SAN FRANCISCO, Oct. 22, 2008
Bipartisan Consensus? Taxpayers Beware
Declan McCullagh Says Despite Proposals For Another Round Of Economic Stimulus, Americans Will Pay One Way Or Another
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(CBS/AP)
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Timeline Financial Meltdown Track major events that lead to one of the most tumultuous times in Wall Street's history.
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Timeline Credit Crunch Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
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If you're an American taxpayer, the most worrisome seven words in the English language may be "a bipartisan consensus has emerged in Washington."
That's what seems to be happening with $300 billion of proposed stimulus spending that congressional Democrats have championed. They got a boost this week when Fed Chairman Ben Bernanke said it was "appropriate" for Congress to consider the plan.
House Speaker Nancy Pelosi invoked that endorsement to pressure the White House. "I call on President Bush and congressional Republicans to once again heed Chairman Bernanke's advice and ... work with Democrats in Congress to enact a targeted, timely, and fiscally responsible economic recovery and job creation package," Pelosi said. (See related video on CBSNews.com.)
President Bush and other Republicans had been skeptical of another round of bailout-related spending. But after Bernanke's remarks, Bush's press secretary told reporters the president might be open to such a proposal.
Details of the plan are still unclear. Some likely components include more public works spending, more unemployment benefits, more Medicare spending, more food stamps, and more "stimulus checks" akin to checks mailed earlier this year to some taxpayers.
It's not clear that another $300 billion of more deficit spending - more than six times the size of the Department of Homeland Security's 2009 budget request - is wise or necessary.
Washington's current bipartisan consensus says that deficits don't matter. The size of the national debt supposedly doesn't matter. Neither does the cost of the Iraq war, which one book puts at $3 trillion. Or the price tag on any bailouts.
In reality, though, U.S. taxpayers will be forced to pick up the tab one way or another, either through taxes to pay for interest on government bonds, or through higher inflation (a regressive tax that harms the poor more than the affluent).
At the dawn of Bill Clinton's presidency, government debt was $4.3 trillion, and increased by only $1.4 trillion in eight years. Now, thanks to the bipartisan enthusiasm for spending in Congress, the debt limit has been lifted to $11.3 trillion -- and the debt itself has ballooned to
$10.3 trillion, not counting future Social Security and Medicare payments.
The price of this whopping government debt is that taxpayers have been paying over $450 billion a year in interest. Soon that will exceed $500 billion.
If politicians had not run up the nation's credit card, income taxes could be almost 40 percent lower. Eliminating congressional pork and other pet spending projects could slice taxes even further. (The IRS collects $1.37 trillion a year in individual income taxes; only $860 billion would be required without interest payments.)
That's approximately as likely as the New York Times endorsing John McCain and Sarah Palin.
Because Democrats hope to enact their $300 billion spending bill soon after the November 4 election, Bush enjoys some temporary leverage. If he and other Republicans can't defeat the bill, they should insist on preventative measures that would reduce the odds of a second financial calamity.
One option is to gradually privatize Fannie Mae and Freddie Mac and eliminate any implicit or explicit taxpayer subsidy. That's been contemplated by the Congressional Budget Office and endorsed by the American Enterprise Institute. A 2006 study published by the Federal Reserve Bank of Boston found "no evidence" that Fannie and Freddie's existence helped low-income and first-time homebuyers.
In the past, opposition from Fannie and Freddie executives and their allies on Capitol Hill would have thwarted privatization. This is the best chance for reform in a generation.
Another option is to fix regulations that encourage banks to divvy up mortgages through a process called "securitization."
Arnold Kling, a Freddie Mac senior economist turned blogger, notes the perverse incentives that created such a securitization frenzy. The FDIC allows a bank to hold less capital against (that is, take more risks with) low-down payment subprime mortgages that it bought from someone else than it can with high-down-payment mortgages that bank employees sold to longtime, trusted customers.
Any post-election bailout or "stimulus" bill should include real reforms. We'll soon see if Washington's bipartisan consensus is up to the task.
Declan McCullagh is the chief political correspondent for CNET. He previously was Wired's Washington bureau chief and a reporter for Time.com and Time magazine in Washington, D.C. He has taught journalism, public policy, and First Amendment law. He is an occasional programmer, avid analog and digital photographer, and lives in the San Francisco Bay area. His e-mail address is declan.mccullagh@cnet.com
By Declan McCullagh
© MMVIII, CBS Interactive Inc. All Rights Reserved.
Add a Comment See all 44 Comments
- Now to break the last two dozen Presidental elections down for you, half of them are Republicans, the other, Democrats.
2005-2009: Republican
2001-2005: Republican
1997-2001: Democrat
1993-1997: Democrat
1989-1993: Republican
1985-1989: Republican
1981-1985: Republican
1977-1981: Democrat
1973-1974: Republican 1974-1977: Republican
1969-1973: Republican
1965-1969: Democrat
1961-1963: Democrat 1963-1965: Donkey
1957-1961: Republican
1953-1957: Republican
1949-1953: Democrat
1945-1949: Democrat
1941-1945: Democrat
1937-1941: Democrat
1933-1937: Democrat
1929-1933: Republican
1925-1929: Republican
1921-1923: Republican 1923-1925: Republican
1917-1921: Democrat
1913-1917: Democrat
Now, why is a certain group people still stuck on the same two parties, I believe we all need a new party in the White House. Having the same last two parties has just gotten too old -- just by looking at their campaign ads, them two just can''t get along together. - Reply to this comment
- We need to take back our government.
The first step is to TAKE IT AWAY from the crooks who have it now.
VOTE THEM OUT!
VOTE THEM *ALL* OUT!!
EVERY SINGLE ONE!!! - Reply to this comment
- OUR GOVERNMENT HAS FAILED when the only thing both parties can agree on are things that DESTROY THE NATION.
We are better off when there is partisan division and conflict, because then one party stops the other one from doing what it wants.
But when they start agreeing, we''re in trouble.
THE BEST GOVERNMENT MAY BE NO GOVERNMENT AT ALL, when we have leaders like these.
VOTE THEM ALL OUT!!! - Reply to this comment
- House Speaker Nancy Pelosi can go to the Hot Place with obama when the time comes........
All we are going to have is heart-ache if he gets in the Office of President.
GOD HELP US ALL - Reply to this comment
- Colin Powell convinced the UN that there were WMD in Iraqi
Posted by gotravel1 at 09:28 PM : Oct 22, 2008
Bill Clinton started the WMD lie.
Throughout his presidency, whenever he was feeling unpopular, he launched an airstrike against some small, distant nation. He learned from he predecessor that being a warrior president does wonders for your popularity polls.
So, just days before his scheduled impeachment vote, Slick Willy attacked Iraq with - guess what - an AIRSTRIKE (ooh, what a surprise). He made a televised speech explaining that it was because Saddam had WMD''s.
Funny how NOBODY called him a liar when HE said it. Even though NO WMD''s had been found in Iraq during his time in office.
But when George W Bush said THE SAME THING, all the libtards jumped all over it and called him a liar.
You see, Slick Willy is a better liar than Dubya. Slick Willy knows NOT TO PROVE YOUR LIE IS A LIE. Slick Willy only waged a quickie war and pulled out. Dubya went in FOR THE DURATION and OCCUPIED THE TERRITORY - and FAILED TO FIND ANY WMD.
What are the chances there WERE WMD when Clinton said so and NOT when Bush said so? Do you REALLY believe that Clinton''s airstrike against SUSPECTED WMD sites COMPLETELY DESTROYED ALL WMD without a trace, even though the location of any possible WMD was NOT KNOWN for certain??? - Reply to this comment
- brianbwb
Colin Powell convinced the UN that there were WMD in Iraqi that committed us to the war,and now Bushes man has endorsed Obama.How ironic!Remember how the country felt after 9/11;we were dumbfounded that such an attack could happen in America.Why should I trust Obama,who is naive on foreign affairs,when Biden warns us of an inevitable attack,and "we''ll need to trust them because it may not be apparant that they''re right".Bringing up Obama''s friends is not an insignificant point because that says alot about his beliefs,and supporting Raila Odinga shows very distorted judgment.Obama is succeeding in convincing you that all that matters is the economy so you won''t focus on his other weaknesses.By the way,what makes him such an authority on the economy?What has he done in Chicago?Now because he can sit at a table and discuss the issues makes him an expert."WORDS" are cheap,but Obama has nothing to back them up.EMPTY WORDS! - Reply to this comment
- Just remember that America''s destination is dependent upon its direction. Obama is trying to steer the country toward socialism. Reject that option by rejecting Obama on November 4th. That is NOT where we want to GO. Socialism is not being proposed by Obama, yet that is where he is headed.
- Reply to this comment
- House Speaker Nancy Pelosi invoked that endorsement to pressure the White House. "I call on President Bush and congressional Republicans to once again heed Chairman Bernanke''s advice ..."
That''s a split infinitive.
Pelosi can''t even SPEAK ENGLISH properly. - Reply to this comment
- When is someone going to stop that run away congress?
Posted by maxify55 at 05:11 PM : Oct 22, 2008
When? ELECTION DAY. It''s coming next month.
More importantly, WHO?
That would be YOU, when YOU vote against the current Congress. - Reply to this comment
- jjp735i- Oh my God someone who really looks at the issues and understands them. You are correct in that we the people are to blame. And yes we will vote the same bunch back in. It is time to change the congress and senate. People do a lot of talk about the President but the ones that are more important is the congress and senate. The president can''t even pay the light bill without congress approval, so look at them and remember these are the most important ones to kick out of office. You got ones on both sides of the isle who should be looking for a new job, but the ones who should go will be elected again cause they put to pork to their voters so they can get back in.
- Reply to this comment
- ---"If politicians had not run up the nation''s credit card, income taxes could be almost 40 percent lower. Eliminating congressional pork and other pet spending projects could slice taxes even further."---
Wow, that makes all that money we give out to other countries like the $6 billion to Pakistan, $1 billion to Georgia look like chump change.
I figure that''s going to be the first level of ''testing'' Barack''s going to get as President - he wants so badly to be liked, he looks like he''d be easy to hit up for money, favored status, trade concessions, political endorsements, whatnot . . .
I''m sure countries are looking forward to restoring better relations with us, but most world leaders tend to drive harder bargains - like why give away anything for free if they can get something that''s of value to them in return (?) - Reply to this comment
- "How people can continue to brush it aside as though it doesn''t matter is beyond me!..." Posted by gotravel1
There is a lot that is beyond you, for example America doesn''t want to lose any more of our children in lie-based wars, we don''t want to see people continuing to lose their homes, their jobs, their pensions, and their children''s future to corrupt corporate cartels, all the obsolete tickle down neocon-derthal ideas of which McSame represents continuation.
These problems are real, unlike your fake anti-Obama hysteria. What is beyond you is that no one cares about your irrelevant concerns, they are trying to keep a table on which to put food. - Reply to this comment
- Posted by gotravel1
So you suppose that McSame''s tax cuts for the rich will somehow provide the necessary revenue to pay the bills Bush has run up?
Or do you say "what the heck," and simply not pay?
The money will have to come from somewhere, got any ideas that make sense?
Didn''t think so. - Reply to this comment
- Elect Obama.. America doesn''''t need a check and balance system in our government... Let one party runthe country into the Stone age...
Posted by DoILookligaf
We didn''t have checks and balances from the years 2001 to 2006 either. I don''t recall a lot of Republicans being concerned about that. - Reply to this comment
- How can anyone not see that the news usually says the truth?
Breaking news:
www.chilitoz.com
Thousands of pictures of NAZI SS Officers and Adolf Hitler found property owned by Sarah and Todd Palin. Also an apparent Altar dedicated to the notorious Angel of death Dr. Joseph Mengele along with thousands of NAZi era coins. - Reply to this comment
- No not a round of hush money
- Reply to this comment
- With news like this,why would the House and Senate think that they would be GAINING more Democrats.Check the voting record of your congressmen,and if they voted for the bailout,don''t send them back to Washington.We need to send a message by way of our votes,that we''ve had enough.Pelosi,Reed,Dodd,and Frank should be the FIRST TO GO.Obama hasn''t had any solutions in the past,has alot of fancy rhetoric,but no record to stand on.Go to Goggle and Youtube to investigate Obama/Odinga.Obama''s friendships with anti-American factions is a serious concern.How people can continue to brush it aside as though it doesn''t matter is beyond me! We can''t be so narrowly focused on the economy,like Obama/Biden want us to be that we lose sight of his "visions" for America and where he draws them from(Jeremiah Wright,Ayers,Odinga).It''s not a coinsidence that he has chosen these people to support.PLEASE WAKE UP out of your hypnotic trance!
- Reply to this comment
- America needs a president that will clean up the Washington swamp, not a shallow, arrogant, platitude-spouting, inexperienced, drug-addicted, Marxist, elitist, narcissistic, flip-flopping gas-bag who will make it an even more horrific monster.
Posted by DcratLosers
LOL! John McCain can''t help that he is like he is. BTW, Sarah needs some new cloths, you can send your contribution to the RNC! - Reply to this comment
- I see post all over blaming one group or the other.
First off, both groups are to blame, but even more blame falls on us, the taxpayers. We vote the same idiots in year after year. Of course they are going to keep spending, we allowed them to. They took our yes vote as blank check because we never tell them to stop. We fuss, but then really do nothing more about it. Now we are going to suffer for it and yet we will still will vote in the same idiots again. - Reply to this comment
- If the media was fair and balanced, you would hear about:
- Obama''''s actual connection to Ayers and his 3 different stories on that connection
- Obama''''s connection to Tony Rezco
- Obama''''s connection and relationship with Father media has not reported the fact that there are lawsuits-not
even Fox...If there was a lawsuit filed against McCain for whatever cause it would be all over the media)
- His corrupt association and funding of ACORN
- Obama has benifitted by the meltdown of the financial networks--if the media would report the rout cause of
this which Obama and his party have their fingerprints all over this--then Obama should have slid in the polls
- His utter lack of any notable accomplishment as a state and US Senator
- His lying on his record of abortion and his many, many policy reversals from the primary to the general
election
I cannot believe that America is about to elect this person. I believe with every ounce of my being that if even half of the dirt on Obama were to be reported this would be a landslide!!!
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I cannot believe you voted for Bush twice!!
I see Obama as hope for change. McCain has the same tax structure as Bush which is tax the little people and give more tax savings, deductions or loopholes for business.
No way! - Reply to this comment
The road ahead in Afghanistan, and the crucial decision Obama faces.
