The New Obama Normal

And when the dot-com bubble burst, what happened?

 

Er... No. You made the claim it did, you prove it did.

Or better yet, stop butting into discussions like this, because you have no idea what you're talking about a good half the time.

 

1. Why was there more capital available just because deficits were lowered?

2. So the thrust of the stimulus Clinton created revolved around business confidence caused by the belief in a "competent government"? If so, couldn't the government have achieved this in other ways besides removing money from the market, which must have a reciprocal effect of decreasing some amount of wealth?

3. Why did we see the 2000 recession at the end of Clinton's term?

4. Don't you think that tax cuts have some positive effects in terms of investment since the wealthy are much more likely to invest their money?

 

Err ... please quote me for the claim you say I made that I should prove. Thanks. Not that I would think you have no idea what you're talking about.

Did you want to identify the statement I made you claim I have no idea what I'm talking about?

Or is this another example of where you have no idea what you're talking about?

 

Govt borrowed less money.

Lost me. What Clinton stimulus? What Govt removing money from the market? Why must it have a reciprocal effect of decreasing some amount of wealth?

We had no recession in 2000.

Dubious. Most the investment went into the housing bubble, it appears.

 

Where's your proof?

 

So reductions in government spending or an increase in government efficiency would have had a similar effect?

According to your interpretation of events, Clinton's tax hikes stimulated the economy. The hikes could be considered a stimulus. Taxes take money from one group and give it to another

Late 2000 early 2001 there was. What do you believe caused it?

Why is it dubious? Well why did the money freed up by lower government deficit spending not go into unsustainable projects like the housing bubble?

 

I think there are a number of reasons.

1. The redistrbution of growth of wealth and income from the middle classes to the 1%.

I've discussed this in detail in other threads.

http://www.politicalforum.com/curre...-4-pay-no-income-taxes-15.html#post1061752923

Basically, "Trickle down" policies over the past 30 years redistributed most of the growth of income and wealth from the middle class to the 1%. The 1% stick it in offshore bank accounts except when they want to invest it. The great engine of spending, the middle classes, don't have the same spending power to drive the economy. The richest sit on a huge pool of money that drives asset prices up when times are good, but pull it out when times are tough. This issue pre-dated Bush, but he reversed the Clinton policies and returned us down the "trickle down" policies of the Reagan administration.

2. Tax cuts, especially capital gains, has refocused attention from production to investment.

Under Reagan's '86 tax code, investment income was taxed at the same rate as earned income. With the Republican controlled Congerss, we big capital gains and investment tax cuts in 1997 and 01 and 03. Thanks to those tax cuts, especially capital gains, are now taxed at less than half the rate as earned income. Income from speculative investment is taxed at a max of 15%, while earned income is taxed at up to 35% plus FICA on top of that.

With those incentives, is it any wonder so much effort has gone into investment and finance as opposed to production and earning? Is it any wonder that we've had two huge and devastating speculative bubbles over the past dozen years?

3. "Business can regulate itself"

Bush and the Republicans adhered to the laissez-faire principle that "businesses can regulate itself. The Bush administration was anti-regulation and thus did not appoint real watchdogs to the agencies that regulate banking and finance and mortgages. As a result, no one was watching the till as the unregulated lending spree went on, with the ARMs and teaser rate mortgage with no money down and no income verification. Banks thought they were insuring themsleves with credit default swaps, but no one was regulating the derivitive industry or companies like AIG which were doing the insuring. And the Republicans controlling the Govt and administration stood by as the bubble blew up to crisis levels, believing that business could regulate itself.

4. "Mr. Ownership Society"

Bush took office just as home prices were starting to take off. He promoted greater and greater home ownership and laws and regulations that got more and more people into homes -- that they couldn't afford. He bragged about home ownership rates increasing, one of the few things he could show an improvement over what he inherited. But it just fueled the housing bubble.

The failure of an energy policy also contributed, IMO, as America got inefficient on relatively cheap oil until demand in nations like India and China sent fuel prices soaring. This was a issue has gone on for years before Bush as well.

 

Effect on the budget? Yes. Effect on the economy, not necessarily.

Please cite where I ever stated that "Clinton's tax hikes stimulated the economy". I don't debate straw men.

There was no recession in late 2000.

In early 2001 there was an economic slowdown, which I would not call a recession though some did. The economy grew 1.3% real in the worst year of the so called "recession".

But it was a largely in response to the stock market correction.

Because, lower tax rates have not correlated with better economic performance, and unless we are talking about extremes IMO there is no reason to think they would.

I think most of it did. Or a lot of it.

 

1. How has trickle-down reallocated resources? If they do nothing but stick money in banks then this should actually increase the spending power of the middle class. If they are investing money then this should result in great future growth.

2. Do you really believe that these rich people would be working any more if earned-income and investment were taxed on par? It would appear that one would not affect the other. Even if all this is true, why are investors spending money so speculatively and dangerously? They're investing to make money, not lose it. This should be even more true if they are spending more time becoming specialized in investment

3. But even the FED the institution which is in large part responsible for regulating the banking industry didn't understand the nature of the housing bubble and tried to boost it up. How was Bush to understand the nature of the problem, let alone any regulators when the finest economics PHD's that money can buy were either at the FED or in the very banks which were propping up the housing bubble?

4. Do you think that Clinton would have been better in this respect? If so, why?

 

Investment would not necessarily mean better economic growth in the now, rather in the future.

There is a very clear reason to think that they would be: Individuals have more money to spend on things that they desire, less taxation to reduce the value of investment or decrease work incentives, and less inefficient crowding out of resources by the government.

Why would any of these factors be incorrect?

 

Since Reagan took office, taxes on the poorer (FICA) increased, taxes on the richer decreased a lot, minimum wage has not kept up with inflation, unions have been gutted of power, things like the overtime laws have been cut back in application, welfare was cut back.

and so we've seen:

When you are taxed at up to 35% plu FICA for earning money and 15% for investing it, why do you think more focus has been on speculative investing? Seems obvious to me.

The Fed has some role in bank regulation. Very little on mortgage lending. Executive agencies like the OCC and OFHEO and SEC have roles.

How did the Fed try to boost up the housing bubble?

Hard to say exactly. It is doubtful that he would have cut taxes like Bush and didn't share his laissez-faire view on regulation.

 

We've needed better economic growth in the now, not 10 years from now.

I'm not sure what you are talking about. Who has more money to spend on things they desire? As far as investment, we don't need more capital. We have trillions sitting in offshore accounts and banks and businesses.

We need more spending.

 

1. Very little of that is actual redistribution of income, especially not in terms of policies by the government. It's letting people make whatever the market allocates them.

2. I don't think that it's obvious at all. Why does the tax on earned income matter at all? It in no way interferes with investment. All that would matter is the tax on capital gains which would decrease potential gains vs. losses. However, you still have not explained why these people would pour billions of dollars into something which is probably going to fail.

3. The federal reserve decreased interest rates and kept credit cheap throughout the housing bubble. The FED could have stopped either by using its leverage against the banks or by increasing interest rates, but they didn't, they couldn't see it coming, nor did any other regulatory agency.
Why didn't any of them or the banks? What would more government regulation have done at that time before it was obvious there was a bubble?

 

It's a huge redistribution of income from middle class workers to the 1%.

If I do one effort and it is taxed at 30%+ FICA, and do another effort that is taxed at 15%, I don't know about you, but I'm going to do the 15% one if I can.

Hindsight is easy. At the time they didn't know when it would fail.

Your facts are wrong again. The Fed was steadily increasing rates while the bubble blew up to its absurd proportions.

I don't believe the Fed has the power to do things like set mortgage loan standards.

Increased underwriting standards. Lowered qualifying loan standards. Increased oversight. Regulated credit default swaps.

 

I'm sure runaway inflation and upper middleclass/fringe rich taxhikes, all while giving the uber wealthy loopholes is going to fix everything......

Oh, and regulation, right? Obama will neither let the free market let banks fail, or have tight regulations that benefit the people. He'll just let the banks play with everyones money, and if the economy crashes again, he'll just push for another banker bailout.

 

So let's not do that.

It's not Obama who is blocking regulations. And with the Tea Party Obstructionists still controlling the House, it's likely we will continue not to see much progress.

 

That's what has happened to some extent, the policy alone is not nor does it ensure that result. Insofar as it is a redistribution, it is because of increase in other areas rather than cuts all around.

But they aren't mutually exclusive. You can make 10 million dollars doing one thing and 5 million doing another, why would you not do both?

Whereas the regulators would have? The question is why were the investors so wrong? Why would they invest so thoroughly on something which was so wrong, when usually investment turns out relatively okay?

After they were at their lows and rates were still relatively low, also while government sponsored companies (fannie and freddie) were going insane and while the government had those extremely loose policies you were talking about. All this while the entire system is supposedly heavily regulated by the federal government.

And how would anyone have known to do that, exactly? Everything looked like it was fine and dandy.

 

Obama didn't want to prosecute anyone when he got in office. He just 'wanted to move forward.'

Meanwhile the Feds have no problem prosecuting some kid for non violent drug related crimes. Such bull(*)(*)(*)(*).

 

If you can make 10 million doing one thing and 5 million doing another, you should.

See reasons listed above.

What is "relatively low"? The Fed is supposed to avoid inflation and we weren't suffering from inflation.

I agree there was a failure of regulation. It was on my list.

It's hard to tell. That's why you don't ease up on it in the first place.

 

So let's quit electing folks who go easy on business but tough on drugs.

 

You are an abject LIAR.
That is why you are here.To spread downright Democrat Lies.
Obama has been averaging 68 Proposed Regulations and Notificatione PER DAY.
6,125 in the last 90 days.They go Unreported as did - Fast & Furious -
and Obama's Executive Orders.
This according to { CNSNews.com } who merely went to
{ regulations.gov } website.

 

Agreed, so your point about taxation on paid work is irrelevant

Those aren't reasons, those are methods.

Something which is lower than most rates have been historically.

That's an understatement, practically the entire crisis is because of regulatory failure on every level.

It's practically impossible to tell. That's why it is a bubble, and why regulation will do little to actually help, especially if governmental policy is skewed in favor of the bubble as it was in the most recent crisis.

 

I don't see the left rallying behind Jill Stein.....

 

Yes, that is absolutely true. When Democrat Clinton was first elected and he started enacting his Leftist Progressive agenda he was very unpopular. The Republicans HEAVILY took over Congress in 1995 (midterm election just two years later, or the first chance the American People had a chance to respond at the ballot box) and Democrat Clinton started signing Republican legislation, or became a REPUBLICAN President which lowered the unemployment rate. Had Democrat Clinton NOT became a Quasi Republican President he would have been slaughtered during his re-election which is really my point. Much of the American People are so politically clueless that they accept what is going now as the "New Normal" and just don't see the Democrat Destruction which is why I posted all the statistics. Thank you for your insightful post!