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EDITOR OF REDSTATE

Putting the TARP Band Back Together

By: Erick Erickson (Diary)  |  December 9th, 2010 at 05:00 AM  | 

RESIZE: AAA

Opinions are varied and divided over whether the tax compromise plan is worthwhile. Some see it as the best the GOP can hope to get. Others see it as the GOP settling for keeping current income tax rates while voting to raise other taxes and increase spending on unemployment benefits, a program that has become a general welfare program.

Whether you are for it or against it, I do think it is worth pointing out this morning that with few exceptions, those parties advocating the tax compromise are precisely the same parties who advocated TARP.

Last time, they told us we were going to have a Second Great Depression if we did not pass TARP. This time they tell us we will have a Double Dip Recession if we don’t pass the tax compromise.

But pay attention here to one key point.

It is the GOP that has been advocating all along that we keep current tax rates steady and it has been the Democrats advocating a tax increase. The GOP, in compromising, is not getting a tax cut. The GOP is getting the status quo.

I’m still having a hard time figuring out why the GOP needs to compromise just to keep the status quo on the income tax, while see other taxes and spending increase.

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COMMENTS

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  • calgacus

    And since Franklin Roosevelt was President, the Executive has been more powerful than the Legislature (and the Judiciary more powerful than the Executive).

  • wonkish1

    TARP was mostly agreed to and passed by democrats not republicans. The strongest opposition to TARP came from Republicans.

    I would further add one other category of people that I would fall under. It is possible that we could score a slightly better deal in January that maybe included only 6 months of Unemployment Insurance and maybe a 2% reduction in both the employee and *employer* side of payroll taxes. But lets be realistic in that case the juice isn’t worth the squeeze. We would end up putting up a serious fight to get not large enough positive changes. And having the President, Reid, and Pelosi doing our bidding in trying to browbeat their own caucus into agreeing to the deal is very, very helpful. There is no guarantee that we could actually get a better a deal.

    So, while it is likely we could see a slightly better deal we would end up wasting a huge amount of time, energy, and political capital for small changes when we desperately need to save that political capital for the budget battle.

    If I thought we had a chance at getting current rates made permanent I would be rooting for them to turn it down. The fact is that there is no possible way that we will get a permanent deal without agreeing to at least some tax rate compromise. A compromise nobody would support.

    If we could get a deal without Unemployment Insurance extension without a prolonged stand off until April, I would say go for it, but the administration will hold the line on that.

  • wonkish1

    I would give it only a 20% chance that this deal passes as is. The Dems and GOP will have a fight over estate tax with the gap at 50% and 3.5(dems) and 35% and 5(gop). Also they will likely try to sneak at least one other thing in the bill. Build America Bonds being the most likely item..

    A deal will occur relatively quickly over the estate tax at something like 35% and 4 million as this fight is largely going to be more symbolic than anything else. Build America Bonds the GOP should try to hold the line on though.

  • bigredone

    TARP let the camel all the way into the tent.

    The Left/Statists knew the GOP would give in on every single spending measure of any significance following that vote. Even Tom Coburn voted for TARP.

    I will never support anyone who voted for TARP. Period.

  • arthurmanger17

    This end of the lefts rule in the house of representatives is what should have been expected. Same for the Senate as the dynamics their have also changed. So this tizzy fit over the compromise with Republicans by the president should also be expected. The main stream media, all Americans know are on the left. They also are losing viewer ship and reader ship on a massive scale. News Week magazine sold for a $1.84 need one say more. Eric Ericson of Red State, wailed against congressman Upton for chairmanship of the commerce committee as I and I know many others have. This man begged for that chair, announced that he would work to repeal the ban on incandescent light bulbs. Something he supported among other overbearing government policies. This you?ll fine will be the rule rather than the exception with regard to ?RINOs?. Joseph P. Overton, former vice president of the Mackinac Center for Public Policy describes this phenomenon which is now called the ?overton window?. The primary premise of the overton window is that in our form of government, politicians don?t lead they follow. Except in a time of some extreme crisis they move with the winds caused by the majority of the electorate. The exception to this rule, are those politicians on the left. That is because ?leftism? is a mental disorder. This is not a snide dig but a true ailment. The infected in this country are a small minority. The nature of the disease allows these poor souls to take actions that in our culture, our country, the civilized portion and the vast majority of people in our land, would not even contemplate. That and only that gives them the perception of power far beyond their numbers.
    They have an ability to learn like the Raptor and that gives them the ability to adapt but in a limited way. The basic understanding of what it means to be an American eludes them. This contradiction in their mental ability and the demeanor of the American people allow them from time to time to attain the power which they just lost in the last election. This brings us to the political situation and the fracas over the compromise struck between the president and the republican minority in the senate.
    This last mid term election has made it clear that the American people know and has always known that 2+2=4, not 5 or 3, not even 4 and 1/10th. So the republicans got the continuation of the tax rates for two more years. The president got extended unemployment benefits. We got a reduced payroll tax and all this drove the left berserk. All this only high lights the insanity of leftism and sets the stage for bolder moves by the new house in 2011.
    Watch and listen to republican congressmen like Mike Pence and Michele Bachmann, they are talking about de-funding and devolving the federal government. Freeing up the American people on a scale not realized for nearly a hundred years. This is the goal, this is what we must continue to push for. Even to the states, which experience a major turn over. Free enterprise is the system our founders gave us. Capitalism is a term that the left created in order to argue for communism. Free enterprise is freedom and that is what we as Americans are reestablishing.
    The American Eagle has been sitting high up on a mountain ledge protecting the nest. Over time it became necessary to take flight in order to ensure the safety of the nest and the rats below beware.

  • bk

    Leftists are acting like Obama gave away the store. but in reality both Obama and the GOP found a middle ground on income taxes and death taxes. Fair enough I suppose, but then why did all this other stuff like unemployment get thrown in from the GOP side over and above that? And to make it even worse than advertised, there were no doubt some other little under-the-table deals from our end thrown in – maybe promises not to filibuster certain other bills for example. As usual, our side seemed to do about 80% of the giving and then the Liberals went off all loony because they’d given up 20%.

    You can already imagine what will happen in 2012. The House will pass something to make tax cuts permanent and the Senate will sit on it until the 2012 lame duck session, when the GOP will have to cave to some Democratic compromise by 12/15 again.

  • wonkish1

    And that historically with very few exceptions(Healthcare, TARP, etc.) a bigger determinant of whether or not a particular bill will pass or fail is based on what the electorate’s opinion of it is more than anything else.

    Conservative Democrats admitted that if they hadn’t gotten thousands of phone calls after Reagan’s speech from the Oval Office they probably wouldn’t have voted for Reagan’s tax plan. It was polling data that got Clinton to finally sign onto Welfare reform. About 80 percent of the American people supported Welfare to Work reform, and staffers at the Clinton White House admitted that Clinton’s chief of staff specifically told him that he had to sign the legislation. After vetoing the bill twice, Clinton’s Chief of Staff told him that either he signs the legislation or he will more assuredly lose reelection, and either way a welfare to work bill would become law in the near future.

    McCain Kennedy immigration bill was killed by American’s shutting down the congressional switchboards with constant phone calls in opposition to the bill.

    Harriet Miers supreme court appointment was killed by constant phone calls.

    Healthcare reform should have been killed by American people expressing their disgust, but Dems rammed it through anyway. But the pattern holds true anyway because they took a beating for siding against the American people.

    This is all makes the case that in addition to serious investments in winning elections, we need to increase the amount of money/donations that make there way to marketing campaigns, issue oriented campaigns, and campaigns that attempt to educate various segments of the electorate.

  • wonkish1

    In this very rare case it appears they are mostly compromising to give in to us not the other way around.

    Keep in mind that the Dem base in more okay with everybody’s tax rates going to Clinton rates than the GOP base is. To a certain extent they have a lot of bargaining power they are choosing not to use because they are worried about not getting independents to vote for them in 2012. They know they get blamed for tax rates rising, but “Progressives” ideologically speaking would rather see someone making $30K a year’s taxes rise if that means somebody making $300K also gets a tax increase.

    By definition when the Dems sacrifice a position held by their base in order to appeal to moderate dems and independents than they are giving in a lot more than we are.

  • avgjo

    that make there way to marketing campaigns, issue oriented campaigns, and campaigns that attempt to educate various segments of the electorate.’

    I absolutely love it.

    I silent hang around lefty sites sometimes, to watch how they operate; after all, they’ve done quite well these last four decades. This is exactly the sort of stuff they constantly talk about; how to change public perception and sway the opinion. They constantly talk about commissioning polls, starting websites, contacting personality X, anything to influence the electorate.

    I think sometimes we take for granted that we outnumber the libs. Yes, we do, but there are enough people committed to neither party (‘independents’) to mess things up from time to time; that’s how we got Obama. And it’s those people we have to educate and sway to our side.

    Bravo for mentioning this.

  • bk

    The left wanted:
    - current middle class tax rate made permanent (or maybe kept temporary)
    - upper/middle class tax hike made permament
    But that obviously could not pass, even in lame duck.

    The right wanted:
    - all tax rates kept as is permanently

    We ended up with keeping them all as is for another two years.

    Similarly, the Dems could not pass getting the death tax completely restored. The GOP wanted it kept out, but they compromised in the middle.

    So far so good – both sides gave to get something, because they knew they couldn’t get all they wanted. On that stuff you can argue whether one side gave more than the other or vice versa.

    My problem is that everything outside of those two areas – be it unemployment and whatever else – seemed to be completely from our side. Maybe you can argue that the Dems wanted to make unemployment be indefinite and permanent and so letting it ride another year was a compromise vs our side wanting it to revert to how it was, but this should have been a separate debate instead of linked to taxes.

    And we don’t know what all else was linked in as well.

  • wonkish1

    I want to be apart of. I am trying to get discussions going on how to think outside of the box on that fight, but that is difficult to get people talking about.

    Examples include:
    -Campaigns that distribute documentary dvds, books, audio books, pamphlets, articles, etc.
    -Promote particular media outlets to those not that involved such as Redstate, Drudge, etc. We all would like to see the new conservative network Right TV to be very successful so promoting that network is something that could be done starting by getting more cable providers to feature their channel.
    -Developing campaigns to train activists in the arts of persuasion.
    -Developing new technology and tools that serve dual purposes of advancing conservatism and also possess utility.
    -Creating Venture Capital and Angel Capital funds that invest in conservative movies, documentaries, music, etc.
    -Creating business models that are able to more reasonably connect conservative think tank information with more individuals
    -Creating mechanisms that more efficiently match donors, investors, talent, and volunteers(when it calls for it) with all of the above and others
    -Plans to influence existing institutions in media, education and higher education, etc.
    -And much much more

    But the first step is to find a significant enough amount of people that want to be apart of coming up with ideas. Think about how much the environment would change if there was a location that already had dozens if not hundreds of people detailing thousands of different campaigns, tools, websites, technology, systems, methods, etc. and all an activist would have to do is pick out their favorite idea and run with it.

  • pdawk

    But what was so bad about TARP? I know that the idea of using government money to prop up private businesses essentially is a prong of socialism. Having said that, didn’t the government end up getting paid back with interest on TARP? Did the financial stability the banks were able to employ as a result of the funds lent keep us from taking even more of a nosedive in the markets and in regards to lost jobs? I really don’t know the answer and would love to hear all the arguments as I have not been on the conservative blogs to terribly long. Thanks in advance.

  • wonkish1

    Currently Democrat politicians wanted lower and middle class tax cuts made permanent or temporary.

    Not to long ago(just a couple months ago) many leftists in the media, groups, etc. wanted all the tax rates to go up. Obama has been very persuasive over the last several years that lower and middle income tax rates shouldn’t increase and so democrats came around to that position.

    But lets be clear, tons of very leftist activists still want all the rates to go up. The problem is that position is even so far away from moderate Dems and independents that congressional Dems aren’t taking that position out of some political reality.

    From a historical basis and from a base point of view Democrats should be arguing for all tax rates to increase. They aren’t. But the next thing is that because of the fact that much of their base supports increases in all tax rates they should be more willing to scuttle an unattractive deal, and take the tax increases across the board in this game of chicken. But again they appear not willing to do that either. On top of that we are practically getting almost everything we want when much of our base would be pissed if a deal doesn’t get done and tax rates sunset across the board.

    If these negotiations were held even 6 months ago the GOP position in the negotiations would be this deal and a compromise would be much farther to the left. It is purely the circumstances we find ourselves in that are leading us to getting this good of a deal.

    I think we need to keep in mind how political negotiations are relative and the positions move pretty fluidly. I think you would be surprised to find out that Clinton and Newt were negotiating deals on Medicare and Social Security that at the time were very close to Bush’s SS plan and Paul Ryan’s road map. Clinton was okay with those deals, but now those positions are considered much farther to the right than in the negotiations with Clinton. The funny thing is that since Clinton would have came out in favor of those deals in 1998 some of the most conservative folks would have came out against them purely because they thought they could have gotten more out of Clinton, but fast forward a few years and Bush’s plan supported by the most conservative members of congress is actually to the left of the Clinton Gingrich negotiations. These negotiations were detailed in the book “The Pact:…”, but the negotiations ended when Lewinsky broke out.

    So keep in mind there is 2 ways to value a deal. One is based on what you think you can get right now, and there is how good of a deal should there be a historical basis. Usually, when a very good deal is found on a historical basis the idea is to immediately take it and save the time, energy, and political capital for more or bigger fights.

  • swamphermit

    I’m sure tired of that same Band and same ‘Status Quo’ tune!

  • Change Jar Conservative

    The status quo was not continuing low tax rates, but expiring “temporary” tax rates.

    Ergo, the status quo was for the “tax cuts” to expire and a return to the “normal rates.”

    Thankfully, the GOP was able to get what they want in the compromise.

  • wonkish1

    Debatable whether TARP actually prevented any larger nosedive in the markets.

    It is very likely that without TARP, the Bear Stearns bailout, etc. more firms may have failed, but those firms would have been diced up and sold off to banks that weren’t being stupid and that had extra cash to make acquisitions.

    FDIC backs the deposits, so if a bank fails the deposits just find there way to a different bank.

    The only one that was really, really scary was AIG because they were actually counter party to just about everybody in the CDS market.

    Personally, I think we should have just backed counterparty on a certain % of the value and let everything else sort itself out. Basically that is like extending partial FDIC for counterparty risks.

    End to mark to market at that stage would have prevented a lot of the mess as well because one of the big forces crashing those particular institutions was that market prices would fall causing the new prices to drive banks below their minimum capitalization and under regulation they would have to force sell to meet those minimums which would further drive down prices causing them to go below their minimum again. And it was just a vicious cycle that allowed even decent assets to crash in price.

    The big the problem with TARP was that it has now set a precedent forever that a reasonable approach to handle a large failing institution is to nationalize part of it. Regardless of it being paid back or not, the precedent has fundamentally altered the nature of America.

  • pdawk

    and I agree completely that the precedent set was bad and is like a gateway drug to free spending and future bailouts.

    I was just curious as to whether the legislation itself (future policy considerations aside) would be considered successful since it seemed to create some stability in the market and was all paid back.

  • wonkish1

    It was mostly paid back. And in order for something to be considered a good investment an adequate return needs to be made on top of getting your money back and that return needs to fit with the amount of risk taken.

    TARP failed to generate an adequate return back
    TARP failed to even get all of the money back
    TARP created market distortions that screwed over successful up and coming regional banks to benefit very large banks
    In my opinion, the economy would be in the same position today if not better had TARP not occurred (I will provide that long explanation if wanted).
    TARP prevented key longterm systemic changes in some of these large institutions that have been long over due
    TARP has created a handful of “Zombie Banks”

    TARP probably did create some price supports in the markets(does that really matter if prices fall and come back to those support levels in short period of time)
    TARP likely prevented many job losses from occurring, but also likely delayed the date at which many financial firms started hiring again.

    Also, it was obvious that most of the TARP money was going to be paid back from the start. A lot of the money was forced onto banks that didn’t need it like JP Morgan Chase, Wells Fargo, PNC, etc. In terms of the money that really had value at risk like Citi, AIG, Freddie, Fannie, GMAC(Ally), BoA(debateable), and a bunch of less known banks TARPs performance was a lot worse. Example: you appropriate $100 billion and take $50 billion and give it to very solvent people who will promptly just pay it right back to you and then take $20 billion and pay it to those that aren’t really at that much risk, but they are a little weak. And then give $30 billion to a bunch of very weak banks. Well if $85 billion comes back do you say the program was successful? Well against $100 billion maybe. But what really happened is that you invested $30 billion at real risk and $15 came back. That is a lot worse of a track record.

  • Marcus_Traianus

    I?m still having a hard time figuring out why the GOP needs to compromise just to keep the status quo on the income tax, while see other taxes and spending increase.

    Because the same “status quo” morons are still in the Republican Party leadership. Oh, yeah and they are guaranteeing future moronic, wall-punching dumb “compromises” by anointing their liege to serve in all the top committee positions for the next Congress.

    I wouldn’t sell the backwoods cabin just yet. Nor would I count on 2012 with all the cannibalism that is starting to occur.

  • avgjo

    why do you think it’s difficult to get people on our side talking about such things? That large list you made of things to do – solving this problem should go at the top, right? Maybe that’s where the discussions you referred to could start.

    I’ll be looking and/or posting on this.

    And then there were two…

  • dmccracken

    In a free market system, if the business is managed so poorly, it goes under, or does a fire sale to someone who replaces the management with people who will fix the problems. Government bailout re-inforced a pattern of doing business that is fundamentally flawed at taxpayer expense.

    If we got paid back with interest, it really doesn’t matter because the dems have so many things they are spending money on, the interest was like pocket change.

  • notalibertarian

    Out of everything else, this particular pander seems to be the lowest-hanging fruit the Dems have at this point. Because of this, DADT will soon be pushed to the top of the priority list — because it is receiving NO organizaed opposition from conservatives who are too busy crowing over the tax deal.

    On this site, I have seen no mention of the fraudulent way the military chiefs misrepresented the survey results, let alone any flashing red light urging people to call their moderate Dem senators and tell them to vote no on the DADT repeal. This deafening silence is nurturing the air of inevitability Lieberman & co. so desperately need.

    I realize you can’t stand talking about DADT, Erick, but that shouldn’t really stop you from mounting an effort to defend our military.

  • http://www.flaliberty.org scorpio0679

    This issue is so critical politically because it has such a huge tangible, real effect on everyone in the country. People, including myself, simply can’t afford to have their federal taxes hiked.

    Whoever is seen as thwarting efforts to lock in current tax rates will pay dearly for it. CNN is reporting that house dems have just tabled the bill stating that it doesn’t reflect their vision of what is good for the economy.

  • http://theminorityreportblog.com Repair_Man_Jack

    63 of them have no pressing responsibility for this fiasco whatsoever. They are truly free to choose sans political restraint.

  • http://theminorityreportblog.com Repair_Man_Jack
  • uselogic

    who think as we do are out doing what we do. Going to work every day, starting a new business, raising our families, attending church, etc. The true American way of life. We give what little time we have to this precious cause but there isn’t much time; it’s hard to carve it out.

    What we don’t do is sit around waiting for the gubmint or the union to take care of us. Or plotting how we can control and bend everyone else’s lives to our whims.

  • uselogic

    who think as we do are out doing what we do. Going to work every day, starting a new business, raising our families, attending church, etc. The true American way of life. We give what little time we have to this precious cause but there isn’t much time; it’s hard to carve it out.

    What we don’t do is sit around waiting for the gubmint or the union to take care of us. Or plotting how we can control and bend everyone else’s lives to our whims.

  • The_Gadfly

    as it has currently been handled TARP is now a permanent slush fund to be used solely at the discretion of the Sec of Treasury for the political benefit of POTUS.

  • avgjo

    I am working on starting a new business. But I will give up sleep if I have to to fight for my freedom and that of current and future generations. I thought that freedom at any cost (within moral reason, of course) was the American way of life.

    I know that if we don’t somehow carve out the time to fight and win for liberty, starting businesses, raising families, attending church, ec. will be for naught. Business? Kiss it good-bye as the Marxists move to take your property. Church? Won’t mean much once pastors are told what to say and not to say; as parishioners are told what they can and can’t believe. I have trouble believing that people who won’t take the comparatively easy course of action now of getting active and involved like wonkish and I were discussing will then stand up. Family? What kind of future will they have if we don’t MAKE the time to restore our liberty? Rush Limbaugh read a speech his dad gave once about the Founders and what some went through during the Revolution, losing fortunes, friends and families. i recall when I listened wondering how many Americans today, even really good people, would be willing to give up just one of those things for Liberty’s cause, much less all three as many of those men did.

    BTW, let me be clear; I’m not directing any of that at you personally. I don’t know you. You’ll have to decide what is and is not the case for you. The fact that you’re here tells me that you are fighting the good fight. But we cannot accept those excuses from our friends and families anymore.

    I also trust that you are not putting the sort of stuff me and wonkish discussed on the same level as ‘waiting for the gubmint or the union to take care of us. Or plotting how we can control and bend everyone else’s lives to our whims.’ That would be very, very silly. So no, you’re not doing that.

  • wonkish1

    1. Habit: Currently people believe the only way to help the movement is to read the news, stay informed, discuss that with other conservatives, and get involved in campaigns. Getting people to think more outside of the box breaks with those habits.

    2. Outside of Reality: Many people think that they coming up with ideas that could have a large impact on the political world is to unrealistic. They don’t think they are worthy of making those type of contributions. I think they are selling themselves short because in this day in age countless people are able to create websites, businesses, etc. that have a huge impact on the world, but people still buy into the notion that big ideas are reserved to those that have lots of money, went to some ivy league school, etc. They sell themselves short. I’m not saying that everybody is going to invent the next google, but someone that creates a new tool that helps only 500 activists has had a very large impact on the political world.

    3. Fear of Criticism: If someone offers up an idea to help the movement generally people are a little more negative than positive on the subject. People will chose to explain all the reasons why they think that idea wont work instead of mentioning all of issues that would be need dealt with for it to work. It is the “Yes if, not No because” problem.. Example: If you and me are working together and I suggest that we get some pizza, generally human nature will be to say, “No because we don’t have any money(for example) instead of saying “Yes if we had some money.” Which I can well I have a credit card. They both say the same thing. But the former sets up an argument and the latter sets up brainstorming. And if person A can’t solve the if problem than the action still wont occur, but at least the he or she will be encouraged to give out other ideas when they come up instead of feeling like every idea will come with an arguing as to why this would be a useful idea.

    In general it appears more safe for someone to just post a piece of news to other conservatives. They wont be criticized or anything.

  • wonkish1

    To find enough individuals that do want to have a larger impact on the process, and do believe they are capable of coming up with ideas that have a larger impact. Get them to at least 1 location where ideas and discussion can flow. Most likely that would occur in a forum.. Or a sub forum of an existing forum site.