Now that Republicans have won in November*

Just to quickly jump back to a point from a couple of pages ago: will a gridlock/obstructionist approach actually work in the republicans favour in 2012? It seems like it'd give the democrats a great opportunity to label them as the reason that any economic problems haven't been resolved. The speeches practically write themselves... "Times of crisis require all Americans to work together for the good of the country. Instead, the republicans chose to put political gameplaying ahead of America and her people" etc. etc.

The type of approach the republicans are planning on would be perceived extremely badly by voters by Australia, but that may be a local idiosyncrasy. Will it work better in the states?

Edit: Clearly every political party plays those types of games, but my impression is that voters don't like them to be obvious about it.

Democrats need to come up with someone or something to counter the Republican noise machine. As it stands they are so grossly outnumbered and outclassed by sensationalist mouthpieces on the other side. If Dems cured cancer the Republicans could spin it as an attack on the health care industry.

The Dems, starting at the top, need to play a much more politically savvy game before we can begin talking accomplishments or obstruction. The Republicans just ran a campaign where they convinced much of the voting public that their own bad ideas from 10-20 years ago were Obama's ideas. John Stewart is not enough to show people all of this double speak and cognitive dissonance, the democratic leadership needs to get its hands dirty.

Paleocon wrote:

IMAGE(http://scrapetv.com/News/News%20Pages/Everyone%20Else/images-3/mad-max-2.jpg)

Yeah, but they got flying cars. Where is my flying car?

Well, that didn't take long:

In policy documents, including a blueprint this week from Representative Eric Cantor, the likely Republican majority leader in the new Congress, the party has made clear that its main proposals for creating jobs are to cut regulations and taxes — in particular to make the Bush-era tax cuts permanent for all incomes. Extending the tax cuts, however, would add nearly $4 trillion to the debt by 2020, and hundreds of billions more in interest owed for the additional government borrowing, greatly complicating another Republican goal: balancing the budget.

Link.

Wow, I am not looking forward to the politics of the next two years.

Funkenpants wrote:

Well, that didn't take long:

In policy documents, including a blueprint this week from Representative Eric Cantor, the likely Republican majority leader in the new Congress, the party has made clear that its main proposals for creating jobs are to cut regulations and taxes — in particular to make the Bush-era tax cuts permanent for all incomes. Extending the tax cuts, however, would add nearly $4 trillion to the debt by 2020, and hundreds of billions more in interest owed for the additional government borrowing, greatly complicating another Republican goal: balancing the budget.

Link.

Ya know, I get the whole idea behind the desire to cut taxes, I really do. I know if I had more money to spend, I'd spend it and that's probably good for the economy. What I don't get though is the inability for any political leader to proposed tax cuts without an equal or greater spending cut. This isn't complex math. Hell anyone whose ever gotten a paycheck knows you aren't supposed to spend more than you earn. How is it that the disciples of fiscal responsibility don't seem to get this? Are they just willing to ignore the long term implications?

Bear wrote:
Funkenpants wrote:

Well, that didn't take long:

In policy documents, including a blueprint this week from Representative Eric Cantor, the likely Republican majority leader in the new Congress, the party has made clear that its main proposals for creating jobs are to cut regulations and taxes — in particular to make the Bush-era tax cuts permanent for all incomes. Extending the tax cuts, however, would add nearly $4 trillion to the debt by 2020, and hundreds of billions more in interest owed for the additional government borrowing, greatly complicating another Republican goal: balancing the budget.

Link.

Ya know, I get the whole idea behind the desire to cut taxes, I really do. I know if I had more money to spend, I'd spend it and that's probably good for the economy. What I don't get though is the inability for any political leader to proposed tax cuts without an equal or greater spending cut. This isn't complex math. Hell anyone whose ever gotten a paycheck knows you aren't supposed to spend more than you earn. How is it that the disciples of fiscal responsibility don't seem to get this? Are they just willing to ignore the long term implications?

Well... yes. Tax cuts mean votes because people see you as giving them more money and/or more money for reelection because people are donating to you to reward your tax cuts. Spending cuts can usually be directly linked to job losses somewhere in the country (often many places in the country, what with how our military industrial complex is spread out now) which means less votes and no business is going to be happy with you cutting off government funding to them so that means less money for reelection.

...Are you really surprised by that? I mean, c'mon.

MrDeVil909 wrote:

we saw in general portrayed them as sitting on thrones of baby skulls whilst trying to figure out how to enslave the entire middle class and turn old people into biodiesel.

Oh come now Mr DeVil, the Republicans aren't monsters. They don't want to turn actual people into biodiesel, they just want to devote most of the arable land into GROWING biodiesel. And those vast biodiesel plantations will need willing and able serfs err indentured contractors to work them, so that's middle class job creation!

As far as baby skulls go, all Republicans love and cherish babies, even ones that are only a few cells old. Oh, you're talking about the skulls of Muslim Communist bi-curious babies. Carry on then.

jdzappa wrote:
MrDeVil909 wrote:

we saw in general portrayed them as sitting on thrones of baby skulls whilst trying to figure out how to enslave the entire middle class and turn old people into biodiesel.

Oh come now Mr DeVil, the Republicans aren't monsters. They don't want to turn actual people into biodiesel, they just want to devote most of the arable land into GROWING biodiesel. And those vast biodiesel plantations will need willing and able serfs err indentured contractors to work them, so that's middle class job creation!

As far as baby skulls go, all Republicans love and cherish babies, even ones that are only a few cells old. Oh, you're talking about the skulls of Muslim Communist bi-curious babies. Carry on then.

Thanks, but that wasn't me. And I believe it was in reference to the Dems, not Reps.

bnpederson wrote:

...Are you really surprised by that? I mean, c'mon.

Not surprised. A page or two back I said the republicans would drop the 'the budget deficit is teh devil' act soon after they won. But I didn't realize that it would happen the very next day.

Bear wrote:

How is it that the disciples of fiscal responsibility don't seem to get this? Are they just willing to ignore the long term implications?

Cynical view incoming:

"The future" is someone else's problem. Congresspeople worry about how many votes they're going to get in the next election cycle. Beyond that, the future holds no interest for them. They have no vested interest in the government - if it loses money, it's not coming out of their bank accounts - so why try to rein in government spending if it's only going to cost them lots of votes and their next election? Easier just to pass the buck down the road to someone else and keep themselves sitting in Congress for as long as they possibly can.

Funkenpants wrote:

Well, that didn't take long:

In policy documents, including a blueprint this week from Representative Eric Cantor, the likely Republican majority leader in the new Congress, the party has made clear that its main proposals for creating jobs are to cut regulations and taxes — in particular to make the Bush-era tax cuts permanent for all incomes. Extending the tax cuts, however, would add nearly $4 trillion to the debt by 2020, and hundreds of billions more in interest owed for the additional government borrowing, greatly complicating another Republican goal: balancing the budget.

Link.

That is what my first post was about. I have always thought the supply siders would win out. Looks like it will be the case.

If Bush tax cuts are permanent then there needs to be even more tax cuts for the middle class on top of it to make us whole again.

There are 5 things that the middle class are paying for more now than they did 30 years ago.

1. Housing - most housing is the same as 30 years ago. per house rooms have gone up modestly from 5.8 to 6.1 but housing mortgages have gone up significantly per income.
2. Cars/transportation - most households have at least 2 cars now. That was not the case 30 years ago.
3. Taxes - taxes as percentage of pay have gone up because of 2 person taxpaying households.
4. Health Care - Everyone knows that this has been the major factor of inflation the past 30 years.
5. Child Care - Was not even an expense 30 years ago.

Everything else - Food, clothing, appliances, electronics, vacations - Americans are paying less.

However it is the costs of the 5 things above that are killing the middle class. The only way the middle class was able to keep up during the 28 years (before the housing bubble crashed) was because of the growth in private debt.

The growth in private debt corresponded to the rate of lowering interest rates. We are now at Zero. The rate cannot go lower. Hence why there is now no growth in private debt to make up for income.

One way to fix the problem is to demand that our federal representatives lower middle class taxes. This will help all people of middle class, both the debtors and the savers.

Too bad we have stupid deficit hawk ideology that I even see on this board. We need to cut even beyond what we are paying now permanently.

goman wrote:

There are 5 things that the middle class are paying for more now than they did 30 years ago.

1. Housing - most housing is the same as 30 years ago. per house rooms have gone up modestly from 5.8 to 6.1 but housing mortgages have gone up significantly per income.
2. Cars/transportation - most households have at least 2 cars now. That was not the case 30 years ago.
3. Taxes - taxes as percentage of pay have gone up because of 2 person taxpaying households.
4. Health Care - Everyone knows that this has been the major factor of inflation the past 30 years.
5. Child Care - Was not even an expense 30 years ago.

Everything else - Food, clothing, appliances, electronics, vacations - Americans are paying less.

However it is the costs of the 5 things above that are killing the middle class. The only way the middle class was able to keep up during the 28 years (before the housing bubble crashed) was because of the growth in private debt.

The growth in private debt corresponded to the rate of lowering interest rates. We are now at Zero. The rate cannot go lower. Hence why there is now no growth in private debt to make up for income.

One way to fix the problem is to demand that our federal representatives lower middle class taxes. This will help all people of middle class, both the debtors and the savers.

Too bad we have stupid deficit hawk ideology that I even see on this board. We need to cut even beyond what we are paying now permanently.

1) Housing: Actually, houses have gotten about 40% larger since the 1980s. The average house in 1980 had 1,740 square feet while the average house in 2009 had 2,438. So while your average house cost you 3.46 years of your average wage in 1980, in 2009 your (much larger) average home costs you 5.89 years of your average wage. Yes, housing is more expensive, but not cripplingly so.

2) Cars: Again, no. In 1980 there were 1.61 cars per household. In 2000, there were 1.69. You have to go back to the 1960s to have the majority of households owning only one car.

3) Taxes: It's actually gone down since the marginal tax rates were higher back in 1980 than they are now. The median household income in 1980 was $37,867, which would put a family (married filing jointly) in the 43% marginal tax rate. The median 2009 household income of $49,777 would put that same couple in the 25% marginal tax rate. Beyond that, it wasn't like dual-income families were a novelty in 1980, when they were a third of all households.

4) Health Care: Yup. Per capita health care spending more than quintupled since 1980.

5) Child Care: Again, a third of households in 1980 were dual income, so it was an expense for a chunk of the country.

The middle class kept up with the Jones by doubling the number of dual income households and doubling their debt loads since the 1980s. One major reason for this is that the growth of middle class incomes has been pretty anemic over the past couple of decades even while GDP has risen dramatically. Why? Most of the income growth has been sucked up by the top 1% of earners and while corporations are more profitable, they give that money to their investors, not their workers.

Taxes aren't the reason the middle class is hurting. They're hurting because they're being screwed by the rich and the corporations that employ them all while they're cutting their own throats by spending more money than they make. The only way to fix this problem is for the middle class is to consume less and pay off their debts. They'll feel a lot richer when one out of every five dollars of disposable income they have isn't going to service their debt.

In other words, don't buy a big ass house and try to furnish it with Lane Bryant furniture. Buy a smaller house and go to Ikea. Instead of leasing a new car every two years, buy it outright and drive it into the ground. Don't buy anything unless you actually have the money for it now. Always live slightly below your means instead of way above it. It's much less stressful.

Slinger wrote:

In other words, don't buy a big ass house and try to furnish it with Lane Bryant furniture. Buy a smaller house and go to Ikea. Instead of leasing a new car every two years, buy it outright and drive it into the ground. Don't buy anything unless you actually have the money for it now. Always live slightly below your means instead of way above it. It's much less stressful.

But then, there will be no GROWTH, and corporations will underperform!

Heretic!!

In response to the last 2 posts (edit: ok, it's now the 2 posts prior to this one and Gorillas) I reccommend reading "The Two Income Trap". It does a wonderful job of explaining all of the reasons why so many people are feeling overextended today. I read it a number of years ago, so I know this was written prior to the current recession. 95% of it still applies today.

http://www.amazon.com/Two-Income-Trap-Middle-Class-Parents-Going/dp/0465090907/ref=sr_1_2?ie=UTF8&s=books&qid=1288981618&sr=8-2

I can second the recommendation of that book -- it actually echoes a lot of the sentiments that popped up in a thread in EE about having kids and deciding between being a stay at home mom or not (I think Mystic Violet started it??)

OG_slinger wrote:

1) Housing: Actually, houses have gotten about 40% larger since the 1980s. The average house in 1980 had 1,740 square feet while the average house in 2009 had 2,438. So while your average house cost you 3.46 years of your average wage in 1980, in 2009 your (much larger) average home costs you 5.89 years of your average wage. Yes, housing is more expensive, but not cripplingly so.

2) Cars: Again, no. In 1980 there were 1.61 cars per household. In 2000, there were 1.69. You have to go back to the 1960s to have the majority of households owning only one car.

3) Taxes: It's actually gone down since the marginal tax rates were higher back in 1980 than they are now. The median household income in 1980 was $37,867, which would put a family (married filing jointly) in the 43% marginal tax rate. The median 2009 household income of $49,777 would put that same couple in the 25% marginal tax rate. Beyond that, it wasn't like dual-income families were a novelty in 1980, when they were a third of all households.

4) Health Care: Yup. Per capita health care spending more than quintupled since 1980.

5) Child Care: Again, a third of households in 1980 were dual income, so it was an expense for a chunk of the country.

The middle class kept up with the Jones by doubling the number of dual income households and doubling their debt loads since the 1980s. One major reason for this is that the growth of middle class incomes has been pretty anemic over the past couple of decades even while GDP has risen dramatically. Why? Most of the income growth has been sucked up by the top 1% of earners and while corporations are more profitable, they give that money to their investors, not their workers.

Taxes aren't the reason the middle class is hurting. They're hurting because they're being screwed by the rich and the corporations that employ them all while they're cutting their own throats by spending more money than they make. The only way to fix this problem is for the middle class is to consume less and pay off their debts. They'll feel a lot richer when one out of every five dollars of disposable income they have isn't going to service their debt.

In other words, don't buy a big ass house and try to furnish it with Lane Bryant furniture. Buy a smaller house and go to Ikea. Instead of leasing a new car every two years, buy it outright and drive it into the ground. Don't buy anything unless you actually have the money for it now. Always live slightly below your means instead of way above it. It's much less stressful.

Housing - Your link was about Houses completed during that time line. Not all houses like my stat. I agree most newer houses are bigger than the ones they built in the 50s, 60s and 70s which still make up for the majority of America's housing stock. Average house went up a modest 5.8 rooms to 6.1 rooms the past 30 some odd years.

Cars - You are right. Most of the change was between 1970 and 1980. But the point still stands if you go back to 40 years instead of 30 years. Cars/Transportation expenses have gone up, not down for the middle class.

Taxes - You are missing payroll taxes which have gone up since 1980. I am including all taxes paid by a middle class family. Not just income taxes. And we all know that payroll taxes are regressive, not progressive like income taxes.

Child Care - Correct - most of the change again was between 1970 and 1980. But the trend has stayed up.

We agree that supply side economics works as designed. Rich get richer and productivity rises faster than a middle class income. It was made up for by debt to keep GDP growing.

Since consuming less would and has lead to recession and joblessness than that cannot be the solution. People are not buying big homes any longer and are saving.

Consuming the same (on aggregate) and raising savings is the solution. The way to do that is tax the middle class less. Raising taxes on the rich would help too. But that is not going to happen.

Consuming the same on aggregate means getting people working and making income again.

MattDaddy wrote:

In response to the last 2 posts (edit: ok, it's now the 2 posts prior to this one and Gorillas) I reccommend reading "The Two Income Trap". It does a wonderful job of explaining all of the reasons why so many people are feeling overextended today. I read it a number of years ago, so I know this was written prior to the current recession. 95% of it still applies today.

http://www.amazon.com/Two-Income-Trap-Middle-Class-Parents-Going/dp/0465090907/ref=sr_1_2?ie=UTF8&s=books&qid=1288981618&sr=8-2

Funny - It was Elizabeth Warren's talk on YouTube I listened to a couple days ago that prompted me with my post. No wonder it sounds familiar to you.

http://www.youtube.com/watch?v=akVL7...

OG_slinger wrote:

In other words, don't buy a big ass house and try to furnish it with Lane Bryant furniture.

Lane Bryant furniture? You mean chairs for plus-size ladies?

Well, America is now officially the "plus size nation".

Jonman wrote:
OG_slinger wrote:

In other words, don't buy a big ass house and try to furnish it with Lane Bryant furniture.

Lane Bryant furniture? You mean chairs for plus-size ladies?

Lane BWW.

Jonman wrote:
OG_slinger wrote:

In other words, don't buy a big ass house and try to furnish it with Lane Bryant furniture.

Lane Bryant furniture? You mean chairs for plus-size ladies?

Ha! Lane Bryant, Ethan Allen. I knew it was one of those fancy two name companies!

goman wrote:

Housing - Your link was about Houses completed during that time line. Not all houses like my stat. I agree most newer houses are bigger than the ones they built in the 50s, 60s and 70s which still make up for the majority of America's housing stock. Average house went up a modest 5.8 rooms to 6.1 rooms the past 30 some odd years.

Cars - You are right. Most of the change was between 1970 and 1980. But the point still stands if you go back to 40 years instead of 30 years. Cars/Transportation expenses have gone up, not down for the middle class.

Taxes - You are missing payroll taxes which have gone up since 1980. I am including all taxes paid by a middle class family. Not just income taxes. And we all know that payroll taxes are regressive, not progressive like income taxes.

Child Care - Correct - most of the change again was between 1970 and 1980. But the trend has stayed up.

We agree that supply side economics works as designed. Rich get richer and productivity rises faster than a middle class income. It was made up for by debt to keep GDP growing.

Since consuming less would and has lead to recession and joblessness than that cannot be the solution. People are not buying big homes any longer and are saving.

Consuming the same (on aggregate) and raising savings is the solution. The way to do that is tax the middle class less. Raising taxes on the rich would help too. But that is not going to happen.

Consuming the same on aggregate means getting people working and making income again.

Housing: Not so sure about that one. The houses built between 1980 and 2000 represents 35% of all the housing stock. Considering the recent housing boom when there were about 1.8 million new housing starts a year we could very likely be at the point where most homes were built in the last 30 years. And the definite trend during that time was that houses got much, much bigger.

Cars: Actually, the average cost of transportation has remained steady at just under 20% of household income since the 1970s. In 1972 it was 19.3% and by 2010 it had dropped to 17.6%.

Taxes: Sure. People are paying more in federal payroll taxes today. A whopping 1.4% more. So while their average income tax rate dropped to 25% from 43%, their payroll taxes went up a smidgen. At the end of the day, they're still paying a lot less in taxes.

Health Care: Huh. Whodathunkit? 1972: 6.4% of income. 2009: 5.7% of income on healthcare.

Child Care: Sure, it's gone up, but it's not the reason why household debt has doubled.

And, no, I don't buy into supply side economics at all.

I fail to see how you can cut taxes enough so that consumers can simultaneously maintain their current unsustainable level of spending *and* save more money. Consuming less is the only rationale choice for over-leveraged consumers. Will that affect the economy? Absolutely, but corporations will adjust to lower demand and lower profits and as consumer debt is paid off we can have real economic growth, not fake growth fueled by loads of cheap debt. That means years of sluggish growth, but there's not really a quick fix for the problem we've collectively gotten ourselves into.

OG - I forgot the main point about Elizabeth Warren's argument that is in the title of her book.

In the 70s it was more likely that a family of 4 had 1 full time income earner.

In the 2000s it is more likely that a family of 4 has 2 full time income earners.

I fail to see how you can cut taxes enough so that consumers can simultaneously maintain their current unsustainable level of spending *and* save more money. Consuming less is the only rationale choice for over-leveraged consumers. Will that affect the economy? Absolutely, but corporations will adjust to lower demand and lower profits and as consumer debt is paid off we can have real economic growth, not fake growth fueled by loads of cheap debt. That means years of sluggish growth, but there's not really a quick fix for the problem we've collectively gotten ourselves into.

Corporations do not control demand. They control supply. Lowering supply is why there are layoffs.

Running deficits long enough will help in restructuring our economy. But it is not as efficient as lowering taxes and stimulus spending. For those that did the math what Obama and congress passed was only half as much as needed.

You help in paying back that household debt by lowering taxes on the middle class.

This idea is actually fair too. Because those middle class people that are savers also get lower taxes. It helps in saving more or if they want to... spend more.

goman wrote:

OG - I forgot the main point about Elizabeth Warren's argument that is in the title of her book.

In the 70s it was more likely that a family of 4 had 1 full time income earner.

In the 2000s it is more likely that a family of 4 has 2 full time income earners.

I fail to see how you can cut taxes enough so that consumers can simultaneously maintain their current unsustainable level of spending *and* save more money. Consuming less is the only rationale choice for over-leveraged consumers. Will that affect the economy? Absolutely, but corporations will adjust to lower demand and lower profits and as consumer debt is paid off we can have real economic growth, not fake growth fueled by loads of cheap debt. That means years of sluggish growth, but there's not really a quick fix for the problem we've collectively gotten ourselves into.

Corporations do not control demand. They control supply. Lowering supply is why there are layoffs.

Running deficits long enough will help in restructuring our economy. But it is not as efficient as lowering taxes and stimulus spending. For those that did the math what Obama and congress passed was only half as much as needed.

You help in paying back that household debt by lowering taxes on the middle class.

This idea is actually fair too. Because those middle class people that are savers also get lower taxes. It helps in saving more or if they want to... spend more.

I know a family in the 1970s was likely to have just one income earner, but there were still about a third of families that had two income earners back then (vs. about 70% today).

I take a different view than Warren. The early 1970s were the peak in real earnings for production and non-supervisory employees (e.g., blue collar workers and low level white collar workers). That number fell throughout the 80s and essentially floated through the 90s relatively unchanged. So the issue really isn't how many earner you have, it's that family wages (especially for non-white collar positions) haven't really be growing at all for the past several decades. All that money has been going to corporations and the rich.

That brings up the argument that if you and your wife are working full time and you still can't make the middle class ends meet, you likely aren't really middle class by the traditional definition. You were only able to act like you were middle class because you took on massive debt.

And I never said corporations set demand. I said they'd adjust to lower demand, which is what would happen when people who can't afford to buy stuff don't buy said stuff. That means they'll be slower growth, not necessarily more layoffs. There's already been plenty of bloodletting on the labor rolls as companies reacted to the slowdown of 2008 and 2009 and it seems corporate America has figured out how to increase their profitability even while demand is well below its housing boom peak.

People need to reduce their household debt by spending less and using that excess cash to draw their debt loads, which are at a near record highs. If that means giving up the trappings of the middle class life, like the big home in the suburbs, then that's families need to do.

Lowering taxes won't do that. Reaganomics showed that cutting taxes just makes deficits skyrocket. While we might have been able to do that in the 80s, we're now paying $600 billion a year just to service our existing government debt.

Lowering taxes so people who can't afford their current lifestyles can continue to pretend they're middle class isn't a solution. It just lets them delay the time when they have to dramatically scale back on their level of consumption because their debt levels are too high. The sooner everyone deleverages, the better.

Even if there were massive tax cuts for the middle class and they used that savings to pay down their debt, it still wouldn't have any stimulus effect. The money would just flow to credit card companies and banks, not the broader economy. Besides, it would serve as a reward to people who were living beyond their means: Uncle Sam knows you took on too much debt, so here's some free money now that your grandchildren's grandchildren will still be paying off. At best you get some people who'd save and some who'd spend, which would result in a crappy economic stimulus and a massive expansion of federal debt that would be a drag on the economy for generations to come.

OG_slinger wrote:
goman wrote:

I know a family in the 1970s was likely to have just one income earner, but there were still about a third of families that had two income earners back then (vs. about 70% today).

I take a different view than Warren. The early 1970s were the peak in real earnings for production and non-supervisory employees (e.g., blue collar workers and low level white collar workers). That number fell throughout the 80s and essentially floated through the 90s relatively unchanged. So the issue really isn't how many earner you have, it's that family wages (especially for non-white collar positions) haven't really be growing at all for the past several decades. All that money has been going to corporations and the rich.

And to an extent, into pink collar jobs. I think a lot of the anger we see over they economy isn't just blue-collar males losing jobs, it's that they're being supported by WAGs who working in things like nursing and teaching. There's a reason the 'momma grizzly' was a theme these two years: a woman who makes enough money to buy you your man cave, but is 'traditional' enough that you won't feel emasculated living off of her largess.

That brings up the argument that if you and your wife are working full time and you still can't make the middle class ends meet, you likely aren't really middle class by the traditional definition. You were only able to act like you were middle class because you took on massive debt.

...If that means giving up the trappings of the middle class life, like the big home in the suburbs, then that's families need to do.

You bring up an interesting point: if so much of this debt was about keeping up with the other families, if the other families can't tank on debt either, won't things like the big home in the suburbs fall in price until they're affordable without debt? I mean, it's not the houses themselves were at the center of the bubble, it was the land to the point where houses were being bought and the land was being divided in two in order to build a house--any house--to take advantage of the debt-fueled bubble.

Lowering taxes won't do that. Reaganomics showed that cutting taxes just makes deficits skyrocket. While we might have been able to do that in the 80s, we're now paying $600 billion a year just to service our existing government debt.

Lowering taxes so people who can't afford their current lifestyles can continue to pretend they're middle class isn't a solution. It just lets them delay the time when they have to dramatically scale back on their level of consumption because their debt levels are too high. The sooner everyone deleverages, the better.

Well, was Reaganomics about cutting taxes to the middle class? I thought Reganomics was the Trickle-Down theory. I'm also not sure the sooner everyone deleverages the better. Maybe a longer but less chaotic/drastic period in which to deleverage is better even if it takes longer.

Even if there were massive tax cuts for the middle class and they used that savings to pay down their debt, it still wouldn't have any stimulus effect. The money would just flow to credit card companies and banks, not the broader economy.

Mmm, that's a concern. Too bad there's no way the government can just buy that debt for cents on the dollar and forgive it in this political climate.

Besides, it would serve as a reward to people who were living beyond their means: Uncle Sam knows you took on too much debt, so here's some free money now that your grandchildren's grandchildren will still be paying off. At best you get some people who'd save and some who'd spend, which would result in a crappy economic stimulus and a massive expansion of federal debt that would be a drag on the economy for generations to come.

I think the fear is that if we don't give people free money however much they may or may not deserve it, your grandchildren's grandchildren's grandchildren will be paying off the costs of the Great Recession in one way or another.

Has "Reaganomics" ever conclusively been shown to work? Logically if you give people more money to spend their spending should increase demand and stimulate the economy.

However I'm not so sure that giving someone that makes $2 million annually another $250,000 does much.

Bear wrote:

Has "Reaganomics" ever conclusively been shown to work? Logically if you give people more money to spend their spending should increase demand and stimulate the economy.

Quite the opposite. Change Reaganomics to "Guns and Butter."

Ballotechnic wrote:

Oh, so this is what it's like to have no shame. Under your watch Democrats suffer one of the worst spankings in years, of course you should be in charge again.

Despite Losses, Nancy Pelosi Will Run for House Post

Under her watch Health Care got passed. In 20 years there will be some moron with a sign that reads: "Keep Govirnment Out of My Heatlh Exchange."

Why should she step down? In two years she'll be Speaker of the House again. That's not what it's like to have no shame, that's what it's like to have a backbone.

Oh, so this is what it's like to have no shame. Under your watch Democrats suffer one of the worst spankings in years, of course you should be in charge again.

Despite Losses, Nancy Pelosi Will Run for House Post