# Economic Craziness from the Democrats **URL:** \ **Category:** Great Debates\ **Created:** [August 5, 2010, 10:08pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340 "2010-08-05T22:08:59Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 5, 2010, 10:08pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/1 "2010-08-05T22:08:59Z")
I am amazed by just how crazy Democratic politics are becoming. Two different issues caught my eye today, which seem to be worth debating. First, [Obama Considers forgiving underwater mortgages](http://blogs.reuters.com/james-pethokoukis/2010/08/05/an-august-surprise-from-obama/). This plan would use Fannie and Freddie to forgive the underwater portion of mortgages across the country - something that could cost as much as 800 billion dollars. Next, [Nancy Pelosi](http://www.myfoxphilly.com/dpps/news/speaker-pelosi-to-call-house-back-into-session-dpgonc-20100804-gc_9008487) is recalling the House back into session to pass a 26 billion dollar ‘stimulus’, aimed primarily at propping up the salaries of teachers so they don’t have to take pay cuts. The administration has also allowed GM to purchase a sub-prime lender to allow them to sell cars to people with bad credit ratings to stimulate demand. Does anyone else think this is nuts? Especially in the context of the plan to allow the Bush tax cuts on capital gains and dividends to expire? The reason the world economy got into this mess in the first place was because there was a real estate bubble fueled by cheap credit and lax lending standards. So now the Obama administration is supporting efforts to lower credit standards further, to encourage sub-prime lending, and to reward the very people who caused the problem by over-leveraging themselves to gobble up real estate. In the meantime, it’s going to allow taxes to go up on investment. Propping up teacher salaries is not much of a stimulus - teachers already make more than the national average, and they also didn’t take anywhere near the cut in pay the average person in the economy took. This seems to be just a payoff to the teacher’s unions to gain support before the election. Likewise, allowing GM customers to purchase sub-prime loans might keep GM’s numbers looking better before the election, but just adds more risk to the economy. Would anyone like to comment on this? ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [August 5, 2010, 10:14pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/2 "2010-08-05T22:14:52Z")
> [@Sam\_Stone](#): > > The administration has also allowed GM to purchase a sub-prime lender to allow them to sell cars to people with bad credit ratings to stimulate demand. At the time of the Chrysler and GM bailout, it was said that the administration would exercise too much control over the companies’ operations. Now it seems you’re criticizing the government for not exercising enough control. Which is it? ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 5, 2010, 10:27pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/3 "2010-08-05T22:27:16Z")
The fact that GM has to go to the Obama administration for approval of its lending practices seems to me to be indicative of control, don’t you think? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 5, 2010, 10:31pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/4 "2010-08-05T22:31:46Z")
> [@Sam\_Stone](#): > > I am amazed by just how crazy Democratic politics are becoming. Two different issues caught my eye today, which seem to be worth debating. > > First, [Obama Considers forgiving underwater mortgages](http://blogs.reuters.com/james-pethokoukis/2010/08/05/an-august-surprise-from-obama/). > > This plan would use Fannie and Freddie to forgive the underwater portion of mortgages across the country - something that could cost as much as 800 billion dollars. That link is a blog opinion pieces, short on sources. I’m reluctant to give this much credence without a better primary source article. ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [August 5, 2010, 10:33pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/5 "2010-08-05T22:33:02Z")
> [@Sam\_Stone](#): > > The fact that GM has to go to the Obama administration for approval of its lending practices seems to me to be indicative of control, don’t you think? It suggests that they didn’t exercise that control, doesn’t it? Not using a veto is functionally identical to the subject getting its way. ---
**Author:** ![Merijeek](https://avatars.discourse-cdn.com/v4/letter/m/f05b48/32.png) [@Merijeek](https://boards.straightdope.com/u/Merijeek)\ **Post date:** [August 5, 2010, 10:39pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/6 "2010-08-05T22:39:21Z")
> [@Sam\_Stone](#): > > The fact that GM has to go to the Obama administration for approval of its lending practices seems to me to be indicative of control, don’t you think? And look at the way they’ve crashed and burned! Is there nothing that Kenyan Socialist won’t destroy? Doesn’t he know that government interference can only cause negative outcomes? Why are the people who voted for him allowing this to happen? -Joe ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [August 5, 2010, 10:43pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/7 "2010-08-05T22:43:17Z")
Leaing your snark aside, GM should have died. The company has been run down for years and is not a zombie, having few useful assets and essentially throwing cash away. Abent a miracle, of political powerhouses leaning heavily to MAKE it profitable, it will never go anywhere. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 5, 2010, 10:57pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/8 "2010-08-05T22:57:31Z")
> [@John\_Mace](#): > > > [@Sam\_Stone](#): > > > > I am amazed by just how crazy Democratic politics are becoming. Two different issues caught my eye today, which seem to be worth debating. > > > > First, [Obama Considers forgiving underwater mortgages](http://blogs.reuters.com/james-pethokoukis/2010/08/05/an-august-surprise-from-obama/). > > > > This plan would use Fannie and Freddie to forgive the underwater portion of mortgages across the country - something that could cost as much as 800 billion dollars. > > That link is a blog opinion pieces, short on sources. I’m reluctant to give this much credence without a better primary source article. You might be right about that. I saw the Reuters headline and thought it was more of an ‘inside scoop’ than just an opinion piece. However, according to [this article](http://blogs.wsj.com/developments/2010/08/05/federal-officials-no-plans-for-expanding-refinance-programs/), the administration came out today and denied the rumors. Maybe it was a trial balloon floated to see how the markets would react, and the results weren’t good, or maybe Pethoukis was jumping the gun based on poor sources. ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [August 5, 2010, 11:13pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/9 "2010-08-05T23:13:22Z")
The mortgages thing sounds like a GOP death panels-type rumour to me. The teachers’ pay thing is eminently sensible, it wouldn’t create any kind of controversy anywhere else except in America. ---
**Author:** ![treis](https://avatars.discourse-cdn.com/v4/letter/t/bc79bd/32.png) [@treis](https://boards.straightdope.com/u/treis)\ **Post date:** [August 5, 2010, 11:28pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/10 "2010-08-05T23:28:54Z")
> [@smiling\_bandit](#): > > Leaing your snark aside, GM should have died. The company has been run down for years and is not a zombie, having few useful assets and essentially throwing cash away. Abent a miracle, of political powerhouses leaning heavily to MAKE it profitable, it will never go anywhere. It’s been profitable for the last two quarters. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [August 5, 2010, 11:29pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/11 "2010-08-05T23:29:37Z")
> [@smiling\_bandit](#): > > Leaing your snark aside, GM should have died. The company has been run down for years and is not a zombie, having few useful assets and essentially throwing cash away. Abent a miracle, of political powerhouses leaning heavily to MAKE it profitable, it will never go anywhere. Hmm… > [@](#): > > DETROIT | Mon May 17, 2010 5:11pm EDT > (Reuters) - General Motors Co GM.UL posted a first-quarter profit as demand steadied in the United States and sales boomed in China, a turnaround the automaker said could put it on track for its first full-year profit since 2004. > > Analysts said the results underscored the progress GM made by slashing costs in a bankruptcy funded by the Obama administration and kept open the prospect of the automaker launching an initial public offering as soon as this year. > > GM posted a net profit of $865 million, compared with a loss of $5.98 billion a year before, as it ramped up production by nearly 57 percent from year-earlier levels in response to improved U.S. demand and a strong market in China. > > It was GM’s first quarterly profit since 2007. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [August 5, 2010, 11:32pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/12 "2010-08-05T23:32:38Z")
> [@treis](#): > > > [@smiling\_bandit](#): > > > > Leaing your snark aside, GM should have died. The company has been run down for years and is not a zombie, having few useful assets and essentially throwing cash away. Abent a miracle, of political powerhouses leaning heavily to MAKE it profitable, it will never go anywhere. > > It’s been profitable for the last two quarters. Only in the reality-based universe. In cookoo-land the former workers would have been hired in new industries to make gay-proof underwear, restored Michigan’s failing economy, allowed taxes to be cut while raising revenue, and caused Detroit to be re-named Randville. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 5, 2010, 11:34pm UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/13 "2010-08-05T23:34:18Z")
> [@Sam\_Stone](#): > > The fact that GM has to go to the Obama administration for approval of its lending practices seems to me to be indicative of control, don’t you think? NO. GM is reviving the GMAC idea. It was sold for a ton of money. But right now the banks are making it difficult for people to get auto financing. It is not true that GM wants to sell cars to people who can not pay them back. that would be self destructive. But banks are making it very difficult to get financing. GM is just making it a bit easier to move cars. It is not a big conspiracy. it is business. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [August 6, 2010, 12:23am UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/14 "2010-08-06T00:23:43Z")
> [@Sam\_Stone](#): > > However, according to [this article](http://blogs.wsj.com/developments/2010/08/05/federal-officials-no-plans-for-expanding-refinance-programs/), the administration came out today and denied the rumors. Maybe it was a trial balloon floated to see how the markets would react, and the results weren’t good, or maybe Pethoukis was jumping the gun based on poor sources. Lemme guess, you’re “just asking questions, man!” ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [August 6, 2010, 12:35am UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/15 "2010-08-06T00:35:33Z")
Wow. I support in general both proposals. I’d have to look more closely, but hey, sound good to me. Now, cutting taxes while starting a war, then refusing to raise them later, that’s crazy. Insisting, as many GOP pols do, that JFK cutting the marginal income tax to 75% justifies further cuts in the income tax below 40%, & this will grow the economy while raising property, sales, & payroll taxes–that’s super double-espresso ign’ant. Insisting this in the face of contrary evidence, once it’s been explained to one, that would be crazy. But I hypothesize that most GOP lawmakers can’t even hear such criticism. I think they’re too sleep-deprived, or self-absorbed. ---
**Author:** ![elfkin477](https://avatars.discourse-cdn.com/v4/letter/e/a9a28c/32.png) [@elfkin477](https://boards.straightdope.com/u/elfkin477)\ **Post date:** [August 6, 2010, 1:02am UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/16 "2010-08-06T01:02:49Z")
> [@Dick\_Dastardly](#): > > The mortgages thing sounds like a GOP death panels-type rumour to me. The teachers’ pay thing is eminently sensible, it wouldn’t create any kind of controversy anywhere else except in America. You realize this works out to $185,714 of taxpayers’ money per teacher, right? We’re not talking about all 6.2 million teachers in the US, just 140,000 of them. ---
**Author:** ![Bosstone](https://avatars.discourse-cdn.com/v4/letter/b/22d042/32.png) [@Bosstone](https://boards.straightdope.com/u/Bosstone)\ **Post date:** [August 6, 2010, 1:14am UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/17 "2010-08-06T01:14:30Z")
Way back during the immediate crisis, I was very much of the opinion that the bailout money should have gone directly to the mortgaged homeowners rather than the banks. That way, the banks get their money, the houses don’t get foreclosed on, everyone’s happy. ---
**Author:** ![Left\_Hand\_of\_Dorkness](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/left_hand_of_dorkness/32/7156_2.png) [@Left\_Hand\_of\_Dorkness](https://boards.straightdope.com/u/Left_Hand_of_Dorkness)\ **Post date:** [August 6, 2010, 1:14am UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/18 "2010-08-06T01:14:43Z")
What’s your cite for teachers making above-average incomes? And are you comparing apples to apples–that is, comparing teacher incomes to folks with equivalent seniority in their professions and with equivalent educational backgrounds? Because from where I stand, I’d freakin’ love to be making an income equal to what I got in my first job out of college twelve years ago, when I was writing material for an Internet marketing company. Your problem with the mortgage bill seems to be that it rewards bad behavior. While I’m not close to being underwater with my mortgage (we bought a house far less than what the credit union said we could afford, and we bought a nasty-looking filthy house that we had to clean up largely because its filthiness was depressing the price into our range), I’m pretty okay with my tax dollars going to forgive mortgages, if that’s what it’s going to take to get other people back on their feet so they can get back to paying more taxes so I can, y’know, finally get a freakin’ raise. ---
**Author:** ![Left\_Hand\_of\_Dorkness](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/left_hand_of_dorkness/32/7156_2.png) [@Left\_Hand\_of\_Dorkness](https://boards.straightdope.com/u/Left_Hand_of_Dorkness)\ **Post date:** [August 6, 2010, 1:20am UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/19 "2010-08-06T01:20:04Z")
> [@elfkin477](#): > > > [@Dick\_Dastardly](#): > > > > The mortgages thing sounds like a GOP death panels-type rumour to me. The teachers’ pay thing is eminently sensible, it wouldn’t create any kind of controversy anywhere else except in America. > > You realize this works out to $185,714 of taxpayers’ money per teacher, right? We’re not talking about all 6.2 million teachers in the US, just 140,000 of them. And **you** realize that a link to a local Fox affiliate may be getting its reporting wrong, right? [NY Times](http://www.nytimes.com/2010/08/05/us/politics/05spend.html?_r=1&ref=politics) has more details: > [@](#): > > The legislation would provide $10 billion to retain teachers who might otherwise lose jobs to cutbacks, and an additional $16 billion to help states struggling to close budget deficits. If I’m crunching the numbers right, that’s closer to $71,428 per teacher. That’d still pay for almost two of me, including taxes and benefits–but I teach in a state with a notoriously low salary (when I started, there was a proposal to give all teachers an immediate 7.2% pay raise just to bring us up to national average. Scrapped of course). It still sounds like it might not be too far off the mark. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 6, 2010, 7:32am UTC](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340/20 "2010-08-06T07:32:41Z")
Most states can’t run a deficit, though some are through gimmicks. Their tax revenues are way down. The right seems to be pretending that they are not cutting services, but even here in California if you want to go to a DMV office on Fridays, you’ll learn different. A friend who is a tenured professor for a state university gets to be furloughed also. Having states lay off people in the midst of a recession with high unemployment is not very clever. You don’t have to be a Keynesian to figure that out. It is probably not nearly enough, but it will help. This is actually a “will someone think of the children” moment. [Next page](https://boards.straightdope.com/t/economic-craziness-from-the-democrats/549340.md?page=2)