Senate passes reform to rein in Wall Street abuses
By Jon Bartholomew of Portland, Oregon. Jon is a policy advocate for OSPIRG. Previously, he contributed "Small Businesses Need Strong Consumer Protections Too".
Moments ago, the U.S. Senate made a huge stride towards fixing some problems that had festered for years, and finally brought a massive collapse to the national and international economy. The financial reform bill that passed reins in Wall Street and protects consumers, investors, and taxpayers from further financial meltdowns.
This Wall Street Reform bill ensures that the financial markets in this nation will be more transparent, stable and will be less likely to collapse in the future. While it isn’t perfect, it makes the greatest strides in decades to create stability in our economy.
I want to loudly applaud the votes of Senator Jeff Merkley and Senator Ron Wyden for standing up for Main Street in the face of some 2,000 Wall Street lobbyists who spent hundreds of millions of dollars over the past 18 months to weaken reforms targeting the practices that sparked the financial mess they caused for consumers and taxpayers.
Thanks to Oregon’s Senators, Americans will now be able to count on the new Consumer Financial Protection Bureau, which will give small investors and homeowners new protections, will rein in risky bank derivatives practices, toughen regulation of financial firms and, when necessary, set up procedures to shut them down instead of bailing them out. The CFPB is actually a model of efficiency, in that consumer protection had been done as a secondary thought in seven different agencies, and now those will be brought together to be the top priority for one.
And the CFPB – passed despite the public efforts of all the banks and the U.S. Chamber of Commerce to kill it – is not the only grand achievement of the Congress. The bill’s new regulation of the shadow markets for derivatives, for example, was strengthened in conference committee, which is something that rarely happens.
Senator Merkley needs to be given special thanks for his leadership on pushing for stronger language on the Volcker Rule as well as preventing mortgage brokers from taking kickbacks from lenders to steer home buyers into loans that are not as good as what they qualify for.
Oregon’s House members Rep. Kurt Schrader, Rep. Earl Blumenauer, Rep. David Wu and Rep. Peter DeFazio also deserve our thanks for passing this legislation in the House a couple weeks ago.
So what all will this legislation do? On the jump...
Here’s a short summary of what all the Wall Street Reform package does, but you can also visit the USPIRG site to get more details.
Landmark consumer protection: Consumers will now have an independent advocate on their side to prevent tricks and traps related to mortgages, payday loans and checking accounts. Credit cards and mortgages will offer terms in language we can all understand. It will also offer help for those abused by predatory lenders. The new law will limit banks from charging businesses hefty “swipe” (or interchange) fees for debit-card purchases and allow merchants to educate consumers about discounts for cash purchases.
Shining Light on Shadow Markets: The $600 trillion derivatives market will now operate in the open, so regulators can catch problems – like the credit default swaps that brought down the economy – before they happen. Most deals will have to be backed up by a separate clearinghouse and traded on public exchanges. The participants will have to actually prove they have the money to cover their bets.
Ending the bailout era: One regulator will be in charge of watching for emerging threats to the whole financial system – and will have the tools and authority to ensure those threats are actually visible. The government will be able to break up large troubled financial firms without taxpayer bailouts.
Reining in the Wall Street Casino: Banks will be barred from gambling with taxpayer-backed money. Banks will have to separate their riskiest derivatives trading operations into affiliates and their investments in risky hedge funds will be severely limited.
Mortgage reforms: For the first time lenders are prohibited from making loans that borrowers cannot repay, and banned from receiving kickbacks for steering people into high rate loans when they qualify for lower rates.
Strong investor protections: Companies will have independent directors set executive compensation and shareholders will get a voice on those decisions. Enhanced shareholder rights will allow for a say on pay of executives and give long-term shareholders a meaningful voice in holding corporate directors accountable. Brokers will also be responsible to their clients for their advice of investments (because they’ll have the same “fiduciary responsibility” that investment advisors have always had.)
Holding Credit Rating Agencies Accountable: Credit rating agencies will no longer have a vested financial interest in giving high ratings to risky investments. Better controls will hold rating agencies accountable for the reliability of their reporting. Investors will be able to sue credit rating agencies who slap a high rating on a risky investment.
Opens the Fed’s books: The Fed’s emergency lending programs from the financial crisis will be audited to see where the money went. The Fed will also have to disclose loans it makes to banks through its discount window. Additionally, banks will no longer have a say in picking their rule makers – they don’t get a say in choosing the regional Fed bank presidents.
Banks Pay Up. The largest financial firms have to pay $19 billion to ensure oversight to prevent another financial crisis.
Banks have to have “skin in the game”: Banks that package loans must keep 5% of the credit risk on their balance sheets.
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July 15, 2010
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1:47 p.m.
Jul 15, '10
AAAAh the Democratic Socialists are coming to the rescue. Their policies caused the houisng crisis and now they are heros for fixing their own messes.
David Wu is now a hero. Where was David Wu before the housing bubble?
http://www.youtube.com/watch?v=LPSDnGMzIdo&feature=related
The National Homeownership Strategy began in 1994 when Clinton directed HUD Secretary Henry Cisneros to come up with a plan, and Cisneros convened what HUD called a "historic meeting" of private and public housing-industry organizations in August 1994. The group eventually produced a plan that argues for creative measures to promote homeownership!
"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership"
1:50 p.m.
Jul 15, '10
Somebody had to come to the rescue. Clearly the GOP had no interest in doing it.
Nor do they now, for that matter.
1:54 p.m.
Jul 15, '10
The DOW goes from 14,300 under George Bush to 6500 under Obama, and now they are heros for fixing their mistakes while doubling the national debt in 4 years? What kind of crack or you smoking?????
http://www.youtube.com/watch?v=hxMInSfanqg&feature=related
http://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=related
http://www.youtube.com/watch?v=iW5qKYfqALE&feature=related
http://www.youtube.com/watch?v=2UZ9l_AxKjA&feature=related
1:59 p.m.
Jul 15, '10
considering the lag time of policies leading to economic activities, you just indicted Bush.
2:02 p.m.
Jul 15, '10
B.S.
5:19 p.m.
Jul 15, '10
You are correct, your claiming that the Dow crashed because of the Obama administration policies is demonstratively false (i.e. "BS"). Not just because the Dow is not direct barometer about administration fiscal or economic polices, but because the Dow actually tanked long before the Obama Administration polices or Congressional legislation were even signed into law, much less had an effect in the economy. FYI, the Dow closed at 7949.09 the day Obama was sworn in and yesterday closed at 10,306.72 which, if we gave any credence to your mindlessly stupid insinuation that the Dow is at all a viable indicator of economic policy, would be an improvement of over 2,417 pts. (aka 130% of where the market was at the day he was sworn in).
BTW it was just announced today that while still not as strong as we would like, we have the lowest jobless rate in nearly 2 years.
Not sure why you want the American economy to fail, but alas for you, we are on a the road to recovery (albeit a slow one).
2:04 p.m.
Jul 15, '10
I support reforms. But, placing blame for demcoratic Socialist policoes on Republicans is B.S. ...Pure unadulterated revisionist B>S> I gues you are a student of Obama revisionist history. This article is crap!
6:32 p.m.
Jul 15, '10
And yet reality and facts utterly refute your nonsense and support our points.
2:43 p.m.
Jul 15, '10
Oct. 12th, 2007, DJIA peaks at $14,093.
Jan. 16th, 2009, 3 days before end of Bush's presidency, DJIA at $8,281.
Today, DJIA $10,359.
During Bush, the stock market fell from its peak by $5812.
Since Obama has become President, the stock market has gone up $2078.
Nice talking point you got there, to bad it's bullsh*t.
5:19 p.m.
Jul 15, '10
Damn, beat me to it Chris. I'll have Fred by you a beer for that one (though he doesn't know he will yet).
5:23 p.m.
Jul 15, '10
The stock market started its slide when Barack Obama was nominated. Look at the chart! It is called the "Obama effect". Look at the dates. Here is a chart of the "Obama Effect!"
Bush brought us back from the tech bubble, the dangling chad, and 911. The market hit an all time high, and most baby boomer 401ks recouped the 6 trillion they had lost as a result of the end of the tech bubble etc. Under Obama the DOW slid to 6500. Is that BS? The market did not start it's 8000 slide until Obama was nominated!!!!
http://fairlyconservative.com/wp-content/storage/2009/02/obama-djia-feb-2009.jpg
6:24 p.m.
Jul 15, '10
You are delusional.
The market crash had nothing at all to do with the finical crisis and the popping of the housing bubble brought on by the massive de-regulation that Phil Gramm and the GOP got passed and Bill Clinton was stupid enough to not veto? No, it had to be Senator Obama beating Hillary Clinton for the Democratic nomination. (shakes head)
You know, even my 14 year old son can spot the logical fallacy of post hoc ergo propter hoc.
You do you understand the difference between correlation and causation, yes?
What next, "Roosters crow just before the sun rises. Therefore, roosters crowing cause the sun to rise."...?
10:40 p.m.
Jul 15, '10
you mean that they don't?
3:48 p.m.
Jul 15, '10
I am confused...the DOW was DOWN 23% while Bush was in office and is UP 20% since Obama has been in office.
Are you running for office again?
1:55 p.m.
Jul 15, '10
Hostory dicates that George Bush was tooting the horn on this issue years ago. That is fact and no amount of Democratic Socialist revisionist history will change that fact!!!!!!
1:58 p.m.
Jul 15, '10
History has documented that George Bush recognized this issue years ago and sounded the alarm to Congress. The Democrats did nothing "NOTHING" except ignore George Bush. That is fact and no amount of Democratic Socialist revisionist history will change that fact!!!!!!
2:01 p.m.
Jul 15, '10
Spreading the Bill Clinton's housing risk agenda throughout the dirivatives market was the reason for the collapse.
3:17 p.m.
Jul 15, '10
Wow. Stephan, you're a walking talking example of confirmation bias. We've had around 12 years of letting the inmates run the asylum without restraint. We've seen the results, but still all you can do is yell about socialism.
BTW. The Easter bunny and the tooth fairy are also mythological creatures, but it's way less dangerous to believe in them.
3:49 p.m.
Jul 15, '10
I thought we had lost him. Damn!
5:09 p.m.
Jul 15, '10
I think he's going to be hard to shake; from his website it appears that his family's Wall Street ties go back 345 years - all the way back to the British capture of New Amsterdam!
http://iraqeraveterangibill.com/Brodhead_military_history.php
5:29 p.m.
Jul 15, '10
I must be less of a patriot then. my family only was trusted to hide the Constitutional Convention documents in Allentown during the British siege of Philadelphia.
6:17 p.m.
Jul 15, '10
Why does your family hate America so much? ;)
6:56 p.m.
Jul 15, '10
it's because we got across the border without our papers. ;)
5:10 p.m.
Jul 15, '10
So your saying Wall street and the private enterprise are the Republican's fault? I would say you are walking talking Socialist "Let them eat cake mentality". The democratic Socialists have been in charge of the house and senate since 2004. In 2008, they gained a 60 senator filibuster proof majority in the senate and 230 something in the house. With this majority, they have had a fiscally irresponsible orgy on our children's nickle. i am confused, is this the asylum you are talking about or is it some other pipe dream?Maybe you approve of increasing the national debt from 11 trillion to $20 trillion in 4 years? What is it that you are actually talking about? Is it the free market system or Kremmlin style control of everything? So you belive in Democratic Socialism or the government takeover of every aspect of your life! Forget states rights! Forget the Constitution> Forget about freedom, choice, and opportunity? Is that the easter bunny you are talking about?
5:28 p.m.
Jul 15, '10
That "question" makes zero sense on multiple levels.
"Filibuster proof" majority rhetoric aside, given that the market has improved well over 2,000 points between when the 111th Congress was sworn in and today, and we now have the lowest number of jobless claims announced today in that same time period, and that the economic meltdown occurred before President Obama even won the election... not sure how you think reminding us of the fact that things have improved since President Barack Obama and the 111th Congress took control is supposed to make us want to embrace the abject failure of conservative economic fantasy and proven disasters of de-regulated financial markets.
But then "conservative" logic, unfettered as it is from reality, escapes me.
5:36 p.m.
Jul 15, '10
Yeah I guess your right. The 250,000 census jobs kind of brought us back to normalcy. I mean for a few weeks that is.
As fars as sense, Blue Oregon makes zero sense and is a waste of time................at so many levels
lets look at the average value of unemployment claims under Bush and then look at Obama shall we.
http://www.iaconoresearch.com/BlogImages/10-02-25_jobless_claims.png
6:05 p.m.
Jul 15, '10
Today's report doesn't include census jobs which are already almost all drawn down.
Try again. I know reality has a liberal bias, but it is still reality.
But thanks for showing quite clearly with that graph that the explosion in job losses occurred under the polices of the previous administration.
9:06 p.m.
Jul 15, '10
As fars as sense, Blue Oregon makes zero sense and is a waste of time.
Not sure why you're hanging out here, then.
I'm just glad that GOP voters in the 1st had the good sense not to nominate you for Congress.
5:11 p.m.
Jul 15, '10
What on earth is "Democratic Socialist revisionist history"?
5:28 p.m.
Jul 15, '10
Go through all of Obama's speeches and you will get the picture......
I am growing tired of this profoundly stupid article.
Under Democratic socialism our children will have to pay for $20 trillion in national debt interest by 2013. Oh I forgot, that's George Bush's fault too! Obama spends $1.8 trillion a year in deficit spending and tells us Socials security is sustainable to 2037? Anyways drink the koolaid!
6:34 p.m.
Jul 15, '10
You are howling at the moon. You have nothing, and are refuted with facts and by that terribly liberal, biased thing called reality.
9:27 p.m.
Jul 15, '10
Hey -- we need to count ourselves lucky it's not "Democrat (sic) Socialist Revisionist History."
5:41 p.m.
Jul 15, '10
Here lets look at deficits shall we:
http://gatewaypundit.firstthings.com/wp-content/uploads/2010/01/2010-deficit.jpg
5:59 p.m.
Jul 15, '10
Yeah, and where they come from while we are at. Let's look shall we?
5:47 p.m.
Jul 15, '10
It's the new mindless Teahadist/Luntz propaganda, trying to fabricate a link between "socialism", "Democrats" and completely nonsensical claims like Democrats are Nazis, Marxists, scary "European" crypto-Muslim boogeymen and women.
In other words, it is Glenn Beck circle-jerking, but even more insipid and moronic than the misspelled crap the weepy blowhard himself scribbles on his chalkboard to "prove" in some kind of six-degrees of Kevin Bacon sort of geometric logic that President Obama and liberals not only are in league with satan, but also DO have a duplicate key to wardroom… ya see… the strawberries… a href="http://www.imdb.com/title/tt0046816/quotes?qt0367327">that's where Stephan had us…
6:04 p.m.
Jul 15, '10
Hey I liked Bill Clinton!!!!!
I thought that Hillary would have followed his abilities in deficit reduction.
I never watch Glenn Beck, Oreiley or Hannity!
Fox news disgysts me with their racist Murdock racist agenda.
The federal government is going to bankrupt us, no matter who is in.
It is all a show.
6:10 p.m.
Jul 15, '10
Well then, you should be happy the President Obama just named Bill Clinton's OMB manager to replaces Peter Orzag earlier this week. Though deficit reduction should be perhaps 12-22 months out at the earliest (aka once the recovery is fully self-sustaining).
Odd that you felt the need to bring up Fox News and immediately proclaim that you hate their racist agenda.
Pssst, in poker, what you just did is called "a tell".
6:22 p.m.
Jul 15, '10
No thats not a tell, it is fact. Fox News is still on a racist ulterior agenda rant. I have come to grips with my disgust and his nothing to do with race.
Obama is owned by corproate interest. GE comes to mind.
This is the face of politics!
Bill Clinton was an extreme Southern Democratic Conservative compared to what we have now. Of course we had to run Juan McCain with Botox.
I miss Bill Clinton and George Bush
We got nothing what we bargained for this time around! Except lies, deficits, and broken promises!
Even Hillary would be doing a better job right now!
AAAh I am burnt on this!
6:30 p.m.
Jul 15, '10
If you insist that your bringing up the subject unprompted indicates a fact and not merely a poker tell.
(stifled laugh)
Again, if you say so, who am I to argue?
I can do nothing but concur with that summation of this exchange.
(wry grin)
6:13 p.m.
Jul 15, '10
BTW, which Cybil am I responding to here, since you liked Bill Clinton in this comment, but tried to pin the mortgage crisis on him up-thread (when he signed off on Phil Gramm's de-regulation bills)?
So which is it?
6:07 p.m.
Jul 15, '10
It is all smoke and mirrors. Its just a matter of time. The next president will just be the front man for large government and the government class. Nothing will be fixed until the dollar collapses. Before that happens, they will get us into another war like North Korea or Iran. Then they will use this reality to subjegate the population with more taxation and less freedom.
6:14 p.m.
Jul 15, '10
You are correct again. Your attempts at baffling people with bullsh*t is all smoke and mirrors. The rest of your claims and assertions… not so much.
6:10 p.m.
Jul 15, '10
The federal government is stepping all over states rights and the Constitution. They are overstepping their boundries and will threaghten America's ability to fund itself. This will have a trickle down effect on the states and everything else. Their is reason limited government works. When will Obama stop? When the Federal government is 40% of GDP?
6:16 p.m.
Jul 15, '10
What utter nonsense. Cite a single example of the Federal Government under this administration stepping all over states rights and the Constitution. And please, I am begging you to try and claim the new Healthcare Reform Law (particularly mandated insurance) is a violation of the 10th amendment.
6:32 p.m.
Jul 15, '10
Patriot act
commerce clause
GM, Chrysler, shutting down dealerships
You can buy an auto policy across state lines but not health care. So, whatever, send me a copy of your 1040 next year! see ya
on and on and on
yawnnnnnnn!
here I will switch back to the WU world rant!!!
During Reagan,s first term as president in 1982, the baby boomer turned 37 years old with 2 kids, a house, braces, earth shoes, and levi jeans. The country was full of vibrant and employed 37 year olds.
During Bill Clinton's first term as president in 1992, the baby boomer turned 47 with no kids, a new house, new cars, and the beginning s of a ... See Moremassive information age and tech bubble.
During George Bush's first term as president in 2002, the baby boomer turned 57 with a depressed 401k that lost 6 trillion in value, and the depressed spending that went along with wealth loss and a demographic shift. This reality was then compounded with a war on deficit spending ,a massive housing bubble, and the beginnings of massive mortgage defaults.
During Obama's first and only term in office, the baby boomer turns 67 with 40 million turning 67 over the next 2 decades. In addition, the "Obama effect" reduced the Dow Jones Index from 14,300 under George Bush to 6500 within months of his election in 2008, and now teeters on 10,000. Obama has yet to talk about the 2011 federal budget and it's $1.6 trillion deficit or the 2010 federal budget and it's $1.6 trillion deficit. He is not talking about the possibility of a double dip recession. He is trying to not talk about the economy or serial deficits before the 2010 elections. Then if we are in a double dip recession, he cant go against his "No new taxes in a reccession " so he is looking at $5 trillion in deficit spending in just a couple years in office.
Social Security will make up 70 percent of the baby boomer retirement portfolio. Approximately 160 million workers will have to support 80 million boomers on fullride entitlements and fullride health care. Another "Obama effect" on the DJI, and the stock market slides back to 6500, and Social security makes up 90 % of the boomer retirement in the short term. This also means that 80 million Americans will not have any money for new investment streams into the Stock market.
We are also faced now with a double dip reccession to compound the demographic trend. I believe this is the beginning of a long economic adjustment, that no amount of defict spending stimulus programs will change. We will not grow ourselves out of debt, when 5 million boomers leave the work force every year for the next 20 years. None of our current politicians will face this reality. They havent faced it for the last 5 years, and they will simply let the deficits soar for our children to pay for.
6:56 p.m.
Jul 15, '10
Wow, that vomiting of nonsense is so chunky I hardly know where to begin.
So let's ignore the fact that the Bush administration used the Social Security surpluses and keeping the Iraq and Afghanistan wars off budget mask the deficits he created with both the wars, and the massive failed tax cuts for the wealthy.
Or as Bush once said, you hit the trifecta.
You do know the build up of the trust fund starting in the early 80s when FICA withholding rates was by design to begin going into deficit outlays in order to cover the boomers retirement, yes?
This is not really much different than building up money in a checking account (building up a cash reserve) so you can cover writing checks for some spending down the road (spending that built up cash). But you knew that, right?
The fact is that if we simply remove the cap on the amount of income FICA withholdings are on from the $104,600 of income it is capped at (so instead of less than 5% of the income someone who makes say $20 million a year has FICA withholdings on they would have all of it under FICA withholdings, like the overwhelming majority of Americans who have FICA withholdings on 100% of their wages) makes Social Security 100% solvent (and actually accumulating a massive surplus) as far as the eye can see, all your word confetti does is prove you know precisely nothing about Social Security, the trust fund of same, and the facts and history of the deficits their causes, scope, etc.
But, as I am heading out the door to go buy groceries, I will leave you with the the floor to bellow more astoundingly ill-informed, fraudulent and down-right ignorant things about the economy, stock market and those evil Democrat Socialists that sounds like a bad bunch of scary hombres. (smirk)
10:47 p.m.
Jul 15, '10
Mitchell, since the employer also pays half of the SS Tax would you have them also keep paying on all income paid out, regardless of cap limits currently in place?
11:27 p.m.
Jul 15, '10
Of course. That has the added benefit of also brining outrageous executive compensation back to planet earth which are so far removed from reality and historical norms as to make the most crass robber baron blush. I would also make capital gains be taxed at the same rates as comparable wages as well. There is zero valid excuse that income derived form stocks,bonds, etc. should be taxed less than income derived from actually working. Depending on how the numbers pencil out, it would likely allow for modest reductions in middle and low wage earner tax rates. That would increase the amount of money customers can spend and put right back into the economy and improve business revenues, which would finally stop the hemorrhaging of the actual constant dollar of most American wage earners.
Only in backwards as conservative e"thinking" does it make sense to effectively fire a portion of your customers and reduce the money in the pocket of the rest of them who you didn't turn into fired customers and somehow expect that you will then want to her more workers when demand for your goods or services go in the toilet.
This is what cracks me up when I hear lunatics on the other side of the aisle say stupid crap like we need to eliminate capital gains taxes and the estate tax, and give more tax cuts to the wealthy in a down economy, cut of unemployment benefits and fire as many public escort employees as we can get away with… because that will lead to job creation.
Supply-side economics doesn't work, has never worked and is a proven disaster. Yet demand-side does work, is proven to work, and actually increases private escort profits and activities and grows the economy and revenues for public services, investments in education, infrastructure, etc.
11:46 p.m.
Jul 15, '10
Opps.
There we go.
One of these years I'll actually get in the habit of proof reading my comments and not just fire them off in a speedy shoot-from-the-hip fashion.
6:43 p.m.
Jul 15, '10
BP stock?
http://www.youtube.com/watch?v=EwW1Dz0Uqr8&feature=player_embedded
7:35 p.m.
Jul 15, '10
Mitch you are to be commended for persisting with the singing lessons.
I think.
9:51 p.m.
Jul 15, '10
The SS trust fund is 100% madeup of bonds by which is proof of the money we wage-earners have loaned Uncle Sam for the past 27 years. Uncle Sam owes us, every last one of us wage-earners, big time- and the sumbitch best pay!
Really, I believe I personally have loaned the violent S.O.B. about $20 grand since '83, with the sizable fraction of the total FICA withholding that is the annual surplus as computed with the same fraction of my own FICA withholding. And my income level has been only lower middle-class- just think waht the people up near the cutoff have loaned the gangster?
Yes, lifting the cutoff-ceiling and have FICA apply to all income could definitely help.
But, just the other day, Steny Hoyer said we must start looking at raising the age to qualify for full benefits to 70. Just what the GOP leaders are saying.
I'd bet that's the way things will go: rather than lifting the cutoff, there will be gradual reductions in benefits.
So, it's not only bad enough that we have to fund The Empire with our regular income tax, but the wage-earners have actually paid an added tribute to The Empire over the last 27 years, although The Empire said we'd be paid back (The Empire lied).
11:37 p.m.
Jul 15, '10
Steny Hoyer is full of crap, and cutting benefits and increasing the retirement age not only is not the way to solve long-term SS solvency. Rather his (and sadly more than a few other Democratic pols) are floating a political scam trial ballon to avoid having to put back the money Bush in essence took to paper over the size of his massively disastrous tax cut for the mega-rich the GOP jack-holes are bleating about because it is set to expire. A disastrous tax cut that did nothing to create job growth near or long-term, and is responsible for nearly a 1/3rd of the deficits that have hamstrung the Obama administration's budget projects. almost all the other 2/3rds are the recession caused by finally putting BUsh's wars on budget, and the revenue collapse brought on by Bush's Recession. That the GOP are bleating about the meag-rich tax giveaways had to pass via reconciliation only underscores the hypocrisy and poetic justice taking a bite out of the ass of the bankrupt GOP rhetoric.
11:42 p.m.
Jul 15, '10
Whoops, that came out a bit mangled.
That should have read:
4:03 a.m.
Jul 16, '10
Mitchell Gore, I sure hope Steny Hoyer is full iof crap, in that what he rcommends doesn't come to pass. And I'm certain Hoyer realizes there are other ways to proceed than what he recommends- it's just that his preferred course is to cut benefits.
And, yes, Bush did take all the SS surplus to paper over his deficit. Of course Bill Clinton was better than he at managing the deficit. but it must be remembered, too, that Clinton also utilized the SS surplus by borrowing it for the general fund. The SS surplus has been completely borrowed into the general fund every year by every president and Congress, since the FICA withholdig was increased (I believe that was '83?).
I'd sure feel a lot better about it if some high-profile pols (of either Party) would come out and recommend eliminating the FICA withholding cap- have not heard any leadership do that yet.
What really has me worried was I believe Obama during his election campaign made erroneous statements about how he thinks SS is going broke- I remember Paul Krugman answering him on that. But, I believe, when a pol makes such statements, what the pol then follows up with is: "we must cut benefits". It makes no sense, but that's usually how it goes.
6:11 a.m.
Jul 16, '10
Rational SS reform has long been a 3rd rail politically. The Trust fund is running out of money at an alarming rate and earlier this year published reports stated that the funds began paying out more in benefits than they took in - 6 years earlier than projected.
A rational approach would be a combination of eliminating the earnings cap on FICA and raising both the early retirement and the full retirement. When the ages were first imposed by FDR, he cynically chose age 65 when the longevity records indicated the average recipient would collect for 4 years or less.
8:17 a.m.
Jul 16, '10
Kurt Chapman- I've not seen the report that SS is in the red (for the first time, that would be), but I don't doubt it. It's possible. That will happen, sooner or later.
As for "the trust fund has been running out of money at an alarming rate": how can that be, when SS has been well in surplus ever since they raised the FICA perceentage withholding in the early '80s? (Anyway, there really is no money in the fund, just securities).
And, as we the wage-earners have loaned The Empire all kinds of money, I say the first priority should be to pay us back- not cut benefits.
6:34 a.m.
Jul 16, '10
Do NOT feed the trolls
11:06 a.m.
Jul 16, '10
That cat's out of the bag.
6:27 p.m.
Jul 16, '10
Paul Krugman would be a troll on this issue on Blue Oregon, according to Grant Remington.
6:18 p.m.
Jul 16, '10
I know this may be "feeding the trolls" but I think a point needs to be made here. Far and away the largest chunk of the "Obama Deficit" is from programs, mandated by law and unchangeable by Obama, that automatically kick-in during economic downturns. That means that the largest chunk of the new deficit is a reaction to the melt-down that occurred before he was sworn in and completely beyond his control. If you take these out of the total and focus on discretionary spending, that has decreased (save the anemic stimulus package) under the boogyman. More over the Bush tax cuts account for the lion's share of the pre-collapse deficit. The Bush wars and unfunded drug bill are also pretty ugly refutation of the "Conservative Deficit Hawks" myth. So all-in-all, "Democratic Socialists" (kind of a complement about the decency of the Democrats' compassion, I assume) are better economic stewards than "Republican Corporatists" I guess.
9:19 a.m.
Jul 18, '10
I apoligize and should have been clearer.
"The rate at which the Trust Fund will run out of money has been increasing at an alarming rate."
I actually keep my annual letters from SS. The published rate of Trust Fund insolvency has steadily declined and now sits at an estimated 2037. Of course the same publicaion estimated the date at which revenues would be less than outlay at 2016. That problematic date occured already this year due to unprecendented unemployment and a statistically significant number of people choosing early retirement benefits at 62, despite reduced monthly benefits.
even a casual "if-then" theorist would reduce the SS Trust Fund insolvency date to 2031.