is that the only ones they can come up are "cut taxes". That (and cheap and easy credit) was the basis for economic policy during Bush's 8 years. They still have no clue what caused the mess we're in, and keep blaming it on Democrats' tax and spending, as if they never had control of the white house and congress for the six years the crisis was fermenting.

I'm not saying that the stimulus plan that the democrats will pass is great, or even good, but it's better than nothing, which is all the Republicans are offering.

We are in this mess Clinton forced banks, by statute, to extend credit to those they normally would have rejected, then forced Fannie May to buy those loans from banks. This was done with the noble goal of increasing home ownership. But the result is that there is too much bad debt in the market, which makes it harder for banks to extend credit, which makes it harder for business to continue to expand and grow and create jobs.

The republican plan is to cut taxes, especially the capital gains tax. If people get to keep more of the money they make from investing, they are more likely to actually invest, even given the current low rate of return - pumping money back into the market, allowing for more credit to be extended.

A better stimulus plan would include Obama's Keynesian economic plan of funding shovel ready infrastructure rebuilding, some of the republican tax cuts, and none of the pork. If Obama wrote up such a bill and told the people to call their representatives to support it as is without earmarks it would pass overwhelmingly. Instead he is going with partisan politics as usual, letting Pelosi mark up a bill that is mostly funding for unpopular liberal pet projects and calling it "stimulus."

Let me clarify my thinking here, republicans have controlled the presidency 20 of the last 28 years, both houses of congress for 12 of the last 14 years and the presidecny for the last 8 years and somehow this is the democrats fault.

And you wonder why republican ideas are not being adopted? It is because they come from thinkers of your caliber.

I didn't say this is the Democrat's fault. I said it was Clinton's fault. The cause for the current economic downturn didn't start 28 years ago, or even 14 years ago. It started nine years ago. From the New York Times 30 Sep 1999 written by Steven Holmes:

"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

Bush is responsible for not undoing this damage by changing the rules back. His tax cuts clearly did help the economy and should be made permenant. If you disagree with this reasoning I would be interested to hear your understanding of the causes for the current downturn (provided it something more focused than simply "republican ideas"). Ad hominem attacks are not useful.

I'm not saying that the stimulus plan that the democrats will pass is great, or even good, but it's better than nothing, which is all the Republicans are offering.

cutting taxes has worked every time it has been tried. the dumbocrats think they can spend my money better than me.

BTW-what happened to that 'we're spending money that our chilluns will ....' blah blah blah blah?

i guess we won't be hearing that one again until the republicans get back in charge.

here's a thought for you. obama should nominate every democrat member of congress as a department secretary and the treasury will brim over with their back taxes they haven't been paying.

fuckheads.

"We are in this mess Clinton forced banks, by statute, to extend credit to those they normally would have rejected, then forced Fannie May to buy those loans from banks."

Credible link?

"Credible link? "

Please tell me that you're kidding.

By the way, for the record, Clinton said that he and a bunch of R's wanted to put in regulation over Fannie and Freddie and it was blocked by house D's.

That's what he said. Late in the game Barney Frank was still not accepting that there was indeed a problem.

Not that there's anyone without culpability, but lest we forget that the legalization of credit default swaps (derivatives), which were like the "offtrack betting" sources of the stockmarket that brought about the crash of 1907, took place in 1999 with Clinton's blessing. Just sayin'...

Remind me again who wrote that legislation?

The bad mortgages were backed by credit swaps that the GOP kept from being regulated; Clinton’s legislation was aimed at "red lining" not forcing bad credit risks. The dollar dropped under GOP fiscal policy, raising the cost of everything. $4.00 gas shocked the system, closing wallets; and exasperating an already slowing economy.

As I predicted GOP policy of raising the National debt to GDP ratio would accelerate due to a shrinking economy in 2009.

There is absolutely no evidence that cutting taxes has lead, or will lead, to growth (in this case, reduced unemployment) in the economy. It's a myth that has been perpetuated for years to justify letting mostly wealthy individuals hold on to more money.

In times when the economy is strong, a tax cut will allow companies and individuals to invest more, and they might do that, when the economy is strong. But during a recessionary period, or a time when it is more like a depression (like now), not even cutting taxes to zero will result in increased investment. Businesses will only invest when they have confidence in getting a return, and right now the confidence level is zero, which is why the government sees the need to supplement what little private investment there is with public investments. And individuals aren't responding to tax cuts by spending more, they are reducing their debt when possible.

I would suggest cutting taxes in only two ways: investment tax credits, which businesses only get when they actually invest, and would be coupled with higher tax rates for those who don't invest and only hoard; and letting companies deduct the cost of dividends they have paid to shareholders, so they can be taxed at the same rate as the shareholder's personal income. If corporations could disiribute profits without the burden of double taxation, they would be less likely to hoard cash, or to do non-productive things like buy back their shares.

And while I think that many Democrats in congress like the ability to spend tax dollars on programs that will keep them in power (i.e., pork and earmarks), I think that Obama is smart enough to avoid that as much as possible. I don't know what the breakdown of the proposed spending is between real investment and pork, but I would be surprised (and less optimistic) if the earmarks represent more than a few per cent.

Even if you want to believe that Clinton was solely responsible for the rule that required banks to finance more mortgages in the poor areas where they do business, it had little to do with the current crisis. Those loans represent a tiny fraction of the sub-prime mortgages made during the decade. Probably more than 98% of all toxic loans had nothing to do with those mortgages you refer to. The bad debt, which is not limited to mortgages, but includes all kinds of corporate loans, was enabled by credit default swaps that were marketed as insurance and bets against defaults, and those swaps turned out to be bets that could not be covered. When the losers of those bets (AIG, Bear Stearns, Lehman, to name the 3 biggest) couldn't pay off, the house of cards collapsed.

The idea that a capital gains tax cut will help the economy is a fallacy. People will not invest in bad businesses just because they will be taxed low. If you don't believe your investment will be profitable, you won't invest even if there is zero taxes. Most capital gains from new investments does not come from individuals anyway, it is supplied by venture capital firms that get funds from corporations and tax-exempt pension and college funds. The capital gains tax preference has been mainly used by speculators who profit from flipping shares or real estate - activities that have little to do with rebuilding the economy.

At the basis of all the bad debt is our real estate market. It represents most people's largest investment. If banks hadn't been forced to give out so many risky loans there would never have been a housing bubble and the people who shouldn't have gotten loans in the first place wouldn't be going into default. I never said these loans all went to poor areas, plenty of people in million dollar homes are defaulting too. Credit default swaps were invented in 1997 as a loophole. The Clinto administration did nothing to try to close that loophole for three years - the loophole was then given the weight law in 2000 by Clinton's signature.

Obviously people will invest more with lower capitol gains tax, even in a bad market. If I say to you, "invest in this market and you can make 3 percent return, but the government takes half, or you leave you money in a checking account, where it is safer, and make 1 percent interest." Which would you choose. Now take away the tax. If people get to keep more of the money they make from investing they are more likely to invest. Speculators, as you call them, are exactly what we need - people who are willing to infuse the market with cash. Long term investing is great for the long term, but we need people to get their money out from under their mattresses and into the financial markets to prime the pump and get the economy moving again.