I agree that unemployment is a result of the recession caused by the real estate disaster, but that disaster was not caused by greedy bankers and people on Wall Street. That’s like saying cars caused the accident and the drivers had nothing to do with it. Bankers were forced to make sub-prime loans as a result of the Community Reinvestment Act of 1977, which was passed by a Democratic Senate, a Democratic House and signed into law by a Democratic president. These sub-prime loans were limited in number because the banks could not sell them to Fannie Mae or Freddie Mac. Then, in the early 1990s, when we again had a Democratic Congress and a Democratic president, the rules for Fannie Mae and Freddie Mac were changed so that banks could now sell their sub-prime loans. This allowed them to make new loans and make a lot of money by expanding the sub-prime market. In addition, the credit default swaps were hatched by the Clinton administration to allow these risky mortgage bundles to be sold on Wall Street. So, if you go back to the source of the problems, although some Republicans might have been complicit, the causes occurred when the Democrats were in control.
He also blames the current deficit on the Bush administration tax cuts. However, during all eight of the Bush years, the deficit only increased the debt by $1.6 trillion while during the two-plus years under Obama, the deficit has increased the debt by $4.1 trillion. So again, it wasn’t the enactment of the tax cuts that caused the explosion in the debt but rather the lower tax revenue due to the recession and the resultant increase in government spending that tried to fix the problem. Remember when President Obama said we have to pass the health-care (spending) bill if we’re going to be able to reduce the debt?
He correctly states that before taxes are reduced you must reduce spending, or you take in less than you spend. However, if the debt is under control and the resulting deficit is not too great, then this is not a particular problem, as the lower tax rates will stimulate the private sector, creating more jobs, which will increase tax revenue.
He also says the solution is simple; that all you have to do is raise taxes and reduce spending. This is an idea that will work in theory but, as history shows, will not work in reality. In the past, our politicians have agreed to packages that increased taxes and reduced spending. The problem is that the tax increases always seem to happen immediately, but the spending cuts either never happen or are significantly reduced in scope when they do happen. Politicians like President Obama always seem to be able to convince people that the rich need to pay more but those same politicians find it impossible to reduce spending by taking away from those people who are already receiving government money. In fact, they usually find ways to increase spending, such as the new health-care bill. This they are eager to do in order to buy more votes.
I agree with Mr. Esarove that we can’t expect change if we keep voting the same politicians back into office. However, it always seems to be someone else’s politician that needs to be replaced and not our own.
The real root of the problem is not the elected Republicans, Democrats or any political appointees. The root of the problem is the people who live beyond their means or rely on government to provide them with benefits that are paid for by someone else. The people who were helped into homes with sub-prime loans aren’t paying for them now. It’s the rich people who are paying for them via government bailouts.
G.W. KIRBY
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