I had an interesting conversation with a person that, well let’s say, is far more conservative than I am. He was commenting on how President Obama had destroyed our economy and how Republicans (and by that he means Tea Party Republicans) were going to take over and reverse everything that President Obama and Congress has done. All I am going to say about that is let’s pray that does not happen.
Now I do not mean that everything is perfect or that Democrats have displayed great leadership. I believe that Democrats have made as many mistakes trying to get us out of this mess as both sides made in getting us into it. I do not claim to be an expert at economic theory or how to restore our economy, but there are many ideas that would have done a better job.
First, neither President Obama’s actions nor those of Nancy Pelosi or Harry Reid got us into this mess. This mess was caused by greed, by poor regulatory oversight and by inaction by both President Bush and by Congress. It cannot be blamed on Republicans or Democrats, each must take equal responsibility. Forest Gump could have told you that selling a $400,000 home to someone working part time at 7-11 was not a good business practice. The deregulation of the market that allowed those contracts to be sold and traded on the open market was even less intelligent. Congress and the President stood by and did nothing to address this issue when it was brought up more than five years ago that we were heading for a cliff. The people selling these contracts, and pushing for even looser regulations were in this solely for the profit and did not care what damage it would leave in its wake.
Secondly, the stimulus package pushed by both President Bush and President Obama was the right idea; however it was not the right method. I do not disagree that if we allowed more banks to fail that the hole we are in now would have been deeper. I believe that you would see fewer banks and more of a stranglehold on our economy by monetary power brokers. I do not however believe that the way things were done were effective or were the best choice at that time. First with the bank bailout, I believe that government dealt with it the same way they typically do, just threw money at the problem. Much of the problem, after you get past the greed, was that banks now held paper on homes that were sold to people who never should have bought, at least at that level of purchase. Foreclosures, upside down mortgages that resulted from plummeting prices and the spiraling effect of money tightening up because of that was the issue that needed to be addressed. Just bailing the banks out without addressing what the issue was is like telling a drunk driver to not drink and drive and then filling up his gas tank. Although I think these new ideas being floated at now starting to address this issue, the damage done to local communities will take years to recover from. If instead the government had somehow purchased the bad contracts and then either refinanced them or as I would have loved to see, establish them a benefit for our deserving Veterans it would have made more sense.
I am also someone who believes in strategic investments and in the carrot and stick approach to fiscal accountability. If you invest in what makes our nation strong you invest in its future. Investments in transportation, communication, power generation and in our greatest asset our citizens would have paid much higher dividends and would have resulted in jobs then and in our future. Conservatives are right when they say that government does not produce jobs. But government strategically working with business does. One of the reasons we saw such a strong economy in the late 90’s was because of the investment made into and by business. Tax breaks for purchasing of computer systems, modernization of manufacturing processes and in this little known thing that was called the internet all contributed. As businesses built up it created jobs to meet the needs of the modernization, when completed it allowed businesses to be more profitable which resulted in more jobs as business expanded. The same concepts are now being debated in Congress, but these ideas should have been the focus two years ago.
Finally, I want to talk about the debate to extend the Bush Tax cuts. This was one of the most remarkably brilliant moves by the Republican Party to put this into play nearly a decade ago. The strategy to make the tax cuts temporary was not just to get the votes at the time, but to set up a long term strategy that they could manipulate as the expiration date approached. Now, going into a midterm election they can claim that Democrats are trying to raise your taxes.
As I have stated in other post, I am not a big fan of taxation to begin with. I feel the best way to increase revenues is to grow the economy. If these tax cuts were such a great idea then, why they were not made permanent then? If reducing the taxes on those making over $250,000 would result in those people reinvesting it back into the economy why didn’t those people do that? The economic theory of lower taxes on wealth and business helping grow the economy only works if those who have the money do not sit on it. If you apply the carrot and stick approach then those who do reinvest in our communities can do so in partnership and those who only want to sit on their hands can pay the higher taxes. As for the idea that failure to extend the Bush Tax Cuts is raising taxes is political manipulation. I saw in the newspaper today the headline “GOP to Battle Democrats on Tax Hike”. Again that is something that Forest Gump would even think is idiotic. You work to block any bill and the Bush Tax cuts expire. You work together to make the Bush Tax cuts actually work as they were intended.
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