# OK, the debt deal is apparently made. How will it affect 2012? **URL:** \ **Category:** Politics & Elections\ **Created:** [August 1, 2011, 4:13am UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004 "2011-08-01T04:13:21Z")\ **Posts on this page:** 20\ **Page:** 9
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [August 6, 2011, 2:38am UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/161 "2011-08-06T02:38:06Z")
> [@Bryan\_Ekers](#): > > At least demonstrate some basic knowledge of arithmetic I have been trying to come up with a charming way to phrase this to my gf > [@carnivorousplant](#): > > Could you elaborate on that? It’s one of the reasons I became divorced. 🙂 See above. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 6, 2011, 3:00am UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/162 "2011-08-06T03:00:10Z")
> [@galveston](#): > > After reading an interview with Elizabeth Warren by Newsweek, I discover that > > 1. She thinks there should not be banks “too big to fail”. I’m puzzled. If she is right on that, then why did the administration that appointed her bail those big banks out? There were some of us that believed they should have gone into bankruptcy, and their assets sold to smaller, more efficient entities. It does appear that a major portion of the stimulus ended up in private pockets. > > 2. She seems to blame the banks for the mortgage bubble without taking into account the role of the Clinton administration and ACORN in forcing banks to make those “sub-prime” mortgages. So while Barney Frank diddled, the bubble burst. > > (All this stuff will be brought up in the 2012 campaign, I’m sure.) ACORN did not write mortgages. The banks did. Fanny Mae did not write mortgages. They guaranteed them. Do you really not understand the difference? ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 3:22pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/163 "2011-08-06T15:22:12Z")
> [@gonzomax](#): > > ACORN did not write mortgages. The banks did. > Fanny Mae did not write mortgages. They guaranteed them. Do you really not understand the difference? What difference does it make, bottom line? The government took the risks and private banks took any profits. A win-win situation for the banks. The taxpayers got left with the bill. Many people would be willing to invest in risky business if it is not their money in jeporday. I’ve never said that there should be no regulations, just that regulations need to be reasonable, designed to improve the economy, not stifle it. I’m a conservative, not a Libertarian. ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 3:51pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/164 "2011-08-06T15:51:37Z")
Election 2012 will be all about the economy, barring some unforseen calamity. It will come down to who the electorate thinks will best deal with that problem. Social Security and Medicare are the two biggest problems. Social Security: Do we trust those who started it, who also turned it into a ponzi scheme, or those who are offering solutions to keep it functional for future retirees? Social Security was established in 1935 under FDR (D). Like most progressive plans, it sounds good at first. (Wonder how all those preceding generations managed without it?) Now, 77 years later, it has become a huge liability, as once embarked upon, very difficult to change. Too many people are now dependent on it. (Wasn’t that the original idea?) Of course, originally the SS funds were in a trust fund and had a healthy reserve. That was until LBJ (D) and his administration decided to put those funds into the general fund. Surprise! It got spent! (If a private corporation pulled that, the executives would have gone to prison) I was here and remember when that happened. From that time forward SS was a ponzi scheme, depending on an ever-increasing work force to support the retired workers. (Then abortion on demand came along, and since then we have slaughtered over 50 million potential tax payers, but that is another issue.) Medicare (1965): I can well remember when that happened. My parents were satisfied with the health insurance they had, but LBJ (D) signed the act into law, and all seniors were enrolled. Like SS, it looked good then, but now it is so huge no one really knows how to deal with it. Progressive ideas just don’t work in the long run. Even the first church in Jerusalem tried communal living for a short time. It wasn’t long before the Church in other countries were sending offerings to the poor saints in Jerusalem. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [August 6, 2011, 4:05pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/165 "2011-08-06T16:05:09Z")
> [@galveston](#): > > What difference does it make, bottom line? The government took the risks and private banks took any profits. A win-win situation for the banks. The taxpayers got left with the bill. That doesn’t quite sound like the sequence of events of the sub-prime crisis to me. Rather, the increasing use of mortgages to form mortgage-backed-securities that could then be sold to other financial institutions (and ultimately to not-too-curious investors) was the driving force, not governmental underwriting. The banks had in incentive to issue as many mortgages as possible, collecting their fees, and passing the mortgage on not to the government but to an eager marketplace. The government stepped in much later, to cough up money to keep the whole system from collapsing. Lehman Brothers, with huge holdings in subprime mortgages, had disintegrated and AIG was about to as well. How any of this is ACORN’s fault eludes me. I get that you don’t like them, but there were literally billions of dollars in bum securities being swapped around, and I rather doubt ACORN ever had a fraction of the necessary muscle. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [August 6, 2011, 4:22pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/166 "2011-08-06T16:22:22Z")
> [@galveston](#): > > (Then abortion on demand came along, and since then we have slaughtered over 50 million potential tax payers, but that is another issue.) Well, that’s it for me. You haven’t supplied supporting evidence for a number of your earlier claims, but you’re using the hackneyed technique of introducing even more off-topic items like the above, which I suspect is because you don’t really understand the debt deal, but you _feel_ that it’s bad because people you like are _telling_ you it’s bad, and since you can’t actually articulate the badness you just throw in other things that sound bad to you, like ACORN and abortion, as though they were relevant evidence of the badness. The abortion side-note suggests to me that your thoughts on the debt crisis aren’t well-focused and/or you want to distract us with some side issue. I can only suggest you watch some on-topic _Frontline_ episodes at [PBS.org](http://PBS.org), and come back to this issue better prepared. I recommend [_The Warning_](http://www.pbs.org/wgbh/pages/frontline/warning/) to start. ---
**Author:** ![carnivorousplant](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/carnivorousplant/32/3563_2.png) [@carnivorousplant](https://boards.straightdope.com/u/carnivorousplant)\ **Post date:** [August 6, 2011, 7:24pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/167 "2011-08-06T19:24:39Z")
> [@galveston](#): > > 77 years later, it has become a huge liability, as once embarked upon, very difficult to change. Too many people are now dependent on it. (Wasn’t that the original idea?) It surely helped my Mom and me when Dad died. > [@galveston](#): > > …depending on an ever-increasing work force to support the retired workers. I probably misunderstand, but wouldn’t it always depend on work contributions to support retirees? > [@galveston](#): > > Medicare (1965): I can well remember when that happened. My parents were satisfied with the health insurance they had, but LBJ (D) signed the act into law, and all seniors were enrolled. Again, it prolonged the life of an elderly cancer patient I know. > [@galveston](#): > > Even the first church in Jerusalem tried communal living for a short time. It wasn’t long before the Church in other countries were sending offerings to the poor saints in Jerusalem. Do you mean they couldn’t support themselves? I believe monasteries are the only places communist living has worked. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 6, 2011, 7:42pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/168 "2011-08-06T19:42:23Z")
> [@galveston](#): > > What difference does it make, bottom line? The government took the risks and private banks took any profits. A win-win situation for the banks. The taxpayers got left with the bill. > > Many people would be willing to invest in risky business if it is not their money in jeporday. I’ve never said that there should be no regulations, just that regulations need to be reasonable, designed to improve the economy, not stifle it. > > I’m a conservative, not a Libertarian. It makes all the difference in the world. If the banks had not created bad mortgages, Fannie would not have insured bad mortgages. If the banks did not drop lending standards, the mess would not have happened. If the banks did not press the rating agencies to AAA their crappy messes, it would not have happened. If we had lending and banking regulators doing their jobs, it would not have happened. The ratings agencies serve a dual function. There is a regulation aspect to their job. If they honestly rated the loans, the banks could not have sold them off. The loans could not have been made. We made the banks whole and they turned on us. ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 9:54pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/169 "2011-08-06T21:54:22Z")
> [@Bryan\_Ekers](#): > > That doesn’t quite sound like the sequence of events of the sub-prime crisis to me. Rather, the increasing use of mortgages to form mortgage-backed-securities that could then be sold to other financial institutions (and ultimately to not-too-curious investors) was the driving force, not governmental underwriting. The banks had in incentive to issue as many mortgages as possible, collecting their fees, and passing the mortgage on not to the government but to an eager marketplace. > > The government stepped in much later, to cough up money to keep the whole system from collapsing. Lehman Brothers, with huge holdings in subprime mortgages, had disintegrated and AIG was about to as well. > > How any of this is ACORN’s fault eludes me. I get that you don’t like them, but there were literally billions of dollars in bum securities being swapped around, and I rather doubt ACORN ever had a fraction of the necessary muscle. Are you saying that the bankers would have made loans to people who could not pay for them without government prompting or gaurantees against loss? That is the starting point or basis for all that followed. I doubt those bankers are dense enough to do that. The only part that ACORN had was to actively find customers (a lot of them) for those sub-prime mortgages. It somehow seems immoral to me to encourage people take out loans that they have nearly zero chance of repaying. As we see in hindsight, it caused a major upheaval. To the OP: I think our side blew the debt deal on at least one major point. They let the next fight on this subject come after the 2012 elections. Obama was desparate (i believe) to not have that discussion during his campaign. ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 10:02pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/170 "2011-08-06T22:02:16Z")
> [@Bryan\_Ekers](#): > > Well, that’s it for me. You haven’t supplied supporting evidence for a number of your earlier claims, but you’re using the hackneyed technique of introducing even more off-topic items like the above, which I suspect is because you don’t really understand the debt deal, but you _feel_ that it’s bad because people you like are _telling_ you it’s bad, and since you can’t actually articulate the badness you just throw in other things that sound bad to you, like ACORN and abortion, as though they were relevant evidence of the badness. The abortion side-note suggests to me that your thoughts on the debt crisis aren’t well-focused and/or you want to distract us with some side issue. > > I can only suggest you watch some on-topic _Frontline_ episodes at [PBS.org](http://PBS.org), and come back to this issue better prepared. I recommend [_The Warning_](http://www.pbs.org/wgbh/pages/frontline/warning/) to start. You say that abortion is a side issue? I thought you wanted more taxes? More taxpayers = more taxes. That seems pretty basic to me. I like Fox news and Newsmax. I suppose you think they are slanted. You like PBS. I think they are slanted, so there you go. The debt “solution” solves nothing. It didn’t even keep S&P from downgrading our credit rating. Washington did what it always does. Put off dealing with it as long as possible. ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 10:11pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/171 "2011-08-06T22:11:07Z")
> [@carnivorousplant](#): > > It surely helped my Mom and me when Dad died. > I probably misunderstand, but wouldn’t it always depend on work contributions to support retirees? > > Again, it prolonged the life of an elderly cancer patient I know. > > Do you mean they couldn’t support themselves? I believe monasteries are the only places communist living has worked. I don’t doubt SS has helped a lot of people. It is helping me right now. The problem is that it is broke and if not corrected will not be there for my children or yours. Politicians of both parties have resisted restructuring this program because they are afraid that they will not be re-elected. The politician who supports business as usual is not looking out for the public. Sure SS depends on contrubutions from those employeed. It would have been solvent a lot longer if the crooks in Washington hadn’t raided the trust fund. Your comment about monasteries makes my point. You have found the only place where socialism works. Of course, most people don’t want to live in a monastery. Could private insurance have prolonged that person’s life just as well? ---
**Author:** ![carnivorousplant](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/carnivorousplant/32/3563_2.png) [@carnivorousplant](https://boards.straightdope.com/u/carnivorousplant)\ **Post date:** [August 6, 2011, 10:18pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/172 "2011-08-06T22:18:52Z")
> [@galveston](#): > > Could private insurance have prolonged that person’s life just as well? Probably, but it’s incredibly expensive when you have been retired for 20 years. ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 10:20pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/173 "2011-08-06T22:20:44Z")
> [@Fear\_Itself](#): > > That is why stimulus should be invested in infrastructure. Can’t be outsourced, employment increases, the money is multiplied in local economies, and the country gets physical improvements.[Recession of 1937–1938](http://en.wikipedia.org/wiki/Recession_of_1937%E2%80%931938) How can that be? 1. Washington takes money from taxpayers from every state. 2. Washington takes their cut off the top and sends the remainder back to the states. The states would be way ahead to take care of their own infrastructure, only Washington insists on their cut first. 3. Washington uses its cut to provide us with more bureaus, regulatons, and the warm fuzzy feeling of “helping” a lot of undeserving corrupt foreign governments. In this scenerio, absolutely no wealth is being created. It’s kinda lke everyone making a living washing each others’ socks. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 6, 2011, 10:30pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/174 "2011-08-06T22:30:10Z")
> [@galveston](#): > > Tell me yet again how much good that “stimulus” did. As Obama said, those “shovel ready jobs were not as shovel ready as we thought”. Very perspective! > > It ain’t workin’, ya know? > > OK, so I didn’t get it blocked right this time. Tips? Of course the stimulus worked. Just look at the unemployment numbers. Bush’s last month we shed over 800,000 jobs. With Obama we have 17 months of positive job growth. Which one is better? Think about it for awhile. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [August 6, 2011, 10:32pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/175 "2011-08-06T22:32:33Z")
> [@galveston](#): > > You say that abortion is a side issue? I say that I see no indication that you can or are interested in focusing on the economic issues, even to the point of proving your assertions. Do you actually _know_ the extent of ACORN’s involvement? Do you actually _know_ the economic effects of abortion? I suspect not, but to you ACORN and abortion are bad, and if the debt crisis is also bad, they must somehow be linked. It would not surprise me at all if some future argument of yours suggested the debt crisis was due in part to gay marriage. And in the interest of disclosure, I’ll admit some personal bias. I’m a Canadian moderate, which puts me on the left of the American political spectrum. I’d like to think that if an American democrat/liberal was presenting similarly half-formed and unsupported arguments, and threw in random tidbits like “…and it’s because the conservatives are so dick-hard about the death-penalty…” I would be similarly dismissive. ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 10:32pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/176 "2011-08-06T22:32:50Z")
The Community Reinvestment Act (CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of **borrowers in all segments** of their communities, \*\*including low- and moderate-income \*\*neighborhoods.[1][2][3] Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as **redlining.[4][5**] The Act **requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered,** consistent with safe and sound operation (Section 802.) **To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions** (Section 804.)[6] This is self explanitory, I think. If a bank wants to open a new branch, it must meet the credit needs of low income neghborhoods. They cannot refuse a loan because it is not fiscally sound. We see how that “consistent with safe and sound operaton” worked out. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 6, 2011, 10:36pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/177 "2011-08-06T22:36:06Z")
> [@galveston](#): > > How can that be? > > 1. Washington takes money from taxpayers from every state. Wrong. The bulk of the money does not come from the states, (at least not from today’s wallet). It is deficit spending, from the sale of treasury bonds. That is how recessions are overcome; through increasing the debt, and paying it back in times of surplus. It is how we have dealt with every recession in our past, and it will be how we deal with every recession in our future, so long as we dismiss the short sighted cries of the deficit hawks. We have never cut our way out of a recession. ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 10:38pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/178 "2011-08-06T22:38:00Z")
> [@gonzomax](#): > > Of course the stimulus worked. Just look at the unemployment numbers. Bush’s last month we shed over 800,000 jobs. With Obama we have 17 months of positive job growth. Which one is better? Think about it for awhile. Exactly. Unemployment numbers. We were promised that the stimulus would hold the unemployment below 8%. How’s that working out for you? ---
**Author:** ![galveston](https://avatars.discourse-cdn.com/v4/letter/g/41988e/32.png) [@galveston](https://boards.straightdope.com/u/galveston)\ **Post date:** [August 6, 2011, 10:52pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/179 "2011-08-06T22:52:36Z")
> [@Fear\_Itself](#): > > Wrong. The bulk of the money does not come from the states, (at least not from today’s wallet). It is deficit spending, from the sale of treasury bonds. That is how recessions are overcome; through increasing the debt, and paying it back in times of surplus. It is how we have dealt with every recession in our past, and it will be how we deal with every recession in our future, so long as we dismiss the short sighted cries of the deficit hawks. We have never cut our way out of a recession. You seem to be missing the fact that our country has not been this situation in a very long time, if ever. We have lost a major portion of our manufacturing. I know this by how difficult it is to find anything made in the USA. You can’t even point to Fords, Chevys, or Mopars, as electrical, mechanical, etc. are imported and only assembled here. During the Great Depression, goods were available, but there was not enough money. Communities resorted to scrip in some areas. Now we have a debt so great that no one knows for sure how to keep us afloat. (Can you actually concieve how much a trillion anything is?) I can tell you this, you can’t cover it by taxing the “rich”. If we go that route, you are going to be amazed at just how “rich” you are. One thing about this recent fight over the debt ceiling has really upset me. Harry Reid would not even allow a sensible bill to be discussed on the Senate floor. With all the talk of compromise, that sure wasn’t it. I hope folks remember all of this come election day. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 6, 2011, 10:54pm UTC](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004/180 "2011-08-06T22:54:20Z")
> [@galveston](#): > > One thing about this recent fight over the debt ceiling has really upset me. Harry Reid would not even allow a sensible bill to be discussed on the Senate floor. With all the talk of compromise, that sure wasn’t it. A balanced budget amendment would doom us in time of recession. That is not compromise, it is suicide. [Previous page](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004.md?page=8) [Next page](https://boards.straightdope.com/t/ok-the-debt-deal-is-apparently-made-how-will-it-affect-2012/591004.md?page=10)