Unrighteous

“Woe unto them that decree unrighteous decrees, and that write grievousness which they have prescribed.” Isa 10:1

One of the great things about our democracy is that old friends can have fundamental differences about things like economic policy, and yet the country still moves forward. That’s because every four years we all get to vote.

The last eight years President Bush earned the opportunity to test trillion dollar tax-cuts, unrestrained capitalism, and cowboy foreign policy. The results of that experiment pretty much speak for themselves.

The American voters had a clear choice in November. Republicans didn’t offer many new ideas. Instead they chose to attack the guy I liked. They called him inexperienced, a socialist, a friend of terrorists, a baby killer, and a Muslim. A majority of voters saw through that. Now my guy has earned the opportunity to take us in a different direction.

Because of the problems President Obama inherited, that direction includes massive short-term government spending. In the near future it may also include taking over failing financial institutions (like the infamous socialist Reagan did during the S&L crisis) and restructuring mortgages.

I didn’t like much of what the Bush administration did the last eight years. I suspect those who supported McCain and Bush won’t find much they like in the Obama administration.

The facts, however, are hard to avoid. The Bush administration added $5T to the national debt, started two wars, and left the country in the worst financial condition since Herbert Hoover. But when Democrats propose $800B to accelerate the recovery, Republicans call it “generational theft” and followed that up with a proposal for a $2.5T tax cut.

Rather than ideas, Republicans only have tired rhetoric – “tax-cuts are good” and “liberal/socialist spending is bad”. Their only plan for success requires President Obama to fail. Given the serious challenges facing this country that is a sad commentary.

9 Responses to “Unrighteous”

  1. keith says:

    Jeff,
    We agree on the one thing that is most important for our country. Every four years we get to select a new president. Your guy won and I appauld the winner and well allour democracy. (It’s unfortunate your side didn’t treat the winner with the same respect last time.)

    As to the error’s in your comments above;

    #1 Bush didn’t just “try trillion dollar tax cuts.” Tax cut are proven to increase revenue to the treasury and they stimualte the economy. Kennedy, Reagan and Clinton all saw revenue’s to the treasury increase after significate tax cuts were implamented. Why your side never owns up to this fact is a mystery. Where the the train runs off the tracks is with SPENDING not increased revenue’s. Why cant we reach agreement on this??????

    #2 Amercians didn’t have a clear choice in Nov. It was a guy everyone liked verse a guy NO ONE liked ….You’ve made a wrong staement several times that the choice for Obama was a choice for his policies. I’m not at all certian thats correct and in particular his economic ones. He is all in for this stimulus while 62% of us are not…..hardly a vote of approval. Remember Bush had something like 70% behind him to go into Iraq.

    #3 Obama was and still is inexperianced, which I don’t hold against him. I think this frist few weeks here have proven his inexperiance. He is a friend of terriorists, he does support the killing of the unborn.

    #4 The country is not in the worst finacail condition since Hoover. It may get there but isn’t there yet. The late seventies and early eighties had much higher unemployement levels then we have today. The job losses are bigger today but the enemployement % is less.

    #5 Repeating here but….tax cut are good and have INCREASES revenue to the treasury EVERY time they have been implamented.

    #6 “Their only only plan for sucess is for Obama to fail…..the dems had a different stratigy that last eight years? This is summerize best by my good friend Harry Reids comments PRIOR to the surge in 2007 “The war is Iraq is LOST!” Nothing like wishing the home team well on their way into battle.

    I do like the tempo for this post and it is worthy to note this is our government, this is the way we do things. We vote, get a winner and then the winner gets to govern. If they have both the house and senate then more power to ‘em. Don’t like it, then go beat them at the poles the next time.

    The danger I see however on your side is that everything becomes political and they cross the line way to much. Couple of examples.

    Go check the vote results for supreme court nominations over the past 25 years. You’ll find very few Dems supporting Republican nomination and virtually every Republican supporting every Dem nomination.

    This notion of bring to trial the Bush administration is the kind of thing that has no place. Bush let the Clintons go on what he was found guilty of….

  2. keith says:

    Hey Jeff,
    Thought to add a few comments.

    #1)About the time our original thirteen states adopted their new constitution in 1787, Alexander Tyler, a Scottish history professor at the University of Edinburgh , had this to say about the fall of the Athenian Republic some 2,000 years earlier:

    ‘A democracy is always temporary in nature; it simply cannot exist as a permanent form of government.’

    ‘A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury.’

    ‘From that moment on, the majority always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.’

    ‘The average age of the world’s greatest civilizations from the beginning of history, has been about 200 years’

    ‘During those 200 years, those nations always progressed through the following sequence:

    1. From bondage to spiritual faith;

    2. From spiritual faith to great courage;

    3. From courage to liberty;

    4. From liberty to abundance;

    5. From abundance to complacency;

    6. From complacency to apathy;

    7. From apathy to dependence;

    8. From dependence back into bondage’

    What stage are we in? 7?

    #2)Mr. Obama’s analogies to the Great Depression are not only historically
    inaccurate, they’re also dangerous. Repeated warnings from the White
    House about a coming economic apocalypse aren’t likely to raise consumer
    and investor expectations for the future. In fact, they have contributed
    to the continuing decline in consumer confidence that is restraining a
    spending pickup. Beyond that, fearmongering can trigger a political
    stampede to embrace a “recovery” package that delivers a lot less than
    it promises. A more cool-headed assessment of the economy’s woes might
    produce better policies.

    This was reflected in unemployment rates. The latest survey pegs U.S.
    unemployment at 7.6%. That’s more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can’t equate 7.6% unemployment with the Great Depression.

    Other economic statistics also dispel any analogy between today’s
    economic woes and the Great Depression. Real gross domestic product
    (GDP) rose in 2008, despite a bad fourth quarter. The Congressional
    Budget Office projects a GDP decline of 2% in 2009. That’s comparable to
    1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP
    fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it
    fell yet another 13%.

    Auto production last year declined by roughly 25%. That looks good
    compared to 1932, when production shriveled by 90%. The failure of a
    couple of dozen banks in 2008 just doesn’t compare to over 10,000 bank
    failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures
    in 1987-88. Stockholders can take some solace from the fact that the
    recent stock market debacle doesn’t come close to the 90% devaluation of
    the early 1930s.

  3. Jeff Beamsley says:

    Keith,

    Not sure where you’re getting your facts on tax cuts. Please put some facts that I can reference from unbiased sources next to your “everybody knows” claims.

    Clinton raised taxes on the wealthy in 1993 and increased revenues. He cut middle class taxes in 1997 and increased revenues. The economy survived the dot-com bust and he handed George Bush a surplus and a world at peace.

    The Bush tax cuts have been an abject failure. Not only were they the largest in history, but they had the least effect. The only ones who made money were the weathly, but the defecit swelled by $5 Trillion.

    Seems to me to indicate that marginal tax rates for the wealthy have little or no effect on government revenues.

    Not sure where your 62% against the stimulus package comes from either (maybe Fox). Here’s a link to a Gallup poll that shows that a majority have always favored the plan and that favorable rating is going up (59% in favor, 33% opposed).

    http://www.gallup.com/poll/114577/Stimulus-Support-Edges-Higher.aspx

    As far as attempting to claim that the economy was in worse shape in the 80’s, there is simply no comparison. Here’s just one example from a source that you’ll respect that outlines the reasons why.

    http://www.foxbusiness.com/video-search/m/21806750/rogoff-80-s-crisis-a-baby-compared-to-now.htm

    Tax cuts always boost revenues? How about a lead article in Time Magazine (that bastion of left wing thought) titled “Tax Cuts Don’t Boost Revenues”. Here’s just a quick excerpt.

    If there’s one thing that economists agree on, it’s that these claims are false. We’re not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves–and were never intended to. Harvard professor Greg Mankiw, chairman of Bush’s Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.

    http://www.time.com/time/magazine/article/0,9171,1692027,00.html

    Even Laffer himself says in this article that it is bunk. He says that it didn’t work during the Reagan years and it took the spending cuts during the Clinton years to clean up the mess that the Reagan tax cuts created.

    It is a fantasy that continues to be perpetrated by the Republican party because it benefits the conservative wealthy who form the backbone of the party.

    As far as a history of bi-partisanship. As I recall, Bush received broad support from both parties for the invasion of Iraq even though the case for war was flimsy. It was based on our trust that he knew what he was talking about.

    What bothers me about the current Republican strategy is that it is hypocritical. These folks are suddenly wrapping themselves in the garments of fiscal conservatism when their counterproposal was for tax breaks that would total $2.5T, give me a break.

    Just like in those days after 9/11 all the way to the invasion of Iraq, we need patriots, not partisans.

    Our intelligence agencies are telling us that the greatest threat to our safety is no longer terrorists. It is our own financial weakness.

    Instead of rising to the challenge and recognizing the perilous position we’re in, the Republican party has decided that they are going to close ranks and disengage from the whole recovery effort. They will criticize it at every turn and sow as much disention as possible because they sense that it’s failure is their only hope to regain power.

    Those that opposed the war in Iraq were roundly and publically criticized as traitors. I know because I was one.

    Well I’m calling the Republic party out for the same reasons. Their unwillingness to engage at any level is putting this country at great risk.

    This should not be about power. This should be about recovery.

  4. keith says:

    Hey Jeff,
    i can’t respond as the point are too many and i am growing very tired of all this……i started into this point by point but stop as it will do noone any good.

    i spend time on the internet to defend tax cuts that don’t work….ragen raised revenue to the treasury, doubled it. period. kennedy raise revenue to the treasury, bush raised revenue to the treasure….tax cuts raised revenue to the treasury. clintons TAX CUTS raised revenue to the treasury. however in every decaded since the depression we have rasied revenue to the treasury…….so i will stop saying tax cuts rasie revenue to the treasury if you will stop saying “bushes tax cuts were a failure.” (failure of what?)

    the economy is weakening rapidly….republicans too both of us sound hypocritical when they talk about spending because they spent like drunken sailors……how ever that doesn’t mean that it isn’t correct to say spending needs to be brought back in order.

    if you and i ran a company we would not spend more then we brought in……our govt shouldn’t either. clinton rightly listen to newt and got this done.

    the more i watch Obama the more I’m begging to believe he’s guessing…that’s ok though i guess because it seems like they’re all guessing…..

    my belief is if we were to drop the mark to market rules we’d be on our way out of this mess very quickly. i asked that question of the head economist from Wachovia two Saturdays ago and he agreed very quickly……

    This is a God problem and only God can fix this one. Hopefully we can agree that the people of this country need to pray our way out of this.

  5. Jeff Beamsley says:

    Keith,

    If I’m going to work this hard, I expect you to at least read what I post. From your response, it doesn’t look like you read that Time article at all.

    If we’re talking about facts, you’ve got to bring it.

    So I’ll make it easier for you. I’ll post the references AND the excerpts.

    The increasing revenue argument is just another example of how politicians (in this case Republicans) take a fact and turn it into the truth. In the same way the fact that the sun rises in the east and sets in the west was used to justify the simplistic truth that the sun revolves around the earth. Everybody accepted that as true for a long time beyond when proof was available that it was false too.

    So here is a bunch more research and references for you to ignore because the tax cut myth somehow gives you comfort.

    FIRST – Kennedy

    http://www.huppi.com/kangaroo/L-taxcollections.htm

    The Kennedy tax cuts are another favorite supply-side myth; many claim that once the tax cuts went into effect in 1964, income tax collections grew. But as you can see from the chart below, growth in income tax collections sharply dropped off:
    Federal Income Tax Collections (Constant dollars, CPI-U) (3)

    Year Receipts Percent change from previous year
    ————————————————–
    1961 $138,069 —
    1962 150,567 + 9.0%
    1963 155,375 + 3.2
    1964 156,804 + 0.9 < tax cut takes effect
    1965 154,475 - 1.5

    In 1965, the economy was in the fifth year of a nine-year expansion, and for income tax collections to see negative growth was, again, most uncharacteristic. Income tax collections did rise in 1966, but by this time President Johnson was accelerating the economy with Keynesian deficit spending on the Vietnam War. (These deficits he hid by unifying the federal budget with Social Security.) The greater economic activity resulted in more tax collections, and to disentangle any alleged supply-side benefits from the Keynesian benefits is all but impossible.

    SECOND Reagan

    http://query.nytimes.com/gst/fullpage.html?res=9B05E5DE1F31F93BA35755C0A9629C8B63

    But Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts. To his credit, he was more pragmatic and responsible than that; he followed his huge 1981 tax cut with two large tax increases. In fact, no peacetime president has raised taxes so much on so many people.

    In 1980, according to Congressional Budget Office estimates, middle-income families with children paid 8.2 percent of their income in income taxes, and 9.5 percent in payroll taxes. By 1988 the income tax share was down to 6.6 percent — but the payroll tax share was up to 11.8 percent, and the combined burden was up, not down.

    AND more Reagan

    http://krugman.blogs.nytimes.com/2008/01/17/reagan-and-revenue/

    Actually, federal revenues rose 80 percent in dollar terms from 1980 to 1988. And numbers like that (sometimes they play with the dates) are thrown around by Reagan hagiographers all the time.

    But real revenues per capita grew only 19 percent over the same period — better than the likely Bush performance, but still nothing exciting. In fact, it’s less than revenue growth in the period 1972-1980 (24 percent) and much less than the amazing 41 percent gain from 1992 to 2000.

    AND more Reagan

    For the econowonks out there: business cycles are an issue here — revenue growth from trough to peak will look better than the reverse. Unfortunately, business cycles don’t correspond to administrations. But looking at revenue changes peak to peak is still revealing. So here’s the annual rate of growth of real revenue per capita over some cycles:

    1973-1979: 2.7%
    1979-1990: 1.8%
    1990-2000: 3.2%
    2000-2007 (probable peak): approximately zero

    Do you see the revenue booms from the Reagan and Bush tax cuts? Me neither.

    FINALLY from a US Treasury Document from Sept 2006

    http://www.ustreas.gov/offices/tax-policy/library/ota81.pdf

    Second, in 1981, ERTA was enacted, which provided for the indexation of the individual income tax parameters. The combination of indexation and relatively large federal budget deficits helped cause 9 of the 11 major tax bills enacted between 1982 and 1993 to increase federal revenue.

    ====================

    Reagan tripled the deficit during his term in office to $155B. As a percentage of GDP it rose from 2.6% to 5.3%. So one could easily argue that any growth in federal revenues during that period was not the result of his tax cut, but rather his tax increases, that fact that the population grew briskly during his term, his aggressive deficit spending, and his good fortune to be in office during the upswing of the business cycle.

    So it isn’t just as simple as looking at revenues at the beginning of a term and comparing them to revenues at the end of a term because that isn’t the issue. The issue is did these tax cuts have a real affect on economic growth. And it certainly doesn’t count in good times to dramatically expand the deficit as both Reagan and Bush did and then claim that it was tax cuts rather than the more obvious federal spending that sparked the economy.

    The Republicans are fond of saying that Reagan cut taxes, federal revenues grew, and so there must also have been economic growth. It’s just not true for all of the reasons I’ve listed. Unfortunately, it won’t stop the Republican revisionist historians twisting the truth to suite their purposes.

    I do agree with you that prayer is the best solution to all problems that face us. God is the source of all supply. That supply is infinite. God is also our first best employer. We all should be about our Father’s business. That business is learning more about our Father and loving our brothers as ourselves.

    Nice talking with you.

  6. keith says:

    as i am found of saying…..bush spent like a drunken sailor….

    so mr keynes why no excellerated growth…..

    my point was this…revenues alway grow in the u.s. over time regardless of who or what happens…….it’ll post the backup to this i found …..

  7. keith says:

    Jeff,
    A few of the places I found stuff the other night. You rightly pointed out I was having a bad night the other night in my post. I am really tired of the great unknown and our investments and markets are a total joke. No one is talking about anything that makes sence and everyone is pooh hooing everything. i had no idea a market couls turn as it is now and seemingly no one wanting to own anything. wealth is being destroyed at a rate thats unbelieveable. Even Clinton jumped in and told our candidate of hope that he needs to kick in a more positive message with telling the facts. lets start with basicly comparing this with the great depression. maybee we’ll get there but lets not call it until it does. i’m still caught in major traffic every morning as i drive to work….unemployment still under 8% vs 25% in the 30’s……

    here are the some of the resourse i found

    http://www.heritage.org/research/taxes/BG1086.cfm

    EFFECT OF REAGAN, KENNEDY, AND BUSH TAX CUTS ON REVENUES

    EFFECT OF REAGAN TAX CUTS ON REVENUES – SHORT ANALYSIS
    The argument that the near-doubling of revenues during Reagan’s two terms proves the value of tax cuts is an old argument. It’s also extremely flawed. At 99.6 percent, revenues did nearly double during the 80s. However, they had likewise doubled during EVERY SINGLE DECADE SINCE THE GREAT DEPRESSION! They went up 502.4% during the 40’s, 134.5% during the 50’s, 108.5% during the 60’s, and 168.2% during the 70’s. At 96.2 percent, they nearly doubled in the 90s as well. Hence, claiming that the Reagan tax cuts caused the doubling of revenues is like a rooster claiming credit for the dawn.

  8. keith says:

    Jeff,
    remember i’m not against obama….i want him to succeed. This articule best sums up what i’m thinking.

    Over the realistic objections of the National Economic Council’s Larry Summers and Treasury Secretary Timothy Geithner, it is said that Chief of Staff Rahm Emmanuel encouraged Senator Chris Dodd to, at the last minute, attach a punitive pay cap on Wall Street execs into the stimulus bill. This tug of war may also account for the gaping holes in the financial bill delivered with child-like upspeak by Geithner, and similar inadequacies in the new mortgage plan. The housing program stupidly omits an obvious need to insulate mortgage servicers from legal claims that they abridged mortgage-holders rights. Because so many mortgages were packaged and sold off to investors, immunity from lawsuits is a necessity if we want servicers to change mortgage terms.

    The White House scramble has led to creeping fear that we’re dealing with the Junior Varsity. I’ve even heard people pining for former Treasury Secretary Hank Paulson — hard to imagine, right? (No one quite misses Bush yet; let’s hope it doesn’t come to that.)

    Now we need President Obama to quit the campaign trail and start looking presidential. He needs to take ownership of the country’s problems and solutions. We all get that he inherited this mess, but as a candidate he had a lot of answers on how he would manage the clean-up; it’s time to get on with it. He needs to push his initiatives forward as quickly as possible, and create some optimism that spending trillions of dollars will get us out of this crisis. We know that having the government patch up schools or revise mortgages will be untidy and expensive, but the sheer volume of money being thrown at these problems will ultimately have an impact.

    Even the expectation of help on the way could prove beneficial. I usually try to find some good news to share with wOw readers, and so I am happy to report that yesterday the Conference Board reported that its index of leading indicators rose in January for the second month in a row. The index turned negative in July 2007, heralding the downturn, and appears to have bottomed this past December. Items boosting the index are a strong rise in the nation’s money supply, improved credit spreads, a slight pop in new orders for nondefense capital goods and a modest rise in consumer expectations.

    My concern is that recent events have squelched that optimism among consumers, and that the nation’s mood is even darker than it was a few months ago. Remember how Obama derided the “politics of fear?” He’s become its greatest champion.

    Jeff, I don’t know what you do but I can tell you in the last 2 – 3 weeks our customers have grown quite reserved in their ordering. (that from an already low level) something has changed in people confidence in that period of time. What I agree with the most in this artucule is that Obama needs to quite campaining and start taking ownership. I believe he is but his public message is still making sure everyone knows its not his and this will take time, etc, etc, etc……he wanted the job, its his, and now its his mess. Own it and fix it and BE POSSITIVE.

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