Greenspan – Very Dangerous Possibilities of Extending Bush Tax Cuts

[gandalf]

When it comes to tax policy, closing loopholes for corporations and reducing tax avoidance would have a tremendous impact on revenue levels, which would enable our government to reduce debt.

[CA renter]

[quote=equalizer]
Schiller is the lone outsider with no agenda and has summed up the mood of the country. He views may appear a tad idealistic, but he correctly identified the two bubbles of the last decade.

Shiller: “There are many dimensions to trying to restore confidence. A plan to reduce the national debt is a relatively small part of it at this point. The really big thing is, people are very upset. They feel that the country is not theirs, and that a small group of wealthy people who get bailed out and bribe the government are in charge.”

Not everyone can have cream puffs![/quote]

IMHO, Shiller summed it up perfectly.

It’s not about “the people” wanting a flat tax (which is very regressive, and would make things even worse), nor is it about people wanting to extend tax cuts for “the rich.”

What’s making people upset is the wealth disparity –it happens every single time. When the corruption that leads to this disparity becomes so entrenched that it is no longer hidden, serious problems result. The people behind this corruption are the ones crying for a flat tax and extensions of Bush’s tax cuts, BTW.

[CA renter]

[quote=equalizer]
Schiller is the lone outsider with no agenda and has summed up the mood of the country. He views may appear a tad idealistic, but he correctly identified the two bubbles of the last decade.

Shiller: “There are many dimensions to trying to restore confidence. A plan to reduce the national debt is a relatively small part of it at this point. The really big thing is, people are very upset. They feel that the country is not theirs, and that a small group of wealthy people who get bailed out and bribe the government are in charge.”

Not everyone can have cream puffs![/quote]

IMHO, Shiller summed it up perfectly.

It’s not about “the people” wanting a flat tax (which is very regressive, and would make things even worse), nor is it about people wanting to extend tax cuts for “the rich.”

What’s making people upset is the wealth disparity –it happens every single time. When the corruption that leads to this disparity becomes so entrenched that it is no longer hidden, serious problems result. The people behind this corruption are the ones crying for a flat tax and extensions of Bush’s tax cuts, BTW.

[CA renter]

[quote=equalizer]
Schiller is the lone outsider with no agenda and has summed up the mood of the country. He views may appear a tad idealistic, but he correctly identified the two bubbles of the last decade.

Shiller: “There are many dimensions to trying to restore confidence. A plan to reduce the national debt is a relatively small part of it at this point. The really big thing is, people are very upset. They feel that the country is not theirs, and that a small group of wealthy people who get bailed out and bribe the government are in charge.”

Not everyone can have cream puffs![/quote]

IMHO, Shiller summed it up perfectly.

It’s not about “the people” wanting a flat tax (which is very regressive, and would make things even worse), nor is it about people wanting to extend tax cuts for “the rich.”

What’s making people upset is the wealth disparity –it happens every single time. When the corruption that leads to this disparity becomes so entrenched that it is no longer hidden, serious problems result. The people behind this corruption are the ones crying for a flat tax and extensions of Bush’s tax cuts, BTW.

[CA renter]

[quote=equalizer]
Schiller is the lone outsider with no agenda and has summed up the mood of the country. He views may appear a tad idealistic, but he correctly identified the two bubbles of the last decade.

Shiller: “There are many dimensions to trying to restore confidence. A plan to reduce the national debt is a relatively small part of it at this point. The really big thing is, people are very upset. They feel that the country is not theirs, and that a small group of wealthy people who get bailed out and bribe the government are in charge.”

Not everyone can have cream puffs![/quote]

IMHO, Shiller summed it up perfectly.

It’s not about “the people” wanting a flat tax (which is very regressive, and would make things even worse), nor is it about people wanting to extend tax cuts for “the rich.”

What’s making people upset is the wealth disparity –it happens every single time. When the corruption that leads to this disparity becomes so entrenched that it is no longer hidden, serious problems result. The people behind this corruption are the ones crying for a flat tax and extensions of Bush’s tax cuts, BTW.

[CA renter]

[quote=equalizer]
Schiller is the lone outsider with no agenda and has summed up the mood of the country. He views may appear a tad idealistic, but he correctly identified the two bubbles of the last decade.

Shiller: “There are many dimensions to trying to restore confidence. A plan to reduce the national debt is a relatively small part of it at this point. The really big thing is, people are very upset. They feel that the country is not theirs, and that a small group of wealthy people who get bailed out and bribe the government are in charge.”

Not everyone can have cream puffs![/quote]

IMHO, Shiller summed it up perfectly.

It’s not about “the people” wanting a flat tax (which is very regressive, and would make things even worse), nor is it about people wanting to extend tax cuts for “the rich.”

What’s making people upset is the wealth disparity –it happens every single time. When the corruption that leads to this disparity becomes so entrenched that it is no longer hidden, serious problems result. The people behind this corruption are the ones crying for a flat tax and extensions of Bush’s tax cuts, BTW.

[CA renter]

[quote=equalizer]Tom Keene at Bloomberg Radio had a great discussion with a expert panel on How to Fix the Economy.

Panelists: Yale University professor Robert J. Shiller, Peter R. Orszag, former Salomon Brothers Managing Director Henry Kaufman, Professor Charles W. Calomiris, and Pimco Managing Director William H. Gross

http://www.businessweek.com/magazine/content/10_39/b4196054741296.htm

[/quote]

Some interesting tidbits from equalizer’s link:
——————-

Charles Calomiris: What typically happens in these kinds of financial crises is that the problem switches from being a private-sector leveraging problem to a public-sector leveraging problem. That is the major handoff—and we are in the middle of that handoff right now. So you could look at the private sector and find some room for optimism if the growth rate of the economy could get going.

The problem is that the public-sector debt is a terrible drain on the growth rate of the economy. And what we know from history is that when you get to the point where it starts looking like you are in an unsustainable fiscal path, the tax increases and high interest rates that come from that are a threat to long-term growth. So you get into a bad equilibrium driven by the public debt problem. Without drastic reforms to entitlement programs in the United States, we are really talking about something that will feel like the 1970s—but last for 20 to 25 years.

[I think it’s funny how he acknowledges the risk transfer from private to public sector, but I’ll be he’s referring to the “Little People” WRT entitlement cuts. Who’s really feeling entitled: the pensioners or Wall Street? -CAR]

Gross: I almost totally agree with Henry on this one. And I take it from a market perspective: Non-Fannie and Freddie mortgages trade in the 6-to-8 percent category, as opposed to the 3½-to-4 percent category [for Fannie and Freddie mortgages]. Those that argue for a more private orientation toward housing, that may be fine 10 to 15 years out. But over the next five years, the private market can’t really step in for Fannie and Freddie.

[Again, Bill Gross benefits greatly from the government and Fed intervention in the bond market. He’s talking his own book. Mortgage rates SHOULD be in the 6-8% range, or higher. Why does he think the govt should take on all this mispriced risk? Is it because HE he benefits from it? -CAR]

Calomiris: Let me clarify. I am not saying just an accounting exercise. I am talking about a fiscal exercise. I am talking about actually subsidizing the recognition of losses. So, the Mexican government in 1999 did a program where they did loss sharing with private creditors, which accelerated the recognition of losses and absorbed some percentage of the loss. It was very effective. That is the kind of program I have in mind.

[Um, yeah. More shifting of all the risks from the private sector to the public sector. Now THAT should get us out of our deficit problems! /sarcasm
-CAR]

Gross: To agree with Henry, what we have seen over the past year or two is a substitution of the government balance sheet, the government checkbook for that of the household. And to suggest that the government now contract fiscally in terms of reducing its deficits to me is simply going in the wrong direction.

[Need I say more? What’s truly scary is that these people are the ones who have the politicians’ ears. The politicians won’t listen to me or anyone else who truly wants to see the problem solved. They will, once again, bend to the will of these financial “experts.” -CAR]

[CA renter]

[quote=equalizer]Tom Keene at Bloomberg Radio had a great discussion with a expert panel on How to Fix the Economy.

Panelists: Yale University professor Robert J. Shiller, Peter R. Orszag, former Salomon Brothers Managing Director Henry Kaufman, Professor Charles W. Calomiris, and Pimco Managing Director William H. Gross

http://www.businessweek.com/magazine/content/10_39/b4196054741296.htm

[/quote]

Some interesting tidbits from equalizer’s link:
——————-

Charles Calomiris: What typically happens in these kinds of financial crises is that the problem switches from being a private-sector leveraging problem to a public-sector leveraging problem. That is the major handoff—and we are in the middle of that handoff right now. So you could look at the private sector and find some room for optimism if the growth rate of the economy could get going.

The problem is that the public-sector debt is a terrible drain on the growth rate of the economy. And what we know from history is that when you get to the point where it starts looking like you are in an unsustainable fiscal path, the tax increases and high interest rates that come from that are a threat to long-term growth. So you get into a bad equilibrium driven by the public debt problem. Without drastic reforms to entitlement programs in the United States, we are really talking about something that will feel like the 1970s—but last for 20 to 25 years.

[I think it’s funny how he acknowledges the risk transfer from private to public sector, but I’ll be he’s referring to the “Little People” WRT entitlement cuts. Who’s really feeling entitled: the pensioners or Wall Street? -CAR]

Gross: I almost totally agree with Henry on this one. And I take it from a market perspective: Non-Fannie and Freddie mortgages trade in the 6-to-8 percent category, as opposed to the 3½-to-4 percent category [for Fannie and Freddie mortgages]. Those that argue for a more private orientation toward housing, that may be fine 10 to 15 years out. But over the next five years, the private market can’t really step in for Fannie and Freddie.

[Again, Bill Gross benefits greatly from the government and Fed intervention in the bond market. He’s talking his own book. Mortgage rates SHOULD be in the 6-8% range, or higher. Why does he think the govt should take on all this mispriced risk? Is it because HE he benefits from it? -CAR]

Calomiris: Let me clarify. I am not saying just an accounting exercise. I am talking about a fiscal exercise. I am talking about actually subsidizing the recognition of losses. So, the Mexican government in 1999 did a program where they did loss sharing with private creditors, which accelerated the recognition of losses and absorbed some percentage of the loss. It was very effective. That is the kind of program I have in mind.

[Um, yeah. More shifting of all the risks from the private sector to the public sector. Now THAT should get us out of our deficit problems! /sarcasm
-CAR]

Gross: To agree with Henry, what we have seen over the past year or two is a substitution of the government balance sheet, the government checkbook for that of the household. And to suggest that the government now contract fiscally in terms of reducing its deficits to me is simply going in the wrong direction.

[Need I say more? What’s truly scary is that these people are the ones who have the politicians’ ears. The politicians won’t listen to me or anyone else who truly wants to see the problem solved. They will, once again, bend to the will of these financial “experts.” -CAR]

[CA renter]

[quote=equalizer]Tom Keene at Bloomberg Radio had a great discussion with a expert panel on How to Fix the Economy.

Panelists: Yale University professor Robert J. Shiller, Peter R. Orszag, former Salomon Brothers Managing Director Henry Kaufman, Professor Charles W. Calomiris, and Pimco Managing Director William H. Gross

http://www.businessweek.com/magazine/content/10_39/b4196054741296.htm

[/quote]

Some interesting tidbits from equalizer’s link:
——————-

Charles Calomiris: What typically happens in these kinds of financial crises is that the problem switches from being a private-sector leveraging problem to a public-sector leveraging problem. That is the major handoff—and we are in the middle of that handoff right now. So you could look at the private sector and find some room for optimism if the growth rate of the economy could get going.

The problem is that the public-sector debt is a terrible drain on the growth rate of the economy. And what we know from history is that when you get to the point where it starts looking like you are in an unsustainable fiscal path, the tax increases and high interest rates that come from that are a threat to long-term growth. So you get into a bad equilibrium driven by the public debt problem. Without drastic reforms to entitlement programs in the United States, we are really talking about something that will feel like the 1970s—but last for 20 to 25 years.

[I think it’s funny how he acknowledges the risk transfer from private to public sector, but I’ll be he’s referring to the “Little People” WRT entitlement cuts. Who’s really feeling entitled: the pensioners or Wall Street? -CAR]

Gross: I almost totally agree with Henry on this one. And I take it from a market perspective: Non-Fannie and Freddie mortgages trade in the 6-to-8 percent category, as opposed to the 3½-to-4 percent category [for Fannie and Freddie mortgages]. Those that argue for a more private orientation toward housing, that may be fine 10 to 15 years out. But over the next five years, the private market can’t really step in for Fannie and Freddie.

[Again, Bill Gross benefits greatly from the government and Fed intervention in the bond market. He’s talking his own book. Mortgage rates SHOULD be in the 6-8% range, or higher. Why does he think the govt should take on all this mispriced risk? Is it because HE he benefits from it? -CAR]

Calomiris: Let me clarify. I am not saying just an accounting exercise. I am talking about a fiscal exercise. I am talking about actually subsidizing the recognition of losses. So, the Mexican government in 1999 did a program where they did loss sharing with private creditors, which accelerated the recognition of losses and absorbed some percentage of the loss. It was very effective. That is the kind of program I have in mind.

[Um, yeah. More shifting of all the risks from the private sector to the public sector. Now THAT should get us out of our deficit problems! /sarcasm
-CAR]

Gross: To agree with Henry, what we have seen over the past year or two is a substitution of the government balance sheet, the government checkbook for that of the household. And to suggest that the government now contract fiscally in terms of reducing its deficits to me is simply going in the wrong direction.

[Need I say more? What’s truly scary is that these people are the ones who have the politicians’ ears. The politicians won’t listen to me or anyone else who truly wants to see the problem solved. They will, once again, bend to the will of these financial “experts.” -CAR]

[CA renter]

[quote=equalizer]Tom Keene at Bloomberg Radio had a great discussion with a expert panel on How to Fix the Economy.

Panelists: Yale University professor Robert J. Shiller, Peter R. Orszag, former Salomon Brothers Managing Director Henry Kaufman, Professor Charles W. Calomiris, and Pimco Managing Director William H. Gross

http://www.businessweek.com/magazine/content/10_39/b4196054741296.htm

[/quote]

Some interesting tidbits from equalizer’s link:
——————-

Charles Calomiris: What typically happens in these kinds of financial crises is that the problem switches from being a private-sector leveraging problem to a public-sector leveraging problem. That is the major handoff—and we are in the middle of that handoff right now. So you could look at the private sector and find some room for optimism if the growth rate of the economy could get going.

The problem is that the public-sector debt is a terrible drain on the growth rate of the economy. And what we know from history is that when you get to the point where it starts looking like you are in an unsustainable fiscal path, the tax increases and high interest rates that come from that are a threat to long-term growth. So you get into a bad equilibrium driven by the public debt problem. Without drastic reforms to entitlement programs in the United States, we are really talking about something that will feel like the 1970s—but last for 20 to 25 years.

[I think it’s funny how he acknowledges the risk transfer from private to public sector, but I’ll be he’s referring to the “Little People” WRT entitlement cuts. Who’s really feeling entitled: the pensioners or Wall Street? -CAR]

Gross: I almost totally agree with Henry on this one. And I take it from a market perspective: Non-Fannie and Freddie mortgages trade in the 6-to-8 percent category, as opposed to the 3½-to-4 percent category [for Fannie and Freddie mortgages]. Those that argue for a more private orientation toward housing, that may be fine 10 to 15 years out. But over the next five years, the private market can’t really step in for Fannie and Freddie.

[Again, Bill Gross benefits greatly from the government and Fed intervention in the bond market. He’s talking his own book. Mortgage rates SHOULD be in the 6-8% range, or higher. Why does he think the govt should take on all this mispriced risk? Is it because HE he benefits from it? -CAR]

Calomiris: Let me clarify. I am not saying just an accounting exercise. I am talking about a fiscal exercise. I am talking about actually subsidizing the recognition of losses. So, the Mexican government in 1999 did a program where they did loss sharing with private creditors, which accelerated the recognition of losses and absorbed some percentage of the loss. It was very effective. That is the kind of program I have in mind.

[Um, yeah. More shifting of all the risks from the private sector to the public sector. Now THAT should get us out of our deficit problems! /sarcasm
-CAR]

Gross: To agree with Henry, what we have seen over the past year or two is a substitution of the government balance sheet, the government checkbook for that of the household. And to suggest that the government now contract fiscally in terms of reducing its deficits to me is simply going in the wrong direction.

[Need I say more? What’s truly scary is that these people are the ones who have the politicians’ ears. The politicians won’t listen to me or anyone else who truly wants to see the problem solved. They will, once again, bend to the will of these financial “experts.” -CAR]

[CA renter]

[quote=equalizer]Tom Keene at Bloomberg Radio had a great discussion with a expert panel on How to Fix the Economy.

Panelists: Yale University professor Robert J. Shiller, Peter R. Orszag, former Salomon Brothers Managing Director Henry Kaufman, Professor Charles W. Calomiris, and Pimco Managing Director William H. Gross

http://www.businessweek.com/magazine/content/10_39/b4196054741296.htm

[/quote]

Some interesting tidbits from equalizer’s link:
——————-

Charles Calomiris: What typically happens in these kinds of financial crises is that the problem switches from being a private-sector leveraging problem to a public-sector leveraging problem. That is the major handoff—and we are in the middle of that handoff right now. So you could look at the private sector and find some room for optimism if the growth rate of the economy could get going.

The problem is that the public-sector debt is a terrible drain on the growth rate of the economy. And what we know from history is that when you get to the point where it starts looking like you are in an unsustainable fiscal path, the tax increases and high interest rates that come from that are a threat to long-term growth. So you get into a bad equilibrium driven by the public debt problem. Without drastic reforms to entitlement programs in the United States, we are really talking about something that will feel like the 1970s—but last for 20 to 25 years.

[I think it’s funny how he acknowledges the risk transfer from private to public sector, but I’ll be he’s referring to the “Little People” WRT entitlement cuts. Who’s really feeling entitled: the pensioners or Wall Street? -CAR]

Gross: I almost totally agree with Henry on this one. And I take it from a market perspective: Non-Fannie and Freddie mortgages trade in the 6-to-8 percent category, as opposed to the 3½-to-4 percent category [for Fannie and Freddie mortgages]. Those that argue for a more private orientation toward housing, that may be fine 10 to 15 years out. But over the next five years, the private market can’t really step in for Fannie and Freddie.

[Again, Bill Gross benefits greatly from the government and Fed intervention in the bond market. He’s talking his own book. Mortgage rates SHOULD be in the 6-8% range, or higher. Why does he think the govt should take on all this mispriced risk? Is it because HE he benefits from it? -CAR]

Calomiris: Let me clarify. I am not saying just an accounting exercise. I am talking about a fiscal exercise. I am talking about actually subsidizing the recognition of losses. So, the Mexican government in 1999 did a program where they did loss sharing with private creditors, which accelerated the recognition of losses and absorbed some percentage of the loss. It was very effective. That is the kind of program I have in mind.

[Um, yeah. More shifting of all the risks from the private sector to the public sector. Now THAT should get us out of our deficit problems! /sarcasm
-CAR]

Gross: To agree with Henry, what we have seen over the past year or two is a substitution of the government balance sheet, the government checkbook for that of the household. And to suggest that the government now contract fiscally in terms of reducing its deficits to me is simply going in the wrong direction.

[Need I say more? What’s truly scary is that these people are the ones who have the politicians’ ears. The politicians won’t listen to me or anyone else who truly wants to see the problem solved. They will, once again, bend to the will of these financial “experts.” -CAR]

[BigGovernmentIsGood]

It’s comical listening to the right extol the virtues of tax cuts. One of the best economies the U.S. ever had was back in the 1940’s when the top marginal tax rate was 90%.

Guess when another period of great economic growth occurred? Back in the 1990’s right before the Bush tax cuts went into effect.

The Bush tax cuts have been in place since 2001. If those tax cuts are so beneficial to economic growth and job creation, then whey have we seen such horrid economic growth and job creation (not to mention wage stagnation) since then?

America is tired of the BS from the right. It’s time to raise taxes on the top income earners at least to the levels of the 1990’s. If we really want to see roaring economic growth, the top marginal rate needs to be somewhere close to 90%.

[BigGovernmentIsGood]

It’s comical listening to the right extol the virtues of tax cuts. One of the best economies the U.S. ever had was back in the 1940’s when the top marginal tax rate was 90%.

Guess when another period of great economic growth occurred? Back in the 1990’s right before the Bush tax cuts went into effect.

The Bush tax cuts have been in place since 2001. If those tax cuts are so beneficial to economic growth and job creation, then whey have we seen such horrid economic growth and job creation (not to mention wage stagnation) since then?

America is tired of the BS from the right. It’s time to raise taxes on the top income earners at least to the levels of the 1990’s. If we really want to see roaring economic growth, the top marginal rate needs to be somewhere close to 90%.

[BigGovernmentIsGood]

It’s comical listening to the right extol the virtues of tax cuts. One of the best economies the U.S. ever had was back in the 1940’s when the top marginal tax rate was 90%.

Guess when another period of great economic growth occurred? Back in the 1990’s right before the Bush tax cuts went into effect.

The Bush tax cuts have been in place since 2001. If those tax cuts are so beneficial to economic growth and job creation, then whey have we seen such horrid economic growth and job creation (not to mention wage stagnation) since then?

America is tired of the BS from the right. It’s time to raise taxes on the top income earners at least to the levels of the 1990’s. If we really want to see roaring economic growth, the top marginal rate needs to be somewhere close to 90%.

[BigGovernmentIsGood]

It’s comical listening to the right extol the virtues of tax cuts. One of the best economies the U.S. ever had was back in the 1940’s when the top marginal tax rate was 90%.

Guess when another period of great economic growth occurred? Back in the 1990’s right before the Bush tax cuts went into effect.

The Bush tax cuts have been in place since 2001. If those tax cuts are so beneficial to economic growth and job creation, then whey have we seen such horrid economic growth and job creation (not to mention wage stagnation) since then?

America is tired of the BS from the right. It’s time to raise taxes on the top income earners at least to the levels of the 1990’s. If we really want to see roaring economic growth, the top marginal rate needs to be somewhere close to 90%.

[Author]

Posts