Killing the Stimulus Plan Key to GOP Rebound

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Wow, the financial ignorance displayed by ALL of the previous posters is simply incredible. First, the economy is in trouble because of regulation, bad regulation by the Clinton administrations and the bought and paid for Democrats with respect to Fannie Mae. Fannie Mae lowered its lending standards to appease the "anti-redlining" crowd that is the Democratic Party. The problem is that banks weren't lending to certain people because of poor credit history, not the color of their skin. And in addition to lowering it's standards Fannie and Freddie extorted banks to lower their standards as well or face a F&F boycott of their good paper. I know because I saw it firsthand as a mortgage broker in Chicago in the nineties. Banks needed loan volume in certain zip codes to keep F&F buying their paper so they paid bonuses and encouraged lending in certain zip codes no matter the credit worthiness of those loans. Of course they knew there would be problems with those loans so they packaged them up and sold them to someone else. They would have never made those loans without the pressure applied by Fannie and Freddie. So get you facts straight people.
Second, regulation is exactly part of what's killing the big three, CAFE standards to be specific. Why? Because in order to meet CAFE standards the big three had to build and subsidize little fuel efficient cars that people didn't want to buy in order to sell big SUV's, where they actually made a profit in spite of the unions, that people did want to buy and still have their AVERAGE work out. Why should the government be dictating what cars a private company builds when that companies customers tell them what they want everyday by what they buy? In a truly FREE country we as consumers vote everyday when we spend out money and I certainly don't need the government telling me what's best for me.
Third, there was no "deregulation" that caused this problem, in fact again regulation, in the form of the "mark-to_market" which was part of Sarbanes-Oxley forced banks to artificially lower the value of mortgage backed assets based on the last sale, exactly what is killing home values right now.
And forth, lower taxes, especially on the higher end and on capital gains and dividends has proven time and time again that it increases revenue to the government. It happened under Reagan, it happened under Clinton when the cap gains tax was lowered, and it happened again under GWB. The problem is spending, under Reagan the Democrats simply spent more than even the increase in revenues that came in. It didn't happen under Clinton because the Republican controlled house, where all spending originates, simply wouldn't give Clinton a budget that outspent incoming revenue, and it did happen again as both Dems and Repubs under Bush held a special interest funding frenzy.
So yes, deregulation and lower taxes do spur both the economy and government revenues and it would happen again IF government would get out of the way.

Kilroi1 of CO 8:20PM December 25, 2008

I vehemently disagree with Pethokoukis' STUPID assertions that deregulation and lower taxes will save us. Deregulation and regulators deliberately told to look the other way - that's what caused the problems we had. What kind of banking system allows banks to go down in reserve requirements and do stupid loans?
Luckily we see examples like in India and China, where reserve requirements were RAISED and bad loans were severely discouraged and penalized and banks had to do more oversight and people had to put down a significant amounts of their own money for a down payment. These regulated banks turned out to have NO financial crisis, as opposed to ur deregulated banks now getting billions in bailouts. How do you explain THAT, Mr. Pet-the-Kooky?
I agree that bail-outs will not work - too specialized, too unaccountable, and too much of a rescue of the very banks and auto companies that deserve to fail for the stupid moves they made. And they will only come asking for more money like they've been doing all along (AIG is on its 3rd or 4th bail-out, the Big 3 will definitely ask for more).
Banks that didn't need money are getting bail-outs, the FDIC's pool of money for deposit insurance is almost wiped out, and the government's stepping in for Fannie and Freddie puts us all on the line and the Fed's printing of trillions more in money and buying of rotten mortgage-backed assets will all cause problems for taxpayers.
We are seeing the worst of privatized gains, socialized losses - all because our corporations and lobbyists and magnates have Congress and the White House in their pockets.

Paul of CA 5:58PM December 25, 2008

You have a degree in Russian politics and American history. How about getting a degree in business so you don't look like such a stooge when you write drivel like this?

John Anderson of MI 12:22PM December 25, 2008

This article is proof.
The idea the Republicans can save themselves by damning the United States to another Great Depression is truly good thinking. And the point about taking Joe the Plumber's advice is classic. He is nothing more than an uneducated and ignorant nobody, whose claim to fame is that he does not pay his taxes.
In short, what I am saying is that James Pethokoukis should go back to church, drum up hatred for minorities, and whatever else Republicans do and leave journalism and governing to the intelligent people.

Michael of New Hampshire of NH 10:10AM December 25, 2008

I love it. It aptly descrbes Republican economic policy since the Reagan years. Before than, they use to complain about the Democrat's deficit spending in times of economic hardship. The problem was, the Democrats were successful politically, at least in the Congress, even after Lyndon Johnson's ERA turned the Southern political landscape against them, and the Vietnam War wrecked havoc on them.
Then the "laugher" (excuse my sarcasm)curve came along. Yeah, fiscal (tax and spend) and monetary policy have a lot to do with what the economy is doing. (Don't believe it, when the pundits say the executive branch cannot affect what goes on in the economy. That is a politician's way of trying to escape blame for bad economic consequences.)
The "laugher" curve theory is that cutting taxes and government regulation and spending, would generate increased economic activity and enough tax revenue to eliminate budget deficits. Sounds plusible. It borrows from the Democrat's deficit spending when the economy needs a boost and Kennedy's tax cut policies. There are flaws in it, like cutting spending, while you cut taxes is one form of playing both ends against the middle (You're both putting and taking money out of the economy), and as the current crisis demonstrates, without regulation, the system (human nature) will run amok. My own thought is the supply-siders have benefitted and seemingly the economy, because the Republicans have been pumping money into the economy through their tax policy and they have not held true to reducing government spending. As a result they have been juicing up the economy for years--the "bubble" economy so to speak. (It was a great ride up, for the well off.) Warnings that this was going to come back and bite us have been constant, but we just went merrily along. Now its come home to roost, and the Republicans are saying that we need to do more of the same to solve the problem their policies created. (Yes, during the Clinton years, we had the stock market bubble, and they were into deregulation. But they were on a track to eliminate the budget deficit, money that would be very useful right now, and unlike under Reagan and Bush, their economic policies increased the economic welbeing of all Americans--including real wages for wage earners. These have fallen under Bush.)
Geez! Too bad the "laugh" is on the Amercan people. But these guys don't see wage earners as "hard" working Americans. Just ask David Brookes of the New York Times. In his writing, he has asserted that those smart money managers are the true hard workers in America.
Go on. Stick it to the UAW auto workers. That will fix everything. Ha! Ha! America, if you believe that.

Joseph Costa of MD 8:15AM December 25, 2008

so which party do you belong to?
are you under the payroll of bush and company or those hicks out there in the boonies trying to catch grasshoppers?
wht a waste of time reading your worthless drivel.

sensible behind a computer of CO 9:55PM December 21, 2008

Moeerator please delete my first and third posts as well as this one.

Sergio Valdez of 9:48AM December 12, 2008

You devote one line of your retarded diatribe to address the cause of our current recession and soon to be depression simply by saying that whatever people might think caused it, it wasn't caused by free markets and deregulation. But the truth is that you don't have any clue what is the cause of the country's current economic crisis because you are too blind to figure it out. If you want to make the argument that deregulation did not cause our economic collapse, you at least have to come up with an alternative explanation. Because here's something you might not know about common sense: when you see one significant event preceed another significant event, (significant means important) the conclusion that either the first caused the second or that something else caused both is usually true. And if it didn't, there's a good explanation for it. So what's your explanation for how the greatest set of tax cuts and deregulations in America's history preceeded the 2nd greatest economic collapse in history (with the potential to be first) without causing it? You want a real strategy for rehabilitating the GOP? The first step is for you supply-siders to admit that it is you who have the burden of proof now.

Sergio Valdez of CA 9:45AM December 12, 2008

You devote one line of your retarded diatribe to address the cause of our current recession and soon to be depression simply by saying that whatever people might think caused it, it wasn't caused by free markets and deregulation. But the truth is that you don't have any clue what is the cause of the country's current economic crisis because you are too stupid to figure it out. If you want to make the argument that deregulation did not cause our economic collapse, you have to at least come up with an alternative explanation. Because here's something you might not know about common sense: when you see one significant event preceed another significant event, (significant means important) the conclusion that either the first caused the second or that something else caused both is usually true. And if it didn't, there's a good explanation for it. So what's your explanation for how the greatest set of tax cuts and deregulations in America's history preceeded the 2nd greatest economic collapse in history (with the potential to be first) without causing it? You want a real strategy for rehabilitating the GOP? The first step is for you supply-siders to admit that it is you who have the burden of proof now.

Sergio Valdez of CA 9:36AM December 12, 2008