Obama on ‘Trickle Down’ Economics: ‘It Doesn’t Work, It Has Never Worked’

[blueclown]

http://thinkprogress.org/economy/2011/12/06/383348/trickle-down-economics-doesnt-work-obama-asserts-in-economic-speech/

Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If only we cut more regulations and cut more taxes – especially for the wealthy – our economy will grow stronger. Sure, there will be winners and losers. But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else. And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.

It’s a simple theory – one that speaks to our rugged individualism and healthy skepticism of too much government. And that theory fits well on a bumper sticker. Here’s the problem: It doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible post-war boom of the 50s and 60s. And it didn’t work when we tried it during the last decade.

Does anyone else find this particular passage of the President's speech extremely exciting... to see him finally acknowledge this premise, instead of trying to be the "Great Uniter"? The progressive wing of the Democratic Party has argued for years that trickle-down economics have been an abject failure. While many moderate and Conservadems might feel the same way, there has never been a huge public pushback against the notion of lower tax rates on the rich = more jobs. Finally though, it seems as if the President realizes that he's going to win the 2012 election in no other way than by acknowleding the facts and the situation on the ground. He may alienate some of his rich financial donors, but he needs to run on this platform in 2012. He needs to present the rationale that the alternative is another era of the Gilded Age, where the top 1% get richer and the rest of the 99% get the scraps. It's exciting to see him parallel his vision of what America should be to the 1950s and 1960s, an era of high marginal tax rates on the wealthy and numerous progressive reforms.

Every President has a different path to re-election. I hope the President realizes that this is his path.

[pinto]

1. Kick

:kick:

[Skittles]

2. the trickle we feel is the 1% pissing on us

[DCKit]

3. It's just rain, stupid. You should be happy.

We're not going to see a lot of rain from here on out.

[dflprincess]

4. I just hope he stays on this path after he's reelected

but his past record doesn't give me a lot of hope.

[joshcryer]

6. Give him a Senate with more than a dead guy and a comedian.

[Cosmocat]

8. right ...

people think the man is a dictator, or that the president has some mystical powers to work against an opposition party that is absolutely 100 percent in lock step to work against anything even remotely progressive, and the mystical ability to insert a spine into the mushy half of his own party in congress who are scared of their own shadows ...

[dflprincess]

22. He certainly has the power to work against the oppopsition party

He may not win every fight - he may not win any of them - but at least he would have fought. And true, he can't be expected to insert a spine into the Vichy Democrats when he can't even find his own.

[uponit7771]

13. +1

[provis99]

5. yeah, ok, bub.

fool me once...

[Hart2008]

7. So Obama is now admitting that his bank bailout policy was wrong?

How were the bank bailouts anything other than Hooveresque trickle down economics?

How were the home owners who took out those bad loans helped by government intervention in the market place from the Obama administration?

[AtomicKitten]

11. "his" bank bailout policy?

Bush- not Obama- Enacted TARP and Signed the Bank Bailout into Law

President Bush- not President Obama- enacted TARP and signed the Bank bailout into law towards the end of his presidency. And yet a large percentage of Americans believe that Obama is responsible, according to the latest Pew survey:

Only a third of Americans (34%) correctly say the Troubled Asset Relief Program (TARP) was enacted by the Bush administration. Nearly half (47%) incorrectly believe TARP was passed under President Obama. Another 19% admit they do not know which president signed the bank bailout into law. Notably, there is no partisan divide on the question. Just 36% of Republicans, 35% of independents and 34% of Democrats know that the government bailout of banks and financial institutions was signed into law by former President Bush. And Democrats (46%) are just as likely as Republicans (50%) to say TARP was passed under Obama.

How are so many people misinformed about the TARP "bailout"? It's not just Fox-watching Republicans (who are often grossly misinformed by the channel) but Democrats as well. Doesn't anybody check their facts anymore? Or do people just choose the facts that support the narrative they want to believe? Bush bailed out the banks and fueled the greatest Recession in generations. Why blame it all on the guy trying to clean up his mess?

http://www.huffingtonpost.com/robbie-gennet/bush--not-obama--enacted_b_678682.html

Then Candidate Obama tried to structure the Bush bailouts with conditions:

9-23-08: Obama Says Bailout Should Include 4 Conditions
http://thecaucus.blogs.nytimes.com/2008/09/23/obama-says-bailout-should-include-4-conditions/

- snip

Adding some specificity to proposals he has already made, Mr. Obama, the Democratic presidential nominee, called for a payback plan for taxpayers if the bailout succeeds; a bipartisan board to oversee the bailout; limits on any federal money going to compensate Wall Street executives; and aid to homeowners who are struggling to pay their mortgages.

If those four objectives are not met, Mr. Obama told reporters at a news conference here, he would recommend that federal and Congressional negotiators “go back to the drawing board” to restructure the bailout plan.

-snip

[Hart2008]

17. Senator Obama voted for TARP I and President Obama implemented TARP II

Obama certainly enacted the TARP program as U.S. Senator and continued it as president:

Rolling Out TARP II

Creating an unnecessarily subsidized market in toxic assets

Anthony Randazzo | March 27, 2009

The Treasury Department has created a bit of a conundrum for libertarians when it comes to the newly announced Jekyll and Hyde-like TARP II. On the one hand, the government is finally reaching out to the private sector through this initiative, recognizing the power of markets and price discovery as means to end the economic crisis. But on the other hand, the taxpayers are still taking up to 93 percent of the risk in this new venture. That’s hardly an equitable solution and it could end up costing incalculable billions.

Since the Troubled Asset Relief Program (TARP) bailout was passed last September the money has been used for a host of recovery initiatives. The first half was used largely to recapitalize the banks by buying up equity shares. The second half, TARP II, will be focused on the initial goal of the bailout: to get the deadly mortgage-backed securities and toxic assets off bank balance sheets.

These real estate loans and securities have been rebranded as “Legacy Assets.” They are essentially mortgages, subprime and other, abandoned or in foreclosure, leaving the bank holding the debt in the weak housing market. Because balance sheets are cluttered with unpaid loans, banks have limited the amount of credit they are willing to extend, part of the cause of the economic slow down.

TARP II will use $100 billion of the Congressionally approved money to create the Public-Private Investment Program (PPIP) , a plan to unite private capital with taxpayer dollars to buy up to $1 trillion of the Legacy Assets from banks, easing their debt levels, allowing credit to flow more freely.

Treasury Secretary Tim Geithner argues that creating a program like this will leverage the price discovery process of the free market to help find the right price to buy the Legacy Assets from banks, and is better than the government trying to value the toxic debt on their own.

http://reason.com/archives/2009/03/27/rolling-out-tarp-ii

At this point in time Obama owns the TARP program after administering it for almost three years now. Like the military occupations, it is yet another instance of Obama extending Bush administration policies to effect Bush's third term.

It’s little wonder that Rolling Stone writer William Greider, in a marvelously detailed article in late 2008, pointed out that Obama’s choice of Summers and other key economic advisers, including Treasury Secretary Timothy Geithner, seemed designed to sustain the failed economic policies of the Bush presidency — an administration that never saw the financial crisis coming in the first place.
The Summers appointment told me that the President had no earthly clue how this devastating financial crisis happened or how to reverse it.

Things only got worse after that. President Obama failed to resurrect the Glass-Steagall Act of 1933. He failed to include a public option in health care. He failed to assert his constitutional responsibility during the recent debt limit crisis. Unbelievably, he's failed to protect Social Security and Medicare. He extended the Bush tax cuts for the wealthy. He failed to push for cap-and-trade. And he failed to close Gitmo. I could go on, but I think you get the point. If anybody deserves a serious intraparty challenge, it's the current occupant of the White House.
In retrospect, it's really incredible that a Democrat of national stature and credibility hasn't entered this race — at least as of now.

http://en.wikinews.org/wiki/Wikinews_interviews_Darcy_Richardson,_Democratic_Party_presidential_challenger_to_Barack_Obama

[AtomicKitten]

18. Ask Elizabeth Warren who has been very clear about TARP.

Bush's "half" cannot be fully tracked because it was distributed in a secretive haphazard fashion, and that is why some of it is unrecoverable. President Obama, however, did quite the opposite dispensing his "half" with conditions, most of it has already been paid back, and the taxpayers made a tidy profit on it.

[Hart2008]

19. FDR's Home Owners' Loan Corp turned a tidy profit too, but Obama rejected that idea.

Given the opportunity to effect real change, Obama chose to continue failed Bush administration policies while ignoring the needs of ordinary Americans, i.e., the 99%.

The true victims of the housing bubble continue to face foreclosure on a daily basis, without assistance of a Liberal president, despite the fact that the HOLC model had proven its effectiveness previously in addressing this same problem.

Thank for agreeing that Obama has simply continued failed Bush administration economic policies.

[AtomicKitten]

20. TARP was already law when Pres O took office.

Whether you admit it or not, he is bound by the law. If you don't approve, run for office yourself.
Maybe you could share a ticket with Darcy Richardson or Ron Paul, both whom you've promoted here.

[uponit7771]

14. wow, you have to be fuckin kiddin me...you guys are so obvious

[Major Hogwash]

21. Evidently they don't deliver pizza here anymore.

But there's always hope.

[Cigar11]

9. Don’t expect the GOP to understand LOGIC or MATH !

Their Ideology says … Less Taxes = Jobs; regardless of the actual results.

[phantom power]

10. Good -- so why were the bankster's bailed out, and not the 99%?

[uponit7771]

15. The stimulus didn't turn around job losses (this is a trick question)

[ieoeja]

24. The banks already had the infrastructure in place.

Banks stopped loaning money because they ran out of cash. So the Feds loan to big banks. Big banks loan to smaller banks, businesses and individuals. Economy revs back up.

Direct loans by the government would have required establshing a huge organization from scratch. The above method made use of what was already in place.

Problem is, while everyone understood this is what was supposed to happen, they failed to understand just how much greed is a fabric of the modern banking world.


Did you know ... following the San Francisco earthquake/fire/military-massacre that the bankers debated taking a cautious wait-and-see approach to San Francisco recovering before deciding that San Francisco could *not* recover unless they took first action and started loaning everyone the money they needed to rebuild. The Bank of Italy, now known as Bank of America, was the first to make that suggestion. I think the people in Washington thought they were dealing with *that* Bank of America, not the cesspit it has become today.

Besides, these banks are run by the same Ivy League guys with whom they were friends in college. And, hey, they were great guys who were always ready to light up a bong back then. Surely they are the same great guys now! Right?



Spend some time socially with these guys and pay attention to how they judge people. "Oh, yeah, he's a really great guy. And he has a huge portfolio, runs a couple of businesses, etc. That other guy? He's a real asshole. And he's doesn't have a penny to his name."

You will learn (probably to your disgust) just how much they judge a person's character and intellect by their monetary worth.

Given: wealthier people are better people, and
Given: stealing re-directing other people's money into my pocket makes me wealthier,
Then: I will be a better human being.

I'm serious here. I have worked with and socialized with these people. They would never lay out like that, and would deny it, but it is an accurate description of their psyche.

[uponit7771]

12. Obama admin listened to my crticism of him, this is the talk we've been waiting for

[polichick]

16. It's great to see him draw distinctions instead of being "the great uniter"...

I really hope it's not just election-year politics.

[Hell Hath No Fury]

23. So why did he try it with the stimulus?

All those tax cut incentives -- nothin' but old school trickle down. :shrug: