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View Full Version : Can important private corporations be "too big to fail"? Is that a problem?



Wei Wu Wei
03-31-2010, 02:39 AM
Firstly, some institutions are so large in their effects on the stock market that their failure can collapse the economy. Banking institutions, or the largest companies in terms of employment, if they were to go under, would cause the economy to collapse and go into great depression.


However, the government bailing out an a failing company because of their size and importance to the stability of the economy places that company above the legitimate free market economy because although they are free to succeed as much as they want, they are federally protected from failure. The failure of (reasonably sized) companies is just as necessary as the success in companies to keep a free market system running smoothly.

One the one hand, our (capitalist-based) economy could face systemic failure, record high unemployment, and possibly another depression if these necessary industries fail, on the other hand, federal bailouts combined with a lack of strict regulation provides the most powerful monopolizing group of irresponsible business owners the ability to not fail (which means when they do act irresponsibly, instead of going out of business, we the tax payers have to make up for it).

Wei Wu Wei
03-31-2010, 02:49 AM
The classic model of free-market business competition was let the winners win and losers lose. About a century ago, after the rise of industrialization and a radical change in our economic picture, we as a nation came to realize the dangers as monopolies developed, preventing reasonable competition, and removing the consumer advantages of having a scattered competitive system.

Today, entire structurally necessary institutions like finance, or extremely large scale employers hold the fates of jobs are in a similar position of holding too much power. It's believed that if they fail, the entire system could fail with them, or at least go through a horrible period of historic depression.

So, should the tax payer bail out these people for their unsustainable business practices? Should we allow them to fail and risk enormous economic disaster as a result? Or perhaps there are other things we could do instead of or in addition to these.

Constitutionally Speaking
03-31-2010, 06:15 AM
Yes it is a problem.

When our government steps in to save a company that has failed it is a HUGE problem.

The free market is SUPPOSED to punish bad decisions and reward good decisions. That is the method with which the market self regulates. When government steps in, it messes this discipline up.

In fact, it turns it upside down. It rewards the bad decisions by giving them money, and gets that money by taking it away from those who made good decisions.

In the current case though, another government interferance is what caused those "bad decisions" - which, in many cases,weren't bad decisions at all. They were actions that the government FORCED them into - or mislead them into making.

Getting the government out of trying to influence the market would solve the problem.

marv
03-31-2010, 09:06 AM
Can important private corporations be "too big to fail"?

No!

Rockntractor
03-31-2010, 09:32 AM
The money doesn't just come out of a hat to bail them out, it is taken forcibly from other successful citizens that have operated their affairs responsibly.

dixierat
03-31-2010, 09:41 AM
The classic model of free-market business competition was let the winners win and losers lose. About a century ago, after the rise of industrialization and a radical change in our economic picture, we as a nation came to realize the dangers as monopolies developed, preventing reasonable competition, and removing the consumer advantages of having a scattered competitive system.

Today, entire structurally necessary institutions like finance, or extremely large scale employers hold the fates of jobs are in a similar position of holding too much power. It's believed that if they fail, the entire system could fail with them, or at least go through a horrible period of historic depression.

So, should the tax payer bail out these people for their unsustainable business practices? Should we allow them to fail and risk enormous economic disaster as a result? Or perhaps there are other things we could do instead of or in addition to these.

Noto the first, yes to the latter. The bankruptcy courts could break up these failed institutions. It might cause problems on Wall St, but the overall effect on the county would be lessened as the tax dollars that have been spent to "save" these companies could be directed to purposes more in line with the needs of the country as opposed to a specific group.

Suppose, for example, that GMC had been allowed to fail. Chevy, Cadillac and some of the other brands could have been spun off which would have saved some jobs w/o costing the taxpayers billions of dollars.

:cool:

Wei Wu Wei
03-31-2010, 05:15 PM
Yes it is a problem.

When our government steps in to save a company that has failed it is a HUGE problem.

The free market is SUPPOSED to punish bad decisions and reward good decisions. That is the method with which the market self regulates. When government steps in, it messes this discipline up.

In fact, it turns it upside down. It rewards the bad decisions by giving them money, and gets that money by taking it away from those who made good decisions.

So is letting them fail and facing the enormous systemic risk of collapse, widespread job loss, and new record recessions the way to go?

Is there another solution?


In the current case though, another government interferance is what caused those "bad decisions" - which, in many cases,weren't bad decisions at all. They were actions that the government FORCED them into - or mislead them into making.

Getting the government out of trying to influence the market would solve the problem.

The former Fed Chairman Alan Greenspan, appointed by Reagan, and a career-long economic conservative, although he subscribed to the ideology of lower federal regulation and had been a proponent of the self-correcting power of the freemarket for most of his career, disagrees:


ut on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.


On a day that brought more bad news about rising home foreclosures and slumping employment, Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken.

He noted that the immense and largely unregulated business of spreading financial risk widely, through the use of exotic financial instruments called derivatives, had gotten out of control and had added to the havoc of today’s crisis. As far back as 1994, Mr. Greenspan staunchly and successfully opposed tougher regulation on derivatives.

But on Thursday, he agreed that the multitrillion-dollar market for credit default swaps, instruments originally created to insure bond investors against the risk of default, needed to be restrained.


[Many Republican lawmakers on the oversight committee tried to blame the mortgage meltdown on the unchecked growth of Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were placed in a government conservatorship last month. Republicans have argued that Democratic lawmakers blocked measures to reform the companies.

But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”

http://www.nytimes.com/2008/10/24/business/economy/24panel.html

Wei Wu Wei
03-31-2010, 05:18 PM
The money doesn't just come out of a hat to bail them out, it is taken forcibly from other successful citizens that have operated their affairs responsibly.

So we're stuck with a problem, bail out these people, not let them fail as they should, and force the tax payer to pay for them.

OR

If the institution is large enough, let them fail and allow the economy to collapse and another great depression occur.


The simple fact is today's market is unlike that of any other time (except in some ways it's comparable to pre-Depression markets) and today so much of the economy is riding on so few companies. They are so large and influential that their failure isn't just the normal up and down of evonomies allowing new companies to come in and take their place, but rather their size means a collapse could cripple the economy as a whole.

Articulate_Ape
03-31-2010, 05:23 PM
Our country isn't too big to fail for crying out loud! Why would anyone ever think that a company is any different?

Wei Wu Wei
03-31-2010, 06:42 PM
Our country isn't too big to fail for crying out loud! Why would anyone ever think that a company is any different?

I agree that companies should NOT be too big to fail. This grants them special rights that essentially lets them reap all of the benefits of capitalism without facing the consequences, with losses being paid for by the tax payer.

This is corporate welfare.

Now, while most of us agree that they shouldn't be too big to fail, both Republicans and Democrats, economists, both Bush and Obama and our government financial institutions saw it otherwise.

Their reason for being "too big to fail" is that their failure would collapse the economy because of their incredible institutional influence.

So what should we do? I think corporate welfare is wrong, but I also think letting a great depression happen isn't good either.

How did they even get to be "too big"?

Megaguns91
03-31-2010, 06:45 PM
How did they even get to be "too big"?

http://www.thehumorblog.com/wp-content/uploads/2009/01/fat_kids_funny_caption.jpg


greed.

Wei Wu Wei
03-31-2010, 06:54 PM
http://www.thehumorblog.com/wp-content/uploads/2009/01/fat_kids_funny_caption.jpg


greed.

Yeah I agree.

Everyone is a little greedy though, and to be fair, that normal greed is necessary to keep the economy fueling, but not everyone's greed can collapse the nation's economy. In that sense some greed is necessary, but this is too much. They behave irresponsibly and gamble recklessly, collecting all wins and passing all losses to the tax payer.

No one liked this kind of corporate welfare, but most people agree that it was necessary to avoid Great Depression II.

What are some solutions?

Lager
03-31-2010, 06:56 PM
I don't know how much stock I'd put in these "experts" who believe the failures of these companies would have resulted in a "depression". Many so called experts don't have much credibility these days.

Wei Wu Wei
03-31-2010, 06:57 PM
This is why I think there needs to be strict financial regulation. If they are "too big to fail" thanks to tax payers, then they are essentially on Welfare and should have strict regulations put in place to make sure that they function well in the long term rather than going for unsustainable short term gains and then passing the bill to tax payers.

Rockntractor
03-31-2010, 07:00 PM
This is why I think there needs to be strict financial regulation. If they are "too big to fail" thanks to tax payers, then they are essentially on Welfare and should have strict regulations put in place to make sure that they function well in the long term rather than going for unsustainable short term gains and then passing the bill to tax payers.
You don't have any idea what you are talking about and don't deserve any replies. You are worse than a 12 year old. Just read posts and learn, or go play in the lounge!

Lager
03-31-2010, 07:01 PM
Any major executive of any company that needs the government to step in and bail them out, should be limited in salary and compensation to the max salary of, let's say the highest GS employee.

Wei Wu Wei
03-31-2010, 07:01 PM
I don't know how much stock I'd put in these "experts" who believe the failures of these companies would have resulted in a "depression". Many so called experts don't have much credibility these days.

That's the whole idea behind conservative supply-side economics. Those at the top hold incredible influence on economic growth and job creation, so we should ensure that they get plenty of support and do not fail because then everyone fails.

Megaguns91
03-31-2010, 07:01 PM
What are some solutions?

Self control by the greedy and ambition by others to outdo their superiors. Competition never hurt anyone.

Wei Wu Wei
03-31-2010, 07:03 PM
You don't have any idea what you are talking about and don't deserve any replies. You are worse than a 12 year old. Just read posts and learn, or go play in the lounge!

That was just my opinion about a step we can take. The companies being "too big to fail" is a problem that I think we all agree on.

What are your ideas on how to address this problem?

Wei Wu Wei
03-31-2010, 07:05 PM
Self control by the greedy and ambition by others to outdo their superiors. Competition never hurt anyone.

Yeah there needs to be more of that but there's nothing we can do to control the inner characteristics of these people. We've seen how they've behaved and it's benefited them very nicely. I'm sure they are quite happy with their decisions so why would they ever stop?

Rockntractor
03-31-2010, 07:07 PM
That was just my opinion about a step we can take. The companies being "too big to fail" is a problem that I think we all agree on.

What are your ideas on how to address this problem?
This problem could be best addressed by you listing to people instead of the constant injection of your infantile ideas! Read posts that other coherent individuals have posted, like Constitutionally Speaking for instance. You may be a nice kid at heart but you are continually making a fool out of yourself!

Lager
03-31-2010, 07:07 PM
That's the whole idea behind conservative supply-side economics. Those at the top hold incredible influence on economic growth and job creation, so we should ensure that they get plenty of support and do not fail because then everyone fails.

I don't know of any conservative principle that believes that large companies need support of the government to succeed. A company with a necessary or desireable product or service, that has a good business model and sound business practices, and that has competent and ethical leadership, should succeed just fine on its own.

Wei Wu Wei
03-31-2010, 07:14 PM
Any major executive of any company that needs the government to step in and bail them out, should be limited in salary and compensation to the max salary of, let's say the highest GS employee.

Haha I like this idea. The bankers who got bailed out got off scott free, it's atrocious.

Is there any way to help prevent these situations from occurring in the first place? I like that idea but the problem with it working as deterrence is that salary is only a tiny part of their total compensation, so some may not even feel the dent in their wallet because their other assets more than make up for it.

BadCat
03-31-2010, 07:15 PM
Yeah I agree.

Everyone is a little greedy though, and to be fair, that normal greed is necessary to keep the economy fueling, but not everyone's greed can collapse the nation's economy. In that sense some greed is necessary, but this is too much. They behave irresponsibly and gamble recklessly, collecting all wins and passing all losses to the tax payer.

No one liked this kind of corporate welfare, but most people agree that it was necessary to avoid Great Depression II.

What are some solutions?

Finding the 50some percent of people who voted for Obumble and feeding them their spleens.

Wei Wu Wei
03-31-2010, 07:17 PM
I don't know of any conservative principle that believes that large companies need support of the government to succeed. A company with a necessary or desireable product or service, that has a good business model and sound business practices, and that has competent and ethical leadership, should succeed just fine on its own.

That's the whole idea behind cutting taxes on the wealthy. Reagan did it, Bush did it. Everyone gets taxed, so if you offer a tax cut to someone you're helping them out, so supply side economics says lower the tax rates of the wealthy because they are the biggest business owners, help them keep more money, and then in turn they can invest that money in productive projects that create jobs and stimulate the economy.

These are often called by conservatives "pro-business" policies.

Wei Wu Wei
03-31-2010, 07:19 PM
Finding the 50some percent of people who voted for Obumble and feeding them their spleens.

This happened before Obama was even elected, let alone took office...

But yes it didn't stop him (and McCain as well) from supporting the bailout when Bush offered it, as well as doing it another time when he took office.

Constitutionally Speaking
03-31-2010, 07:23 PM
So is letting them fail and facing the enormous systemic risk of collapse, widespread job loss, and new record recessions the way to go?

Is there another solution?



The former Fed Chairman Alan Greenspan, appointed by Reagan, and a career-long economic conservative, although he subscribed to the ideology of lower federal regulation and had been a proponent of the self-correcting power of the freemarket for most of his career, disagrees:







http://www.nytimes.com/2008/10/24/business/economy/24panel.html



The biggest problems they had were the government interference in the first place. And if they fail because of their own mistakes, the country is better off without them.

The vacuum will be filled with a more competitive and better company.

Megaguns91
03-31-2010, 07:27 PM
Yeah there needs to be more of that but there's nothing we can do to control the inner characteristics of these people. We've seen how they've behaved and it's benefited them very nicely. I'm sure they are quite happy with their decisions so why would they ever stop?

I'm saying that people need to take initiative and control themselves.

Most conservatives I know are willing to do so.

Wei Wu Wei
03-31-2010, 07:29 PM
Yes it is a problem.

When our government steps in to save a company that has failed it is a HUGE problem.

The free market is SUPPOSED to punish bad decisions and reward good decisions. That is the method with which the market self regulates. When government steps in, it messes this discipline up.

In fact, it turns it upside down. It rewards the bad decisions by giving them money, and gets that money by taking it away from those who made good decisions.

In the current case though, another government interferance is what caused those "bad decisions" - which, in many cases,weren't bad decisions at all. They were actions that the government FORCED them into - or mislead them into making.

Getting the government out of trying to influence the market would solve the problem.


You're right though about how the economy is supposed to work, and companies always are (and are always supposed to be able to be) at risk of potential failure. However, if failure of a such a massive corporation could ruin the economy, we obviously have a problem.

What is there to do? Even if we say take out the government, they won't prevent them from failing. Companies succeed and fail all the time, that's how it works. Also, taking government regulation out isn't going to make them any smaller either. So taking government out of the economy doesn't make these companies any less big, or remove the risk of failure. The problem is still there.

Lager
03-31-2010, 07:36 PM
That's the whole idea behind cutting taxes on the wealthy. Reagan did it, Bush did it. Everyone gets taxed, so if you offer a tax cut to someone you're helping them out, so supply side economics says lower the tax rates of the wealthy because they are the biggest business owners, help them keep more money, and then in turn they can invest that money in productive projects that create jobs and stimulate the economy.

These are often called by conservatives "pro-business" policies.

I find your premise false, that keeping taxes low is considered government assistance - it's just sound economics. First of all, your assumption relies on the existence of an agreed upon, optimal tax rate. So, your logic assumes that whenever government lowers the rate below that magic number, government is doing business a favor. Second, lowering taxes on just the wealthy (wherever that arbitrary level begins in your personal belief system) isn't an honest representation of conservative policies.

I believe the onus should be on the members of government to reduce spending to curb deficits, before they put the burden on tax payers and businesses. It's because of their failure to do just that, that your notion of a "fair" tax rate can't be taken seriously.

namvet
03-31-2010, 07:37 PM
did someone say to big to fail???

rnE5zvosplc

:D

Jfor
03-31-2010, 07:38 PM
Government regulations created the problem you dumb fuck. Sarbanes-Oxley is one area I am intimately familiar with. The amount of money one company has to invest to be in compliance with this one regulation alone is ludacris. When you grow up and get out inot the real world you might learn something. There is no such thing as "too big to fail". If a company fails, then they did something wrong. They go away and another company with better business practices takes its place. Capitalism. Gotta love it.

Wei Wu Wei
03-31-2010, 07:40 PM
The biggest problems they had were the government interference in the first place. And if they fail because of their own mistakes, the country is better off without them.

We can agree to disagree for now about the cause of this specific instance of company failure, but do you think the country would be in a better place right now if our major banks failed and our financial system collapsed (not just in 2008, but today or any day)?



The vacuum will be filled with a more competitive and better company.

You're skipping something enormous here. There's a gap between their failure and new companies coming up, and unfortunately that gap could be a 6 year Great Depression.

Large corporations can employ millions of people, they can run institutional priorities like housing or finance, these corporations don't work like small businesses do. You don't have one business just get replaced by another with minimal impact. Failure of these corporations means a failing economy, soaring unemployment, various markets dropping, major problems.

The bigger a company is, the more ties it has to other parts of the economy and the more impact it's failure has on all of us.

Wei Wu Wei
03-31-2010, 07:59 PM
I find your premise false, that keeping taxes low is considered government assistance - it's just sound economics. First of all, your assumption relies on the existence of an agreed upon, optimal tax rate.

That's true, rather than appealing to a nonexistant number, let's use relative terms of "raising/lowering" of taxes in respect to where they were previous to that policy.


So, your logic assumes that whenever government lowers the rate below that magic number, government is doing business a favor.

Well the argument goes if the government lowers taxes (rates are never given, it's always talked about in relativistically terms too, "lower than now") on the wealthy, they are boosting business.



Second, lowering taxes on just the wealthy (wherever that arbitrary level begins in your personal belief system) isn't an honest representation of conservative policies.

We can say the top 20% the top 10% the top 5% or the top 1%. Truth is, the higher you go up, the more they do benefit from these policies:

Of the Bush tax cuts 80% went to the top 10% wealthiest people, 20% went to the top 0.1%


The Tax Policy Center, a nonprofit venture of the Urban Institute and the Brookings Institution, two policy and research groups in Washington, estimated yesterday that 80 percent of the tax savings would flow to the top 10 percent of taxpayers and that almost a fifth of the benefits will go to the top one-tenth of 1 percent.


I believe the onus should be on the members of government to reduce spending to curb deficits, before they put the burden on tax payers and businesses. It's because of their failure to do just that, that your notion of a "fair" tax rate can't be taken seriously.

From Economic Policy Institute:
http://www.epi.org/images/fig_11.jpg

Tax cuts, especially on the wealthy raise the deficit. People are all upset about the Obama bill because it's expensive, forgetting that the Bush Tax Cuts cost 2 and a half times that amount, adding all to the deficit because they were not paid for.**

Think about this, Obama's bill was less than half the cost of Bush's tax policy, and most of the benefits go to working and middle class homes.

Bush's Tax policy was 2.48 Trillion over this decade and 80% went to the upper class.

**source: http://www.ctj.org/pdf/bushtaxcutsvshealthcare.pdf

Constitutionally Speaking
03-31-2010, 08:02 PM
We can agree to disagree for now about the cause of this specific instance of company failure, but do you think the country would be in a better place right now if our major banks failed and our financial system collapsed (not just in 2008, but today or any day)?


Have you ever exercised??? It can hurt like hell for a bit, but you ultimately end up stronger. The truth of the matter is, though, I didn't have a big problems with stabilizing the banking systems (not the way they did it though). I say this because it truly WAS government interferance that caused this issue and the banks were forced into the actions they took. (or were mislead as to the guarantees that they took advantage of)




You're skipping something enormous here. There's a gap between their failure and new companies coming up, and unfortunately that gap could be a 6 year Great Depression.


It would not be that long. The REALITY we are facing if we do not do a VERY QUICK about face is much worse than a mere 6 year depression.




Large corporations can employ millions of people, they can run institutional priorities like housing or finance, these corporations don't work like small businesses do. You don't have one business just get replaced by another with minimal impact. Failure of these corporations means a failing economy, soaring unemployment, various markets dropping, major problems.

The bigger a company is, the more ties it has to other parts of the economy and the more impact it's failure has on all of us.


Ford would have expanded rapidly.

Wei Wu Wei
03-31-2010, 08:13 PM
Have you ever exercised??? It can hurt like hell for a bit, but you ultimately end up stronger. The truth of the matter is, though, I didn't have a big problems with stabilizing the banking systems (not the way they did it though). I say this because it truly WAS government interferance that caused this issue and the banks were forced into the actions they took. (or were mislead as to the guarantees that they took advantage of)


It would not be that long. The REALITY we are facing if we do not do a VERY QUICK about face is much worse than a mere 6 year depression.


Ford would have expanded rapidly.

Well like I said we can agree to disagree as to what caused that specific failure, but the fact is that these corporations are still just as large, still just as important to the functioning of our economy, and every private business inherently has a risk of failure.

However, if you believe our major banks and largest corporations can go under and that our nation would not feel horrific economic turmoil, well I guess we can agree to disagree on that too.

Wei Wu Wei
03-31-2010, 08:17 PM
Ford would have expanded rapidly.

Lack of competition doesn't ensure success. If millions of people go unemployed, (not just those working at a plant, but also all those who are connected to it, who make parts the plant uses, ect) they aren't exactly going to go run out and buy a new car.

If your competitor goes under that seems great for business, unless of course when they went out of business half of your community begins to budget tightly and spend less money on your product.

Rockntractor
03-31-2010, 08:30 PM
Lack of competition doesn't ensure success. If millions of people go unemployed, (not just those working at a plant, but also all those who are connected to it, who make parts the plant uses, ect) they aren't exactly going to go run out and buy a new car.

If your competitor goes under that seems great for business, unless of course when they went out of business half of your community begins to budget tightly and spend less money on your product.

Parts, plants, do you think your in China?:confused:

FlaGator
03-31-2010, 08:39 PM
Can important private corporations be "too big to fail"?

No!

Even if the failure brings down the economy?

Rockntractor
03-31-2010, 08:43 PM
Even if the failure brings down the economy?

Large businesses have been failing for the last hundred years and when it is settled in the proper manner in a bankruptcy court the market absorbs them and they become pieces of other companies. nothing is forever!

Lager
03-31-2010, 09:01 PM
You are making a fairly weak argument on taxation and the deficit. By your logic, it's reasonable to tax at any rate that allows us to avoid deficits. With that reasoning, government can spend as freely and excessively as it wishes, and justify raising taxes as spending rises, by claiming that to not do so, would "cost" too much, and increase the deficit. Isn't the more logical argument to blame the failure to rein in spending as what really causes high deficits?

And as to your complaint that tax cuts primarily benefit those who pay the most in taxes, all I can say is it's fairly obvious why that is. Lowering taxes doesn't provide much benefit to those who already pay little to no taxes, because the tax code has already been structured to give them relief, and in some cases a subsidy. Using your argument, I could lament how much the EIC (Earned Income Credit) "costs" in lost revenue. Would you favor eliminating that program, simply to help lower the deficit?

FlaGator
03-31-2010, 09:42 PM
Large businesses have been failing for the last hundred years and when it is settled in the proper manner in a bankruptcy court the market absorbs them and they become pieces of other companies. nothing is forever!

There are a couple of industries in which a major failure of one or two large ones would bring the country and the economy to their knees. The most important of these being the railroad. I'm not saying that the country wouldn't recover but it would devastate the economy and due to the complexity of the rail transportation system other transportation businesses couldn't just step in and take over quickly. Stores would run out of merchandise real quickly in some areas of the country and when food gets scarce the real problems start.

Trust me on this one. I use to work for the CSX back in the 90s and knew of the disaster planning that was done and what was being planned for wasn't pretty.

Rockntractor
03-31-2010, 09:47 PM
There are a couple of industries in which a major failure of one or two large ones would bring the country and the economy to their knees. The most important of these being the railroad. I'm not saying that the country wouldn't recover but it would devastate the economy and due to the complexity of the rail transportation system other transportation businesses couldn't just step in and take over quickly. Stores would run out of merchandise real quickly in some areas of the country and when food gets scarce the real problems start.

Trust me on this one. I use to work for the CSX back in the 90s and knew of the disaster planning that was done and what was being planned for wasn't pretty.

The railroad is nothing in comparison to what it was in the 50s. it could disappear tomorrow and trucking would fast fill the void. When the government stays out of the free market as much as possible ,it works. When government meddles like it is doing now.....God help us!

FlaGator
03-31-2010, 09:55 PM
The railroad is nothing in comparison to what it was in the 50s. it could disappear tomorrow and trucking would fast fill the void. When the government stays out of the free market as much as possible ,it works. When government meddles like it is doing now.....God help us!

Sorry but you wrong on this one. Like I said, I worked for the rail road. There were some glitches after the CSX-Conrail merger back in the end of the 90s Nothing major but some parts weren't getting delivered to the auto manufacturers in a timely fashion and some food went bad because of delays in movement. The feds kindly explained to CSX what the ripple effect of these little glitches were doing and that if we didn't fix it pronto, they would step in.

Think about this, how many trucks are free enough to switch to full time transportation of what the railroads do right now? They could build new cabs and trailers for the next 5 years while training people to drive them and still not have enough to replace what the railroad moves.

Wei Wu Wei
03-31-2010, 10:28 PM
You are making a fairly weak argument on taxation and the deficit. By your logic, it's reasonable to tax at any rate that allows us to avoid deficits.

No not at all, let's not get carried away. The rate is exactly the mediating factor, we can discuss tax rates but frankly we're one of the lowest taxed nations in the world and we also have one of the most regressive tax systems so the tax rates in place overwhelmingly favor the wealthy (which isn't surprising, after all they can afford political influence).


With that reasoning, government can spend as freely and excessively as it wishes, and justify raising taxes as spending rises, by claiming that to not do so, would "cost" too much, and increase the deficit. Isn't the more logical argument to blame the failure to rein in spending as what really causes high deficits?

No the more logical argument is that both taxation and more efficient spending is the way to fix deficits. No one is arguing for unlimited taxation, but remember we are taxed less than most other nations and we do have some outstanding expenditures.

Government spending goes to all sorts of things, it's important for us as a society what's the best way to allocate money. The Bush tax cuts removed 2 and a half trillion dollars of government revenue, with the top 10% getting 80% of it's benefits.

Obama's health plan costs around a trillion dollars over 10 years (paid for so it reduces the deficit) and the middle and working class will be the ones primarily getting benefits.



And as to your complaint that tax cuts primarily benefit those who pay the most in taxes, all I can say is it's fairly obvious why that is. Lowering taxes doesn't provide much benefit to those who already pay little to no taxes, because the tax code has already been structured to give them relief, and in some cases a subsidy.

Not quite, if you factor in all taxes on financial assets (income, stocks, capital gains, ect) , the very top actually pay a smaller percentage of their money in taxes than do middle class. In fact, they pay similar rates to working-poor people who do get tax relief options.
(source: Financial Reporter David Johnston, 2005)


Using your argument, I could lament how much the EIC (Earned Income Credit) "costs" in lost revenue. Would you favor eliminating that program, simply to help lower the deficit?

I'm not arguing for unidimensional action of do anything to reduce deficit, we should compare "costs" including that credit as well as actual expenditures and decide what's best for the society.

Rockntractor
03-31-2010, 10:36 PM
Sorry but you wrong on this one. Like I said, I worked for the rail road. There were some glitches after the CSX-Conrail merger back in the end of the 90s Nothing major but some parts weren't getting delivered to the auto manufacturers in a timely fashion and some food went bad because of delays in movement. The feds kindly explained to CSX what the ripple effect of these little glitches were doing and that if we didn't fix it pronto, they would step in.

Think about this, how many trucks are free enough to switch to full time transportation of what the railroads do right now? They could build new cabs and trailers for the next 5 years while training people to drive them and still not have enough to replace what the railroad moves.
The truckers I know in my area, and I know several because they used to ship for me, are sitting idle about 70% of the time right now. They tell me it is slow everywhere. Flagator just look at what we did in world war two when our backs were up against the wall. if we have the will and the need to do something , we have proven time and time again we can adapt fast!

Constitutionally Speaking
04-01-2010, 06:09 PM
That's the whole idea behind cutting taxes on the wealthy. Reagan did it, Bush did it. Everyone gets taxed, so if you offer a tax cut to someone you're helping them out, so supply side economics says lower the tax rates of the wealthy because they are the biggest business owners, help them keep more money, and then in turn they can invest that money in productive projects that create jobs and stimulate the economy.

These are often called by conservatives "pro-business" policies.


No,it is not helping them. It is simply stealing from them less.

Constitutionally Speaking
04-01-2010, 06:15 PM
That's true, rather than appealing to a nonexistant number, let's use relative terms of "raising/lowering" of taxes in respect to where they were previous to that policy.



Well the argument goes if the government lowers taxes (rates are never given, it's always talked about in relativistically terms too, "lower than now") on the wealthy, they are boosting business.




We can say the top 20% the top 10% the top 5% or the top 1%. Truth is, the higher you go up, the more they do benefit from these policies:

Of the Bush tax cuts 80% went to the top 10% wealthiest people, 20% went to the top 0.1%





From Economic Policy Institute:
http://www.epi.org/images/fig_11.jpg

Tax cuts, especially on the wealthy raise the deficit. People are all upset about the Obama bill because it's expensive, forgetting that the Bush Tax Cuts cost 2 and a half times that amount, adding all to the deficit because they were not paid for.**

Think about this, Obama's bill was less than half the cost of Bush's tax policy, and most of the benefits go to working and middle class homes.

Bush's Tax policy was 2.48 Trillion over this decade and 80% went to the upper class.

**source: http://www.ctj.org/pdf/bushtaxcutsvshealthcare.pdf


First off, the Economic Policy Institute is a union organization that is vehemently opposed to anything that helps business.

Secondly, they flat out lie. Tax cuts that are often for "the wealthy" - like the capital gains and investment credits have historically and ESPECIALLY this last time are the type of cuts that WITHOUT DOUBT increased the revenues to the government.

Under Bush, the capital gains tax rates were reduced from 20 percent and 10 percent to 15 percent and 5 percent. Your source said this cut actually cost the government tax revenues, but let's look. In 2003, the Capital gains tax revenues were$50 billion by 2006 capital gains revenues more than doubled to $103 billion. (Congressional Budget Office)

The type of tax cut that does NOT increase revenues are the one time "rebates" and cuts on lower income groups.

According to the CBO and the Joint Committee on Taxation data, the increased child tax credit, marriage penalty relief, 10 percent bracket, actually cost the government $114 billion.

The cuts aimed at business and investment create jobs that dramatically increase the tax base, while the lower income tax breaks cost money.

Your source is just plain, flat out lying.

Constitutionally Speaking
04-01-2010, 06:46 PM
An example of how your "esteemed" EPI slants it's research can be found in the following sentences you quoted:


We can say the top 20% the top 10% the top 5% or the top 1%. Truth is, the higher you go up, the more they do benefit from these policies:

Of the Bush tax cuts 80% went to the top 10% wealthiest people, 20% went to the top 0.1%


The lowest income brackets got a 100% tax cut from the Bush administration - 100%. MILLIONS (2 or 3 million - going by memory) of people who would have had to pay taxes before Bush's cuts no longer had to pay at all.


The ONLY way you can make the case you tried to is if you completely ignore common sense and TRY to mislead the gullible and those who tend toward envy.

This is how they misrepresent things in order to lie and mislead people:

A person at the lower end of the 15% tax bracket before the tax cut had his tax obligation completely eliminated. - He got a 15 point reduction in the rate which amounted to 100% of his obligation. Because this 100% reduction only amounted to $100, they try to compare it to the businessman who got a reduction from 39.6% to 35% (4.4 points or a 11.61 percent reduction) but saved $1000. The cut to the rich man was VERY small comparatively, but because he had more to take in the first place, even that smaller cut added up to more money.


Those are the actual rate reductions from the Bush cuts.


Tell me how again they were "tax cuts for the rich"????

NJCardFan
04-02-2010, 12:40 AM
The only time I thought a government bailout was justified was of the airlines after 9/11. The airlines were going to go down with a fury and it was due to outside influences(terror attack which forced the government to ground all flights for 2 days). Everybody else, fuck 'em. You can't run your business right, so be it. Fail. But of course we all know that wee wee's solution is to have everything under government control. Worked wonders for the USSR didn't it?:rolleyes: