« | »

AP: Tax Cuts Caused Housing Bubble, Recession

A supposed news article from the Associated Press:

Consequence to cuts no one thought would happen

By TOM RAUM | March 2, 2013

WASHINGTON (AP) — It’s not the first time that government economic engineering has produced a time bomb with a short fuse.

Back in 2011, few lawmakers, if any, thought deep and indiscriminate spending cuts, totaling about $85 billion and now starting to kick in, were a smart idea.

Does Obama count? As recently as October 2012, Obama was touting the sequester to the editors of the Des Moines Register as a "good idea." It and the end of the Bush tax cuts for the so-called rich, would be the solution to all of our budget problems.

The across-the-board cuts, set up as a last-resort trigger and based on a mechanism used in the 1980s, are a reality largely because President Barack Obama and House Speaker John Boehner, R-Ohio, failed to find a way to stop them.

Republicans, influenced by tea party and other conservative factions, insisted on just spending cuts to narrow the deficit. Tax increases were out.

Some say ‘journalism is the first draft of history.’ But this kind of journalism is the first draft of revisionism.

We just had a $600 billion dollar tax increase enacted two months ago. And the return of payroll tax. And all of the taxes in Obama-Care. Or did we just dream all of those?

Obama and the Democratic-run Senate didn’t budge from a mix of cuts and increased tax revenues.

Which is exactly what we have gotten. — Except for the cuts.

"Arbitrary" and "stupid" Obama called the auto-pilot cuts, known as sequester.

While he at the same time vowed to veto any attempts to change the cuts. And while he also failed to offer any alternative, via a bill from the Senate Democrats.

But history shows a long trail of unintended consequences from government actions – or inaction…

– President Ronald Reagan’s ambitious 1986 overhaul of the tax code simplified taxes and closed many loopholes, including repealing the popular tax deduction for credit-card interest. Then people started borrowing heavily against fast-rising equity in their homes; that interest still was deductible.

But the practice eventually helped put millions of homeowners under water on their mortgages when the housing bubble burst, contributing to the 2007-2009 recession…

More revisionism. The AP is now trying to blame Reagan for the housing collapse. At long last, have they no shame?

By the way, Obama is now trying to close many tax ‘loopholes’ and ending many popular tax deductions. And yet the AP supports those moves.

– The tax cuts of 2001 and 2003 were first proposed by Texas Gov. George W. Bush as he campaigned for president in 2000. At the time, the economy was enjoying rare multi-year budget surpluses and government economists were predicting surpluses well into the future. Bush told cheering audiences his tax cuts would return to taxpayers "what is rightfully yours."

What a crazy thing to say, let alone think. How could money earned through work belong to anyone but the government?

Those cuts long have outlived the surpluses, which vanished in Bush’s first year in office. Deficits returned with a vengeance and have grown ever since…

Economists view those tax cuts as one of the biggest drains on the Treasury, and a major contributor to the spiraling government debt.

And never mind that tax revenues actually grew tremendously under Bush. And never mind that 9/11 and the war on terror caused the deficit. Which would have been worse without the tax cuts.

But the current deficit is all Bush’s fault. Even though, as Mark Knoller of CBS recently reported, Obama has added $6 trillion dollars to the debt. On January 20, 2009, the day Mr. Obama took office, the debt stood at $10.626 trillion. It is now $16.687 trillion. That reflects an increase of over $6 trillion.

In fact, Knoller also points out that this is "the largest increase to date under any U.S. president. During the eight-year presidency of George W. Bush, the debt soared by $4.9 trillion."

And now the sequester…

The sequester now in play is actually an updated version of the Gramm-Rudman-Hollings Act of 1985. There also was a small sequester in 1986, and a big one planned for 1990.

The latter was avoided only after President George H.W. Bush broke his "no new taxes" pledge to join Democrats in a deficit-reduction compromise that raised taxes.

There was a huge GOP backlash, one that many politicians believe contributed to Bush’s 1992 re-election defeat to Democrat Bill Clinton. Clearly not the consequence Bush had in mind.

No, but our one party news media had that in their minds.

In fact, the media’s mission now is to get Congress to overturn the sequester, just like Bush went back on his ‘no new taxes’ pledge. And they will not rest until they can get that to happen again — to the House Republicans.

Until that day, we will get an endless stream of articles like this:

From the New York Times:

As Automatic Budget Cuts Go Into Effect, Poor May Be Hit Particularly Hard

By ANNIE LOWREY | March 3, 2013

WASHINGTON — The $85 billion in automatic cuts working their way through the federal budget spare many programs that aid the poorest and most vulnerable Americans, including the Children’s Health Insurance Program and food stamps.

But the sequestration cuts, as they are called, still contain billions of dollars in mandatory budget reductions in programs that help low-income Americans, including one that gives vouchers for housing to the poor and disabled and another that provides fortified baby formula to the children of poor women…

"Baby formula"! It was ever thus.

This article was posted by Steve Gilbert on Monday, March 4th, 2013. Comments are currently closed.

2 Responses to “AP: Tax Cuts Caused Housing Bubble, Recession”

  1. AP – “Money. How do it work?”


« Front Page | To Top
« | »