Is it the government's job to fix the economy?

iVillage Member
Registered: 07-11-2006
Is it the government's job to fix the economy?
628
Mon, 09-12-2011 - 9:21am

Do you think this controversy will play a role in the upcoming election?

WASHINGTON (AP) — The economy needs to be fixed. On this, Democrats and Republicans agree. They part ways over how to do it and, specifically, what role the federal government should play.

"Ultimately," President Barack Obama tells Congress, "our recovery will be driven not by Washington, but by our businesses and our workers. But we can help." His argument that government has a responsibility to do so probably doesn't sit well with an America that's down on Washington.

Texas Gov. Rick Perry, former Massachusetts Gov. Mitt Romney and other Republicans competing for his job take a different tack as they court a tea party-infused GOP electorate: The economy will thrive, they say, if Washington simply gets out of the way. As Perry puts it: "Smaller government, less spending, fewer regulations.At the heart of the 2012 presidential race is an issue as old as the country itself."

Is it the federal government's responsibility to address what ails the nation, in this case the economy? And if so, to what degree? What is the right balance?

More:

http://news.yahoo.com/analysis-governments-role-fix-economy-072531745.html

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iVillage Member
Registered: 09-30-2011

What you just expressed was the setting up of the early dominos of unexpected consequences.

iVillage Member
Registered: 09-30-2011

And don't forget the Clinton quote as well.

iVillage Member
Registered: 07-11-2006

Yes, I know. I am expressing that the Republicans, deregulation, the Gramm-Leach-Bliley Act, all played a role in the meltdown.

The fact that you agree with me makes me question whether or not you read my post. Democratic ideology suggests that all Americans should be eligible for a piece of the American dream - home ownership. Not receiving a large inheritance, not being a WASP, and not living in a well-to-do neighborhood should not, in the ideology, prevent someone from home ownership. Thus, Democrats were in favor of finding a way to allow people living in less well-to-do neighborhoods, with ethnic diversity, and without large down payments to finance a house. Presumably, there are people without significant inheritance, who have proven themselves to be responsible with money who could fairly reliably pay a mortgage. They are, of course, riskier loan recipients than people whose moms and dads will step in if, say, the economy tanks.

Republicans on the other hand figure that if you do not have resources to pull together the down payment, then you have no right to home ownership. You should just continue giving the bulk of your salary to the landlord.

So when the Democrats figured out a way to help those without the down payment to finance a home based on the ability to pay the mortgage and it started to be a reliable business venture, Republicans decided that it isn't "fair" for only some companies (GSEs) to be eligible for the profits. Sadly, since the GSEs had to meet variouos requirements and be accountable to the government, when the GLB legislation allowed other businesses to get in on the action, they failed to be accountable. Holding companies took in tremendous profit. Loans were given out willy-nilly. Bogus combining and packaging and selling of the risky loans led to a lack of confidence in the market, which brought the financial industry to a stand still.

Pretending that the critical factor here was giving responsible people, albeit lacking a financial safety net, home loans, is, just nuts.

Somehow, I seriously doubt that you share my belief in how many dominos there were and how big each domino was.

I've already said the CRA played a small role in the crisis. But that is all. It played a small role.

iVillage Member
Registered: 07-11-2006

As time marches forward, people see things differently. The factcheck.org quote was from 2008. Now that it's 2011 both Clinton and Gingrich are singing a different tune.

I'm reading Bill Clinton's new book Back to Work for a story, and I come across this admission about the former president's economic judgment.

I made some mistakes, too, though not the ones I've been most widely critized for: aggressively enforcing the Community Reinvestment Act and signing the bill repealing the Glass-Steagall Act, the Depression-era law requiring commercial and investment banking to be done by separate institutions.

Right after I read this, I watch Newt Gingrich talk to Jake Tapper about financial reform. Isn't there anything, asks Tapper, that Gingrich would do to control the banks?

"Repealing Glass Steagall was probably a mistake," says Gingrich.

There we have it, 13 years after it could have mattered: Bipartisanship.

iVillage Member
Registered: 07-11-2006

http://www.progressivehistorians.com/2007/11/bill-clintons-role-in-mortgage-crisis.html

"The large-scale corporate ...rigging that was going on. This took a variety of forms, of which by far the most common was the organization of corporations to hold stock in yet other corporations, which in turn held stock in yet other corporations."

"...one investment house, Goldman, Sachs & Company, organized and sold nearly a billion dollars’ worth of securities in three interconnected investment trusts—Goldman Sachs Trading Corporation; Shenandoah Corporation; and Blue Ridge Corporation. All eventually depreciated virtually to nothing."

That's a quote from the Depression 1929, not the 21st Century Financial Crisis.

iVillage Member
Registered: 09-30-2011

Yes, I know. I am expressing that the Republicans, deregulation, the Gramm-Leach-Bliley Act, all played a role in the meltdown.

Of course there are some Republican fingerprints on the meltdown, but the salient point, and perhaps biggest lesson to be learned is by seeing where it started...with Democrat attempts at social engineering and over-regulation.

iVillage Member
Registered: 09-30-2011

Well, I don't know why you're so hung up on GLB...maybe it's all that there is to cling to and try and blame Republicans instead of the Democrats...which is sad.

iVillage Member
Registered: 07-11-2006

I don't know why you're so hung up on GLB

From Charlie HipHop:

I'm not sure why he would make such a

iVillage Member
Registered: 09-30-2011

With all respect to Mr. Hip-hop, Politifact and Bill Clinton, not to mention the bi-Partisan Congress and many other historians and economists, share a different point of view.

iVillage Member
Registered: 07-11-2006

Liberals see home-ownership.... should be paid for on the backs of other taxpayers.

That is not what liberals think. That is conservative rhetoric.

Those responsible people still own their homes today

Lots and lots of responsible people lost their jobs and subsequently couldn't pay their mortgages. It is hard for me to fathom the idea that some people actually believe that everyone who lost their home got what they deserved.

work harder and save more

Right. But those who get the down payment from inheritance, relatives, etc do not have to work as hard. Is that the way it must be, IYO? Are some people more deserving of home ownership because they chose the right parents?

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