Wednesday, November 04, 2009
Your Telling Bone
The Senate and House are poised to agree on a compromise measure to extend unemployment benefits that also would expand a popular $8,000 tax credit for homebuyers, despite a recent government report on extensive mistakes and suspected fraud in the program.Snort. Note also that the tax credit is now being limited to those at least age 18, because the tax credit is being claimed by ambitious first-time homeowners as young as four, according to the IRS. Nice to see another entrepreneurial generation getting an early start, isn't it? No one believes that this tax credit is really doing anything much to stimulate the economy, and it is clear that in many cases there is significant abuse. See this earlier NY Times article about the IRS investigations.
The homebuyers’ credit — enacted last year, expanded this year and scheduled to expire Nov. 30 — would be extended to cover homes under contract by April 30. Also, it no longer would be limited to first-time buyers; people who have owned a home for at least five years could get a $6,500 credit on a new residence. Income limits for eligibility would be raised, making many more people qualify.
Under the new legislation, individuals with income up to $125,000 a year and couples earning up to $225,000 would be eligible. The current income limits are $75,000 for individuals and $150,000 for couples. Under both the House and Senate versions, smaller amounts are available to people of slightly higher incomes until the credit phases out.
Winter is coming on, heating costs are rising. In many states, those who are unemployed have little chance of finding a job - any job.(See state and local unemployment rates for September.) When unemployment is over 9.5% in a state, in many areas you won't even be able to get a job at McDonalds. A single male aged 55 is probably eligible for almost nothing in the way of social benefits either. So what does Congress expect these people to do? Extension of unemployment benefits should not be linked with measures that give tax breaks to people with very high incomes when fiscal constraints are a severe problem; further, unemployment is a stimulus to the economy.
So such news items fill my heart with awe, fear and loathing. Congress should have extended this benefit by now, and the political consequences of bundling it with what is essentially a giveaway to people who do not need giveaways are going to be lasting in the form of popular wrath. Please note that the above measure is very bipartisan - when the weasels know they are doing something that would make the average voter want to throw the bums out, they always turn bipartisan and then they link it with something else that is really needed so every person who votes for the measure can claim that they did so for an altruistic reason.
I view yesterday's elections more as a referendum on good government that focused on local issues, but obviously an election like NJ, or the Republican sweep of VA does have something to do with anger about taxes, jobs, incomes and governments that seem focused on featherbedding and cronyism. I'd call it something of a "throw-the-bums-out" trend.
It should be obvious that popular anger is going to grow over machinations such as the housing tax credit. When on the one hand persons are looking at losing their last life lines, and on the other hand government is giving money to rich people to buy the property such persons are losing (because they can't pay the mortgage, or even the taxes), you are building something extremely ugly. The anger is justified. The anger will last. Politicians will have a motive to deflect that anger onto any other target.
All of this sets up a very worrisome social dynamic. Yesterday Shrinkwrapped wrote about a Social Regression Watch. Since people are telling me that they are hearing mutterings about "Jew bankers", I think it is a good plan.
But none of this is going to work unless the population can get Congress to wake up and smell the coffee. The time for measures like this bundling of a very substantial giveaway to high-income families together with unemployment benefits is OVER. This is the era of constraints, and those constraints are economic, social and therefore political.
When people are genuinely suffering, and when there are genuine societal injustices present, there is going to be healthy anger. What is so troublesome here is that in the four years from 2004 to 2008, voters completely transferred control of government from one party to the other over just such issues, and what did voters get? The same cubed? This is almost unfathomable.
Therefore I am guessing the anger is due to escalate very rapidly. Since the troubles are real, and since voters have been trying to send a message that apparently Congress just does not want to hear (Republicans and Democrats both!), the next historical step is for Congress to start pointing fingers in all directions in an attempt to deflect responsibility.
SW wrote yesterday:
We all have an interest in maintaining rationality in the face of danger.Yes, we do. Most Americans have had the blessed experience of growing up in a land in which our adjustments are made politically, in which social and economic options have been constantly expanding, in which social pathologies have been diminishing, and even though the past few decades have seen a slow diminishing of the underlying vitality of the economy, social benefits and lending have combined to lessen the constraints. But now that is changing; we are entering into a new era in which all of our deferred societal maintenance comes due, and that will mean that the average person, at best, will be constrained. At worst, it is perfectly possible that a blind and corrupt government will create a situation in which a significant portion of the middle class will fall out. The last time that happened on a broad scale was in Turkey, and the fur is still flying over there; the latest downturn has brought the tensions from the earlier currency class and the destruction of so much of Turkey's middle class to the forefront. History repeats itself over and over again, and history and gravity control the future in the US just as they do in every other state.
So I do disagree with SW to some extent. He wrote yesterday:
I continue to believe that Americans' native good sense will prevent us from descending too far down the road(.)I don't. I believe that all bets could be off. I do believe both in American good sense and decency, but those will fail when understanding of the underlying mechanics fails in combination with a corrupt government, widespread cronyism with projection of blame and widespread economic distress of a life-changing quality. The trick in these cases is always to prevent the abyss of an irrational consensus forming, and that means intervention has to occur very early. No one ever walks off the cliff knowingly, people wander off when they are looking for a path, and when social lies have so predominated that only the insane appear to be able to find a path.
Anyway, after brooding about these matters I have decided to try to address the banking problem at its root. So far our measures appear to be increasing financial instability rather than addressing it, and if people are worrying about "Jew bankers", it is because they do not understand banking (Jews are not the problem; the problem is the nature of banking and its fundamental instability). So I am going to start a new series to explain what banking is and how it works, in the hopes that people will be able to understand why our banking system is so fubarred and why any attempts to fix it are being so shortchanged by Congress.
However understanding can prevent much, but the other piece of the fix has got to be reform of Congress. A congress that can blithely make unemployment benefits conditional on handouts to millionaires needs reform, and if we don't get it, the odds are high that we will drive right off a cliff with our collective feet firmly pressed on the gas pedal. So I think a "Congressional Regression Watch" is a most important component of addressing our social risks. And if linking tax credits for rich people buying houses for their toddlers isn't socially regressive, I can't imagine what would be.
Don't over react. We still have time to correct, although we aren't going to get out of this without pain. American history is filled with corruptions and corrections, and I would not be worried now if it weren't for the fact that the American people have tried to correct and are basically getting dissed by both parties. More is needed, and quite quickly if the voters are not going to conclude that politics is useless.
I close with a Chris Rea song titled "Auberge". It is about recognizing the dangers and getting off the road BEFORE the ugliness starts because by the time you see the danger, you'll have lost your options:
The lyrics, which are copyrighted (album here on Amazon)
On the hard fast train, on the road to gain, something gets right through to your telling bone.Auberge means something like inn or hostelry in French. But the problem for us is that there is no place to go. The US is the place where so many people have found Auberge. We just need to keep the foundations solid, the powder dry and the roof intact.
There's a sudden itch, an electric twitch, sometimes I swear this body's got a mind of its own.
This is the naked truth. This is the light. There's only one place left to go - Auberge.
You meet the silent type on a windy trail with a shiny cloak and an unseen silver dagger.
You can talk until you ache, give yourself one more break, but you can tell by the look on his face that it just doesn't matter.
This is the naked truth. This is the light. There's only one place left to go. Auberge.
Give me a weekend - give me a day. Don't like what I'm seeing although I hear what you say.
Think with a dagger and you'll die on your knees begging for mercy, singing please mister please.
This is the naked truth. This is the light. There's only one place left to go. Auberge.
If you won't listen to Auberge, there's a decent chance you may have to listen to this. Because when trust in a society breaks on every level but in that of the military, you are setting up an acutely dangerous dynamic. These are the people who protect Auberge - they are not the people who can run it:
Because they protect Auberge, their graves are sacred. And you spit on those graves if you don't take care of matters here at home; you make their deaths pointless.
If we can't curb this, things are going to continue to get worse.
Congress must be forced to behave at least as responsibly as the average second grader. Right now this looks an awful lot like organized legal robbery.
You would think that the politician's miserable sense of self preservation would have kicked in enough by now to warrant more than the most superficial attention to our current crisis. This suggests that Washington is either truly ignorant of our (and their) peril, or this is intentional...the looting of a burning bank.
Villainy or incompetence, I'm not sure which is worse.
Pardon me and I am loathe to disagree with you, but this IS definitely robbery. And they definitely know what they're doing. Why else would they have been sending out all those homeland security memos earlier this year about domestic bred terrorists?
I think I've mentioned this here before, but if not, it's not democrats versus republicans, it's them versus us. As you just mentioned the other day, it's much, MUCH better to be a government employee than private. Much greater rewards with much lesser risks. They will not give those up without a fight and if they fear they're going to lose them they will squeeze harder for even more now. A bird in the hand...and all...you mention Turkey, but isn't the only example...I'm much more concerned with the Napoleonic analog. The natives definitely are restless.
Well put, MOM. This is precisely what worries me. It's a race to inject some uncommonly common sense into Washington while we all still have something to lose.
The far right got their shot in the 90's, and found out that social conservativism is not really congruent with fiscal common sense.
The progressives tried last year, and got bamboozled badly--they accidentally-on-purpose put corporatists (the most polite description I know of for the current Administration) into power.
The center-right/libertarians are teeing up next, and they're the last hope. If they can somehow eliminate the princely role of the committee Chairmen, and come to a new sustainable social contract, we might yet get another good 80 years out of this Constitution. If not, well, shotgun shells and canned beans.
That's so .... CUTE.
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