job, Senator, in starting the discussion.
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You can write off interest for yachts?You can only write off gambling losses against winnings, so that makes sense and cannot be considered a "subsidy." If you are going to tax gambling gains, you have to tax people on net winnings, not gross winnings.I am all for means testing SS and Medicare.
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direct handouts for millionaires have included $74 million in unemployment checksWell, though government administered and mandated, it is characterized as an insurance program. You'll have to change how it's described, and start means testing based on assets . . . tricky. direct handouts for millionaires have included $74 million in unemployment checksAnd there's a lot of fraud going on there, as only experienced fraudsters, or middle-men, are capable of navigating the byzantine bureaucracy in order to ever get a payment. Regular folks with disaster damage have a hard time collecting anything. Most of the things mentioned seem relatively minor compared to ag subsidies (including ethanol) and industry (and sometimes almost company) specific tax breaks for mega-corporations that make billions in profit (GE, ExxonMobil—I'm looking at you). The interest deduction on mortgaged yachts seems likely to be piddling, by comparison.
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These numbers are always interesting, but frequently, deeper investigation reveals they aren't as disasterous as they seemed, or there is important extra information. Millionaires got student loans . . . really? And don't they have to pay that $16 million back? Or are these millionaires kids with millionaire parents who won't fund their chosen college education or something? I just think there has to be more to it.
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I represented a man worth over $10M whose passive income was over $500K annually. He was a veteran of between the wars [Korea and VN] who served in Germany in peacetime. He had diabetes. NOT service related, by any stretch.He used full VA benefits for the last ten years of his life [probably longer]. Even my father-in-law, a combat WW2 vet, could not get full VA benefits, and he was no millionaire when he had a stroke, also not service related. My father in law had his first 90 days of skilled nursing care from VA b/c he was on Medicare and there is apparently a deal where Medicare vets can get some Medicare services from VA. It is probably more efficient that way.VA benefits are available for service related injuries or in some cases if you means test. How my multimillionaire with diabetes got free care for ten years is beyond me.
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Hopefully he gets to offer this on the Senate floor."You can write off interest for yachts?"If you can possibly claim it as a first or second residence."Tax deductibility of interest on boat and yacht loansUnder IRC section 163 (h)(2) a taxpayer may deduct any qualified interest on a qualified residence, which is defined as a principal residence and one other residence owned by the taxpayer for the purpose of deductibility for the tax year. IRC section 163(h)(3) defines qualified residence interest as any interest which is paid or accrued during the tax year on acquisition or home equity indebtedness with respect to any qualified residence of the taxpayer. "http://www.excelcredit.com/tax_deductible.htm
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This is bunk."Millionaires receive tax earmarks and deductions". Aren't these earmarks available to everyone, not just millionaires?The people who received these 'benefits' – earmarks and direct 'handouts' – overwhelmingly provided the government the funds to do this through their taxes. The notion that this is reverse Robin Hood is lunacy. Do millionaires need SS. No. Should they get it? Of course since they paid into it (proportionally a lot more than us lower and middle class rabble). It is not welfare – it is Social Security. Means-testing is inherently anti-saving, unfair and will destroy SS by making it just another welfare program instead of the notion that it is. If your spouse paid their life insurance premium regularly and when the died the insurance company determined that you were well enough off that you didn't need it, how would that go over with you? They got 9 billion – in 2009, $650 billion in Social Security benefits were paid out. Again, this is bunk.
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Interesting. I expected Dave's argument to come from a liberal anticipating that means-testing for SS benefits was designed to turn it into a welfare program that would then have more critics.
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Dave:This is bunk.I'm with you. Tax deductions are not a "handout" "stolen" from low and middle income Americans. If a millionaire and his employer have paid into unemployment insurance, while employed, he is no less entitled to collect unemployment than anyone else. And government guaranteed loans? Are you kidding me? First of all a loan is not a "handout" in any sense. Second of all, unless the borrower defaults, the loan hasn't cost anyone anything, much less does it represent "stealing" from low and middle income Americans. That this person needs to resort to such utter foolishness to make his argument shows how feeble it is.Having said all that, farm subsidies should most definitely be eliminated, whether they are going to millionaires or anyone else.
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I don't like the idea of means testing Social Security either. If you've paid into it, you should get it. It's already means tested to a certain extent anyway when you're still earning money and drawing, you pay taxes on it and if you draw early and work you also pay a penalty. I could understand increasing the age by one year again or increasing the income cap a little. Some of those other benefits are pretty outlandish though, preservation of ranches and estates…………..how nice.
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lms:Some of those other benefits are pretty outlandish though, preservation of ranches and estates…………..how nice.I'd like to know what this actually refers to. Is it estates that have somehow been designated national landmarks or something? Under what program are these preservation grants being doled out?
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I couldn't find much but I think he's referring to something to do with the estate tax and conservation easements. Google didn't turn up much to specifically address what he's talking about but I didn't spend too much time on it either.
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bsimon – notice i lead with "anti-saving"…I am a saver through and through. That said, the idea of SS as social insurance is not one that keeps me awake at night…were I king, of course, i would run it differently. Since I was born in the last year of the baby boom generation, I am not planning on retiring on it alone…and believe that I could have done a better job with the money than the government has.
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Scott/lms:Coburn's document is here.
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90% bs. To the extent that he is calling "welfare" not to deprive "millionaires" of the same privileges available to everyone else, this is just divisive class warfare serving no substantial purpose.Coburn just went on my list of idiot demogogues when it comes to economic and budget issues. Disappointing.
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Mike, I saw that but it doesn't explain what form these benefits for ranches and estates are in or why they're considered necessary. I'm just curious. I basically think Coburn wants everyone to take a haircut and that includes millionaires and billionaires. At least that's an improvement over most conservatives who seem to want to place the onus on middle class and working poor workers by unwinding the benefits they receive from SS, public education and Medicare/Medicaid.
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qb:this is just divisive class warfare serving no substantial purpose.Quite right. Read the link and it gets even worse. The unfortunate part is that a lot of the stuff he's talking about actually should be done away with, but not because they benefit "millionaires". Rather, they are things the government ought not be involved in at all, for anyone. But instead of just saying that, he frames it as a class warfare issue. What a putz.Oh, and the crap about "preservation" of estates and ranches actually seems to refer to "conservation", ie idiotic environmental, wildlife, and farming "incentives" which pay people not to do certain things with their land.
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I basically think Coburn wants everyone to take a haircut and that includes millionaires and billionaires.If that were what he meant to say, I assume he would have said that. But what he said was entirely different.At least that's an improvement over most conservatives who seem to want to place the onus on middle class and working poor workers by unwinding the benefits they receive from SS, public education and Medicare/MedicaidThe rich alreay pay disproportionately, so how is the "onus" not on them as well? I just don't get why people keep pretending otherwise. And there aren't enough of the rich, and they aren't rich enough, to pay for all the benefits that liberals not only hold sacrosanct but want to expand. The math just doesn't work, no matter how long or loudly liberals shout about the millionaires and billionaires. And that's what really makes this rhetoric from Coburn pure demogoguery. He sounds like a he lives in the fantasy world of a 19-year-old OWS Fleabagger.
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Btw, re OWS, I saw a link via Instapundit to the OWS official website. If you click through to the page about their open source code, you see that their motto is something like Stamping Out Capitalism One Line At A Time, iirc.Shocker.
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You know what qb, I don't really care whether the rich get richer and what their tax rate is or what they want it to be, you're right there's not enough of them to make a dent. And if you want poor people to pay taxes, they need jobs, pure and simple. I don't see anyone working on that except possibly for Obama and I have my doubts about that as he's in campaign mode and I don't trust him anymore, not that I ever did that much to start with. Of course the middle class and working poor have taken the hit in this recession and all the risk of the bailouts and interest on all the money we've borrowed for wars and the minimal safety net we provide which is now under stress. Don't worry though, once the rest of us pay down a little more debt and start spending again we'll bail our own damn selves out. That's where the jobs will come from, not a bunch of rich cats sitting on a stash of money. AFAIC, they can keep it, I sure don't want it.
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The only thing I see Obama working on is villifying the millionaires and billionaires for not paying enough taxes. How that helps anything remains a complete mystery.The truth is that the only long-term plan he has is for everyone in the top half to pay more, a lot more, because that is the only way to pay for all the programs, transfers, and government needed to ensure continued Democratic control and growth of its vision of government.The NLRB of course is working on some things like rigging the system in favor of unions and blocking Boeing from opening its new plant. None of that favors growth or jobs but just the opposite.The idea that Obamacare was pro-growth and jobs is already a tragicomic illusion. It is only hurting growth.Government "investment" in the imminent revolution in green jobs — there was another joke on America.Even Obama's immigration policies of course help flood the market with competition for lower paying jobs. But the left won't have it any other way, because that is another part of the long-term agenda for Democratic political hegemony.The stagnant results of all this are no surprise. An Obama's single-minded focus on simply demonizing people and setting up phony trade-offs to stick it to fat cats does nothing but poison the atmosphere. It is unlikely that this fat cat's scathing takedown of Obama will get the fawning media attention of the Pharisaical Warren Buffett:http://hotair.com/archives/2011/11/30/legendary-investor-to-obama-is-all-this-class-warfare-rhetoric-really-necessary/
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lms:Of course the middle class and working poor have taken …all the risk of the bailouts and interest on all the money we've borrowed.You say this quite a lot. What is the evidence for it? It seems to me that the risk of the bailout loans (what relatively little that remains), if/when it turns sour, and the interest on all of the borrowing, will ultimately be paid by taxpayers. Therefore, it seems to me that those individuals who pay the most taxes are/will be bearing the most risk/burden for these things.Since individuals in the class "working poor" actually pay relatively little in taxes, the risk/burden they are bearing is relatively low. That borne by those in the middle class is somewhat higher, since they pay somewhat higher taxes. And that borne by the highest income earners is the highest, since they pay the most in taxes.So when you say what you say above, I can only wonder: What compels you to conclude such a thing?
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qb:Great letter from Cooperman. Glad you linked to it.
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qb: The rich alreay pay disproportionately, so how is the "onus" not on them as well? I just don't get why people keep pretending otherwise.Well, in some cases (not here so much), I've often been convinced it's because they don't actually want to have the conversation. They've got a belief that involves clear good guys and bad guys, and the rich are robber barons in this narrative, not the people who fund the lion's share of federal revenues.
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From CNBC this morning regarding the state of the economy. We're only waiting for the middle class now with a reversal of job growth and a housing resolution.With other economic indicators pointing higher, jobs and housing remain the primary missing links from the U.S. recovery.And the share of Federal revenue from Income Taxes has remained statistically the same since the 1950's. Perhaps the reason the wealthier class and upper middle class are carrying such a "heavy load" is simply because the wages of the 90% have not kept up with the burden of taxes. And scott, there is more risk to the bailouts than just a tax burden, as the quote above indicates.
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lms:And scott, there is more risk to the bailouts than just a tax burden as the quote above indicates. What risks?
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Given a choice between eliminating the various subsidies that Coburn has proposed and increasing marginal income tax rates, I'll take Coburn's proposals.
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jnc:I definitely agree with you. As I mentioned above, a lot of the things he is talking about should be eliiminated. What I find unfortunate and annoying is that he framed the issue in such a demogogic, class warfare manner. The problem has nothing to do with the income level of those getting the subsidies. It is the very idea of the subsidies in the first place.
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Guess Who Really Pays the TaxesLots of good stuff there (article is from 2007, though, and is by Stephen Moore, the Club for Growth guy). But still, interesting stuff, and I don't see anything wrong with his numbers. Over the past seven years, however, Americans in general think taxes have become more fair, not less. The Gallup Organization found in an April poll that 60 percent of respondents believe the income taxes that they themselves pay are fair, compared with 37 percent who believe the taxes they pay are unfair. In 1997, the figures were 51 percent fair and 43 percent unfair.….The wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.
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ScottDo you follow John Hussman at all? He claims that the Federal Reserve has distorted the capital market by prolonging the bailout mentality for the TBTF institutions which has taken capital from investment in R&D, education, infrastructure, safety net, etc. etc. The Fed essentially transferred the toxic stuff to Fannie and Freddie which is still holding the public hostage.Of course, there is a cost to any financial crisis, which is "contagion" where the failure of one institution or government calls others into question. The main way to contain this is to follow the century-old "Bagehot's Rule" – lend freely, at high rates of interest, but only to institutions that are solvent and able to provide collateral for the loans. When policy makers behave as if every institution, solvent or not, is within the ring-fence, or that some institutions are simply "too big to fail," saving these institutions comes at enormous costs, because true economic losses that should properly be taken by private investors are instead forced upon the public.Keep in mind that money is fungible – not all losses are taken directly by the institution that created them. Many of the losses that should have been borne by banks were instead assumed by Fannie Mae and Freddie Mac. This allowed TARP to seem largely successful even while hundreds of billions of public funds are still being spent to bail out Fannie and Freddie. Recent efforts by government overseers of Fannie Mae to claw back these losses from the banking system are appropriate, but they also demonstrate how easy it is for private institutions to transfer their mistakes onto the public balance sheet.
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I like the idea of getting ride of the mortgage interest deduction for second properties. I'd also support a cap–say, limited the deduction to $12k a year. Or getting rid of it entirely, if that were possible. Also the rental expenses deduction–that's also where most of the money is–$27.7 billion and $64.3 billion respectively. SS and Unemployment are Social Insurance. You don't means test insurance payouts. Either you turn them into entitlements, or you leave them as they are. I'm all for eliminating farm subsidies, but Coburn doesn't spend a lot of time on that. I notice he doesn't touch on corporations like GE and ExxonMobile.In 2010, GE earned $14.2 billion in profits in 2010, but paid no taxes. In fact, GE received a $3.2 billion tax benefit.In 2009, ExxonMobil made $19 billion in profits and paid no taxes, but did receive a $156 million rebated from the IRS (which had to be one something, right?). Bernie Sanders list of ten American corporations not paying taxes.I think there's a lot more money there than there is in yacht interest deductions. 1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
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lms:The Fed essentially transferred the toxic stuff to Fannie and Freddie which is still holding the public hostage.How so? Fannie and Freddie were certainly buying "toxic stuff", but how is the Fed responsible for that?The article you quoted says:Many of the losses that should have been borne by banks were instead assumed by Fannie Mae and Freddie Mac. That may be true, but that is a function of the very mission and existence of Fan/Fred, not because of anything the Fed did during the crisis. At least as far as I know.…prolonging the bailout mentality for the TBTF institutions which has taken capital from investment in R&D, education, infrastructure, safety net, etc. etc.How much has spending on these things declined since 2008?
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"jnc:I definitely agree with you. As I mentioned above, a lot of the things he is talking about should be eliminated. What I find unfortunate and annoying is that he framed the issue in such a demogogic, class warfare manner. The problem has nothing to do with the income level of those getting the subsidies. It is the very idea of the subsidies in the first place. "It was framed that way to counter the whole "millionare's surtax" proposal from the Democrats. The framing is a battle of the talking points. I'm a cynic so I've given up on political discourse being honest and I'll just take good policy (or preventing bad policy) where I can get it. Any steps to eliminate tax deductions for specific activities that the government approves are steps in the right direction.
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"SS and Unemployment are Social Insurance. You don't means test insurance payouts. Either you turn them into entitlements, or you leave them as they are. "They are already entitlements. I'm sure you remember the entire "debate" over whether they were Ponzi/Pyramid schemes or welfare. John (Banned) successfully convinced me that they are in fact welfare and not Ponzi schemes because their statutory benefits will be paid via general revenues (or borrowing/deficits) regardless of the state of the "trust funds"
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scott, from Oct. 2008 Oct. 11 (Bloomberg) — Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury's $700 billion Troubled Asset Relief Program.The Federal Housing Finance Agency, which placed the two companies in conservatorship on Sept. 7, directed them last month to start increasing their purchases of loans and mortgage-backed securities as the Treasury seeks to absorb underperforming and illiquid assets from financial companies.Also, on Dec. 24, 2009 the Fed's extended some sort of unlimited funding source to F & F.Regarding the shortfalls in the rest, I don't have time this morning to look all of it up. But state by state the crash of 2008 has caused lack of public investment in all of the above, granted some worse than others.Back to work for me.
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jnc:Any steps to eliminate tax deductions for specific activities that the government approves are steps in the right direction. Agreed.they are in fact welfare and not Ponzi schemes because their statutory benefits will be paid via general revenues (or borrowing/deficits) regardless of the state of the "trust funds" But we don't know that they "will be paid". They might not get paid at all, if that is what the government decides to do (unlikely, I acknowledge). The problem with trying to distinguish between a welfare scheme and ponzi scheme in this context is that there is no authority restricting the actions of the government. Ultimately it can do whatever it wants to do.If it wants to pay out of general revenues like a standard welfare program, it can. If it wants to increase the cost to new entrants into the scheme in order to continue to pay out of "dedicated" funds, it can. If it wants to stop lending SS money to itself and literally put the cash in a "lockbox" until it runs out, and then cancel the program entirely, it can.In my mind, the thing that characterizes welfare is a pure and simple wealth transfer. Money is taken from A and given to B, with no value given back to A in return. As long as SS is not means tested, ie as long as everyone who pays in is given a promise of some future benefit, and that benefit is a function of what they are forced to pay in, it isn't really "welfare" in the true sense.Now, I definitely agree that, given demographic/mathematic reality, the government eventually must necessarily fail on its promises, and that this will in turn likely lead to seeing the program turned into a true welfare program. But, while likely, that isn't a necessity. Rather than being turned into a welfare program, it could simply stop making its promised payments and thus fail…just like any other Ponzi scheme must inevitably fail.
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lms:Thanks for that. I was not aware of it. I agree that was/is a real problem.
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lms:I will look myself, but any info you might have on what price was paid for these securities, and where they are priced now would be appreciated.
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Scott, fyi, here's part of a Reuter's piece re unlimited funds for F & F. Just so you know, there were D's & R's both opposed to this, including Norquist.(Reuters) – At a hearing last fall, U.S. Treasury Secretary Timothy Geithner told lawmakers that he and his team were working to put the $700 billion financial bailout fund "out of its misery." But some in Washington now see a second, backdoor bailout in its place.On December 24, the Obama administration announced it was extending an unlimited credit line to mortgage finance agencies Fannie Mae FNM.N and FRE.N Freddie Mac, which would keep them afloat no matter how high their losses.Representative Dennis Kucinich, an Ohio Democrat who was an early opponent of Obama in the 2008 presidential race, thinks the move is backdoor way to help banks, and a congressional subcommittee he leads is investigating the Treasury's decision to cover unlimited losses at the housing finance companies."This new authority must be used responsibly and for the benefit of American families," Kucinich said. It "cannot be used simply to purchase toxic assets at inflated prices, thus transferring the losses to the U. S. taxpayers and acting as a backdoor TARP."That's exactly what Treasury is doing, says Dean Baker, co-director of the Center for Economic Policy Research in Washington."This looks like the original TARP," Baker said, referring to $700 billion financial rescue fund, known officially as the Troubled Asset Relief Program.The original bailout program, devised by former Treasury Secretary Henry Paulson, "was a plan to help the banks restore their capital position by buying bad assets at and above market price, and that looks like what Fannie and Freddie will be doing if they are incurring losses of this magnitude."The Treasury's announcement said the unlimited credit line for the two government-controlled companies would be in place through the end of 2012, weeks after Obama would face voters if he seeks a second term.The Treasury also said it was scrapping plans for the two agencies, which play a role in funding three-fourths of all U.S. residential mortgages, to reduce the size of their investment portfolios. The 2010 limits on their portfolios, in fact, would allow their investment holdings to grow.
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lms:I've looked a bit for info on this, but apart from the original bloomberg story you cited, I can't find anything. The information that I would like to konw is:1) Was the instruction to purchase these assets in addition to or simply part of its normal and historical remit to purchase such securities.2) What amount of these loans did they ultimately purchase, and at what price.3) How much has subsequently been sold, and at what price (ie how much profit or loss)4) How much remains on their books, and at what price (ie in the money or out of the money)
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I'll try to do a little research as well, maybe over the weekend. There was also a bi-partisan letter written to either Congress, the President or both in Dec. 2009 opposing this. It was an unusual assortment of people. A lot of it seemed to fly under the radar at the time. I wonder if there's anything in the Fed audit that addresses any of the numbers?
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Here's something more current from CNN money. Who knows?
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But then I also read something that they asked for another $7.8 billion to cover losses this year between July and Sept.
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One of the things that I find curious about this is that TARP's original purpose was to do exactly that – provide liquidity for the "toxic assets" because the market had basically disappeared. Banks could not sell them to raise capital for anything like a reasonable price because liquidity had disappeared due to panic, so TARP was going to create a reasonable, less panicked market. But the government ultimately chose instead to use TARP to inject capital directly into the banks, thus obviating the need to raise capital by selling the assets at firesale prices. And ultimately barely half of the allocated TARP funds were ever used, so it is odd to me that a "back door" bailout by purchasing assets would have even been thoguht necessary.That is why I wonder whether this instruction was simply an instruction to Fan/Fred to re-start its normal operations in support of the housing market after having gone into conservatorship the month before, rather than a secret attempt to inject capital into and rescue banks, which TARP was doing already.Even more importantly, though, is to know what has become of these assets. Fan/Fred had already lost billions prior to this instruction. So the question is did these operations themselves lose more money, or did the purchases actually work out? That, to me, is the most relevant issue.Regardless, however, the very original point remains. The risk of loss, or any realized losses, on this kind of thing will ultimately be borne by taxpayers. And so, given the amount of taxes paid by high income earners, your claim that the risks will be borne solely by the "working poor" and the middle class is pretty far from the mark, from what I can see.
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That's because you're not listening to my point or I'm not explaining it well. While the government fiddles with saving the banks from losses on these crappy loans whether through front or back door bailouts, it is still the people on Main Street who are losing their homes and jobs. There has yet to be any effective avenue to turn either the housing or jobs crisis around, but the banks are surviving, if not fine, they're surviving. From what I've read no one expects to see any of the dividends from the money given to F&F and they settled with BofA earlier this year for pennies on the dollar rather than forcing BofA to buy back the loans. Meanwhile, there's no money to help the states with their budget crunches which are decimating education, public safety and medicaid resources. That's all I'm saying. The bailouts and housing crash have further ramifications than just the tax burden on our citizens. I also said I don't really care anymore whether we raise taxes on the wealthy. It's causing too much strife and people are trying to put their lives back together without help and knowing their future is dimmer now than it was before. I'd just as soon get on with it. We've lowered our standards, you guys win for now.
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lms:it is still the people on Main Street who are losing their homes and jobs.I understand, but that is not a result of the bailouts. You originally said:Of course the middle class and working poor have taken the hit in this recession and all the risk of the bailouts and interest on all the money we've borrowed.I did not dispute your claim about them "taking a hit in this recession" (although if you think wealthier people haven't taken a hit, you are fooling yourself). What I disputed was that they have taken "…all the risk of the bailouts and interest on all the money we've borrowed."The risk on the bailouts is that it won't get repaid, and will have to be covered by taxpayers. And interest on the money we've borrowed will b epaid by taxpayers. High income peopel pay more taxes than "working poor" people and middle class people. Hence, it is not just wrong but nearly inverts reality, to say that this risk/cost will be borne solely by the "working poor" and middle class.The bailouts and housing crash have further ramifications than just the tax burden on our citizens.Certainly the housing crash did, but even accepting this (and, again, we weren't actually talking about the housing crash itself, but rather the political reaction to it), it has effected people throughout the economic spectrum. To say that the risks/burdens are borne solely by the "working poor" and middle class is hyperbolic to say the least.We've lowered our standards, you guys win for now.Right. Because that is what we've been striving for.
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All I can tell you Scott is that I'm an advocate for the middle class, the working poor and seniors. Myself and the friends who work with me in the health care field, the food bank and even our business have seen the standard of living fall rather dramatically during this recession over previous ones. I read somewhere that real median income has fallen over 9% since 2008. People in the groups above have not only lost homes or equity, retirement, and jobs, they're also paying more for goods and services with no cushion or nest egg left. While we bail out the banks and buy up their stinky loans there's no political or financial will left for these people. If it's not intended to be this way you could have fooled me.I'm tired of arguing class warfare because I think we're better than that and it's not producing results anyway. That's why I say let the process work itself out and if we have a little less security at the bottom rungs of the ladder and a little more false security at the banks it's just too bad. Bush, Paulson, Obama and Geithner all catered to the same interests. I said yesterday I'd vote for Huntsman if he was running and if he meant what he said about TBTF banks, the risk of bailout still exists, look at Europe. I suppose some of this is also in the best interest of Main Street but I'm not so sure anymore. You mentioned yesterday the market looking short term rather than long term when it shows exuberance, I think that's what we're doing a s a nation now, short term fixes and solutions for some very long term problems and the loser will be the bottom 50% to 60% of the population.
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