Column by Jacob Sims
When is the last time you read a book that was over 1,000 pages? Better yet, have you ever read a document over 1,000 pages and written by attorneys? What if I handed you this document at midnight and told you it had to be read by noon?
That’s insane to think about. Oh, right, except that is exactly what happened in Congress about a week ago. Congress was handed this plan at midnight and had 12 hours to read it all, make a decision on it, and vote on it. Not only was it 1,000 pages of complex wording and multifaceted implications, but it was an $800 billion plan that was supposed to save or create 4 million jobs for American citizens.
Needless to say, with our politicians exemplifying their usual incompetence, no member of Congress read the document.
What kind of loonies would propose such a crazy idea? The Democrats in Washington did.
During the campaign season, Obama promised to let the American people see the bills that would be voted on for 48 hours before he would sign it and injected all kinds of rhetoric about transparency in his administration. He even went as far as to say that he would look at the bills “line by line†to cut wasteful spending and ineffective projects.
Apparently, Obama, like the members of Congress and the American public, didn’t get a chance to read the bill because the one that he described on television demonstrated very little resemblance to the one that passed Congress after Harry Reid and Nancy Pelosi got a hold of it. He claimed that there were no earmarks. There was no pork. As Bill Clinton would say, “Define porkâ€.
When the bill was originally introduced, the Democrats claimed it was about creating jobs and stimulating the economy. Unfortunately, this bill is not primarily about either of those; it’s about spending.
How is $15 billion to save a mouse in California (Pelosi) going to help create jobs? How is $8 billion to build a high-speed rail line from Los Angeles to Las Vegas (Reid) going to stimulate the economy? Both of these are conveniently in the districts of the Democratic leadership in Congress. Maybe it is just a coincidence.
In an election, the people exercise their right to political participation, and their voices are heard at the voting booth. They cast their vote, and through tradition, whichever party wins, to the victor goes the spoils. I have no problem with the nature of these political cycles. What I do find disheartening and, quite frankly, deceitful is when the Democrats, coupled with the ultraliberal Huffington Post and others, say Republicans are hindering Obama’s effort at every turn; that we are being partisan for not supporting bad legislation; that we are being the Party of No; that Capitalism failed and our ideas didn’t work. It is nonsense, fraudulent and beyond naïve.
Government intervention was at the origin of this economic collapse. More specifically, Democrats created, expanded and defended the role of Freddie Mac and Fannie Mae, which had a huge impact on the crisis. Capitalism was undermined by the Democratic Party and the Republicans that betrayed conservative principles (including George Bush).
During this Stimulus debate, Republicans brought a proposal to the Congressional Democrats that would create twice the jobs at half the price, but the Democrats already threw Obama’s call for bipartisanship out the window and didn’t even allow Republicans in the room for a discussion.
The Republicans were trying to stimulate the economy while the Democrats were driving up the debt for us and our kids and simultaneously half-heartedly throwing money at the problem. Republicans believe individuals know how to handle their money better than the bureaucrats and want to help the citizens instead of helping to expand the size of government and our federal deficit. Maybe we elected “more of the same†after all.
Jacob Sims is a political science and history sophomore and president of UK College Republicans. E-mail opinions@kykernel.com.
As a shameless fan of Obama, it hurts to say that I partly agree with you. I don’t agree with the Democrats being responsible for the origins of the crisis, I think that was more a consequence of irresponsible lending by the banks and a fluke failure of capitalism (banks and corporations NOT acting in the best interests of the shareholders).
But some of the stuff in the package is useless. I’ll never understand ANY government support for high speed trains in the US, the country is too big for them to ever provide much real service.
I harshly disagree with your view of the Republicans being a voice of reason here. They proposed almost nothing and, despite loving the attention Obama was showering on them, voted along party lines for purely selfish reasons. I agree the stimulus needed a lot of work, but they never gave any rational reasons for voting against it outside of wanting more tax breaks and bitching about some pork-barrel spending that’s all-to-common in ANY Congress bill (of either party). Tax breaks are always good for the economy, but not in the short term and not fast enough to in any way cushion some of the damage and losses to your average American.
But yes, the stimulus was a mess and could have been handled much better. I still think it will help somewhat, but not to the extent we need it to.
Glad to see that someone actually reads my articles and that there is some common ground, even with different ideologies.
With that said, I passionately, passionately disagree with you whren you say that Republicans did nothing and that we voted along Party lines for selfish reasons. Here is the deal. If you say that the goal of the bill is “Stimulus” like they were trying to present it, then you propose a bill that does that. What the Democrats proposed was roughly 2/3 spending and 1/3 tax cuts and isn’t going to effectively stimulate the economy (according to people alot smarter than me that are not politicians). What the Republicans proposed was a bill that was roughly 1/3 spending and 2/3 tax cuts and would have created twice the jobs (which was supposed to be the goal) at half the price. This proposal among other suggestions was never considered. The Republicans were allowed no input. Obama’s call for bipartisanship was ignored. To say we did nothing, is very inaccurate.
In your opinion, you may think they voted for selfish reasons, but you must understand the ideological differences. We don’t see the government as the solution, for about anything. As a matter of fact, as I explained in my last article, many of the problems that our country now faces was created or encouraged by the intervention of government.
I didn’t just come up with this notion that Freddie Mac and Fannie Mae was at the root of this economic collapse. Democrats like Chris Dodd, Republicans that Democrats love like Chuck Hagel, major publications like the Wall Street Journal, and a plethora of economicists have said it. It was not the sole reason but it was a major contributing factor since they did have responsibility of 1/2 of the mortgages in the US. And you’re right that many banks were lending irresponsibly, but they were also getting sued if they did not under the provision and expansion of the Community Reinvestment Act. They were sued if they did not give loans to low income, bad credit individuals. They both blamed huge factors in the collapse.
I, once again, will have to disagree that tax cuts don’t affect the economy. If anything, they go directly to the source and inject it quicker than creating infrastructure projects that take years to develop. Not that these are not good things, but if you are talking short term, tax cuts are very effective and effective almost immediately.
Lol with all that said, it passed and all we can do is move forward. To understand Republicans, or at least my writings, is that we do not trust government will fix any problem, but rather complicate it. I hope that Congress handles this money responsibly but I highly doubt it. I wish Obama the best of luck though.
And by economicists, I mean economists. Ha!
I would agree that there is plenty of blame to go around on the current state of our economy. Id’ love to see bank President’s turn around and question the likes of Senator Dobb and Congressman Frank on what the hell they were thinking when they choose to deregulate the lending market nad pushing banks to lend money to those who couldn’t make the payments. However, that practice grew rapidly with the creation of the subprime market and it spu into where we are today.
What I do disagree with though is the thought that the only type of spending we should have to stimulate the economy should be done by the electorate. The electorate that in this economic climate isn’t going to go out and buy a toaster or a car. Their own personal economies are failing as they risk losing their job tomorrow. They’re going to save that money – that’s not going to do much stimulating. And why should we be afraid that the largest stake in our national economy – the US Government which represents a third of the GDP is such a bad source of economic spending. When Republicans say FDR didn’t get us out of the depression, WWII did, it’s because the Government spent a ton of money in the economy – that’s stimulus. It astounds me how basic Keynes economics and the idea of spending has been dumbed down to solely tax cuts – that’s not stimulus.
While there are plenty of problems with the legislation, and no one read it, I’m not surprised. That is not an unusual occurence in Washington. Even if they did read it, politics would play a part in it anyway. History dictates the politics will play the biggest part of it. If we aren’t playing politics then why did every House Republican vote against it and every potential 2012 Presidential candidate currently a Governor stand against it. It’s election season, it’s always election season, and this is the best possible thing to campaign against in four years. I’m not a professional political operative but that is what I would suggest. I would suggest it because we aren’t going to begin to see the light at the end of this recession until it’s election season. The majority will be blamed for the mistakes – that’s how it works. It is politics, plain and simple. Pork barrel spending complaints about education and green jobs started the ball rolling, but that fact is that green energy innovations is the next technological breakthrew and if China makes it then we’ve failed as a society. We have an obligation to be on the innovative way – that’s why we are the country we are. So, by putting “stimulus” toward this objective is a wise move and the same goes for education.
Dis here is how de stimulus package is sposed to work:
Da Pres Obama he give me ten dollars.
Gov’ner Steve he take five dollars of that for Kaintucky.
Mayor Jim he take seven dollars of that for Downtown Lexington.
See now, dats how it works.
Y’all keep da change.
Also, the story about the “$15 billion for Marsh Mice” is completely false. The original claim was that there was a provision for $30 million, not $15 billion, so I’m not sure where you got that figure, but the entire story is false. There is nothing in the entire stimulus bill about money for preserving marsh mice.
http://theplumline.whorunsgov.com/stimulus-package/pelosi-staff-conservative-talking-point-about-30-million-for-mice-is-fabrication/
“How is $8 billion to build a high-speed rail line from Los Angeles to Las Vegas (Reid) going to stimulate the economy?”
Well you see, economics is a funny thing. When you build rail lines, you have to hire people to build them, and then jobs are created, and once high-speed rail is implemented, opportunity costs for exports in Nevada and California is lower, leading to a higher profit margin for businesses. So pretty much, while that may be a really complex and hard-to-understand concept, getting our internal transportation infrastructure on par with the rest of the civilized West should be–and is starting to be–a top priority for many Americans.
“When is the last time you read a book that was over 1,000 pages? Better yet, have you ever read a document over 1,000 pages and written by attorneys? What if I handed you this document at midnight and told you it had to be read by noon?”
Document presented before Congress detailing and outlining how over $700 Billion of the nations money will be spent; House Republicans upset about too much reading.
So are you saying Republicans would have voted on it, had they had time to read it all? Or are you saying that Democrats always pass legislation without reading? Is the criticism coming from the fact that you really wanted to read it before it passed? I am unsure as to where you stand on this issue. It’s a $700 Billion stimulus, not a paycheck.
“Government intervention was at the origin of this economic collapse. More specifically, Democrats created, expanded and defended the role of Freddie Mac and Fannie Mae, which had a huge impact on the crisis. ”
Holy crap, can this argument be put to rest? Freddie Mac and Fannie Mae were a symptom of the problem, not the source. The levels of cognitive dissonance the person has who started this rumor must be super-human, because the idea that FMFM caused this entire crisis requires little to no understanding of how the financial system works, and actually believing it if knowledgeable would cause a normal person’s head to explode.
Private sector loans, not Fannie and Freddie, caused this financial crisis. The fall of those two companies was nothing but a symptom of the greater problem at hand. According to McClatchy, an actual reputable news publication, such unsubstantiated claims can easily be overturned.
From McClatchy D.C., October 24, 2008
(http://www.mcclatchydc.com/251/story/53802.html)
“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.”
Let me further debunk this with the history of the companies, and exactly what they do, because I feel I am arguing against Republican talking heads with no facts or reasonable conclusions to back their absurd assumptions.
Fannie and Freddie were private institutions created by the government with the purpose to buy debt from banks, to free up money and to allow lending. These two companies, and the system of buying debt from banks, is nothing new and nothing “evil.” There is nothing partisan about this.
Fannie used to be owned by the public, but was privatized. Freddie was created after Fannie to provide some competition. Because both companies were created by the government, they existed in a type of public/private limbo. When profitable, they were private; when working at a loss, they were public. Both companies held so much value in mortgages, to simply let both fail meant the entire financial system would collapse. Greenspan knew this, Reagan knew this, Clinton knew this. There isn’t a single party to blame on the structure of Fannie and Freddie.
Now that that is out of the way, what essentially happened before the “Sub-prime Mortgage Crisis” in 2008 was the big banks (whats up Merrill and Countrywide) started buying the same debt from banks that Fannie and Freddie were created to buy and sit on. These are called Mortgage Backed Securities (MBS), which as I understand it, can be packaged together with other types of Securities in the form of Credit Default Swaps (CDS) that are then rated by organizations by their profitability. The increased competition in the market essentially pushed Fannie and Freddie to buy up bad loans, because they were *private* institutions, and had to take on loans that weren’t as solid (AAA) as loans past in order to create *value for shareholders*.
Essentially, Merril and Countrywide put FM&FM’s balls in a vice, and caused too much pressure on the financial system. Fannie and Freddie weren’t at the cause of anything, they just fell victim before the others because of their singular, undiversified role in trading CDSs. That of course isn’t where the story stops, as further Credit Default Swaps and buying toxic and “get rich” MBSs by other private companies with great disregard for the health of the financial system catalyzed the situation we are in right now.
Often, Republicans will suggest that the CRA laid the foundations for this. This is actually even easier to debunk, just realize that if you try to bring forth this horrible argument, I will use examples of New Century Financial to counter this, as they failed without having to follow the CRA, and were the nation’s second largest sub-prime lender.
“During this Stimulus debate, Republicans brought a proposal to the Congressional Democrats that would create twice the jobs at half the price”
I have not seen anything of this. I would be interested to look at it, but as I understand, almost every proposal shot forward by McConnell was a charade and not meant for actual debate, but instead, for symbolism. Republican Senators actually stood up in the chamber and argued passionately that Education does not create jobs–for example.
“Republicans believe individuals know how to handle their money better than the bureaucrats and want to help the citizens instead of helping to expand the size of government and our federal deficit.”
WHAT? Are you honestly, I swear to God, stating this? Are you actually asserting that Republicans are somehow protectors of the federal deficit? Did you live during George W. Bush? George H.W.? Reagan? Do you even realize when the last time we had a balanced budget was? Under whose Presidency? Is this an honest argument? Somewhere in the world, a Republican’s head is exploding from all the cognitive dissonance.
Also, to further illustrate how the private sector and deregulation caused the downfall of the American economy, the Gramm-Leach-Bliley Act passed in a Republican Congress with an overwhelming veto-proof majority allowed the trading of Mortgage Backed Securities, which as I understand, were not allowed under Glass-Steagall.
Again, this isn’t partisan here, either. President Clinton himself was all about Gramm-Leach-Bliley, and signed it enthusiastically. Republicans and Democrats held hands as our financial system began to burn.
Myles, you’re a son-of-a-bitch, but you’re also correct.
5$ says the stimulus will work.