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Rejecting Budget Compromise, Activists Demand Government Shut Down

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While Republican leaders on Capitol Hill are virtually jumping for joy at the tentative agreement for $33 billion in cuts for the rest of the fiscal year, grassroots Republicans and members of Tea Party organizations are far from satisfied with the results. Many of those who backed the election of the 70 or so new representatives who gave Republicans a House majority are calling foul and demanding a government shut down instead of compromise with Democrats.

Some Tea Party groups held a rally on Capitol Hill today demanding further and deeper cuts and a government shut-down if Democrats did not accept further reductions in spending. The Republican Liberty Caucus which elected several members to Congress last fall issued a strongly worded statement advising lawmakers “not to compromise on the budget or to expect to be held accountable,” and enthusiastically endorsing a government shut down so that legislators could “Come home to your districts for a week or two and hold some town hall meetings. Give us a chance to remind you face to face why we’re so fed up with the way you’re spending our money and ignoring the debt problem.”

The level of anger is high among those who have been working to change the big-spending practices of government, and they seem not at all concerned about the threats of Democrat leaders like Howard Dean who claim that a shut-down would lead to a backlash against Republicans. Activists on the right are convinced that voters will see through any attempt to place blame on fiscally conservative Republicans and direct their anger at those in both parties who have turned a deaf ear to the demands for real and substantive cuts like the $500 billion in cuts proposed by newly elected Senator Rand Paul (R-KY).

Florida Republican Liberty Caucus Chairman Matt Nye expressed some of this outrage, saying that “spending at every level of government is out of control, but nothing compares to the fiscal insanity we are witnessing in Washington, D.C. This new batch of Republicans was elected to get America’s financial house in order, but to date they have failed utterly and completely. It is hard to understand how such a simple fact of reality – that you cannot consume more than you produce – is so hard for our elected officials to understand and act on when regular Americans do it every day in their own households.”

Michael S. Murphy, Chairman of the Republican Liberty Caucus of Wisconsin, observed that, “The message sent by the American voter was not heard clearly enough by the Republican Congressional leadership… The Republican establishment has proven yet again that they can’t be trusted with responsible budgetary governance. The only way to halt runaway deficit spending is to shut down the government to save our Republic from the irreversible financial abyss it’s about to dive into.”

At the Tea Party rally RLC-endorsed Representative Louie Gohmert (R-TX) said “If we can’t keep our pledge, we deserve to be thrown out of office.” Judson Phillips of the Tea Party Nation group wrote “The Tea Party movement should find a candidate to run against John Boehner in 2012.” Daria Dewald of Patriot Action Network called the budget “bloated and obscene” and has started a petition to demand a government shut-down.

As a concerned Republican, when I received a fundraising email from House Speaker John Boehner yesterday on behalf of the National Republican Congressional Committee, my reaction was one of dismay. It made me wonder how they could possibly be so out of touch as to think that grassroots GOP donors would take a donation request seriously from the guy who is about to compromise with the Democrats on a totally unacceptable budget. It made me want to get out my phone and call to scream at them, not get out my wallet and send them money.

A government shut-down sounds serious, but if we are so dependent on the federal government that we cannot do without it for a few weeks then that alone is proof that our government has grown too large and too intrusive. Belgium has now gone for ten months without a central government after a similar shut-down. If we cannot do as well with our system of divided powers and largely self-governing states than that is proof that there is something fundamentally wrong with our republic which needs to be addressed.

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About Dave Nalle

Dave Nalle is Executive Director of the Texas Liberty Foundation, Chairman of the Center for Foreign and Defense Policy, South Central Regional Director for the Republican Liberty Caucus and an advisory board member at the Coalition to Reduce Spending. He was Texas State Director for the Gary Johnson Presidential campaign, an adviser to the Ted Cruz senatorial campaign, Communications Director for the Travis County Republican Party and National Chairman of the Republican Liberty Caucus. He has also consulted on many political campaigns, specializing in messaging. Before focusing on political activism, he owned or was a partner in several businesses in the publishing industry and taught college-level history for 20 years.
  • The situation in Belgium isn’t really comparable, since theirs is a parliamentary system. It’s not that the Belgians can’t agree on a budget; they can’t agree on a government.

    In the meantime, the King has appointed a caretaker administration to keep basic functions and services running. Somewhat different from what might happen here.

    I’m watching events with interest. The agency I work for has enough reserves to pay low-income housing subsidies for one month in the event of a shutdown. If this farce drags on longer than that, who knows?

  • “A government shut-down sounds serious” because it is. This is not Belgium.

    Your next bit, “if we . . . cannot do without it for a few weeks” has a good sound, but what part of “we” are you? You are not a disabled veteran, are you? Your picture does not like one of a man who relies on any transfer payment, such as Social Security.

    With all due respect, Dave, I hope you are being argumentative for the sake of it. I respect that. So far, all that Republicans have to offer is outrage. It is very easy to take a position such as theirs and yours. Making our federal system competent is the issue and outrage is an emotion, not a solution.


  • It was part of the American people who spoke last November, certainly not all of them. Most Americans want the two sides to work together and compromising and stop the ludicrous posturing.

    And after all, Democrats still control the White House and the Senate. But Tea Partiers and their propagandists apparently can’t see past the ends of their noses.

    Boehner seems likely to allow a compromise on the current fiscal year’s remaining budget. Then we have to start this game of chicken all over again, first with the raising of the debt ceiling and then with the FY12 budget.

    The idea that we have to massively cut spending right now or else is just ludicrous. The danger in large deficits is long-term, not next week. Nalle knows this, Rand Paul knows this. But they love the drama.

    This overreaching is already losing support from independent voters. If the “New Radicals” want to continue their revolution, they may have to learn some realpolitik. Otherwise, they will lose badly at the polls next year.

  • Doug Hunter

    Most Americans want to keep collecting checks from their fellow Americans and not contribute anything themselves, even if it means collapsing the system. You’re being made a debt slave to the tune of $1,000,000,000,000+ per year but anyone who wants to make actual progress against that is a ‘radical’ a ‘racist’ ‘teabagger’ and any other clever epithets one can imagine.

  • IMO most Americans are happy to take other people’s money and fund the military with it.

    Until I hear teabag people, and others who wish to limit spending, deal with that ocean of a problem as opposed to the baby pool worth of spending that goes to social services, I will remain unconvinced that their actual motives are not nefarious and antisocial–i.e. they are pathologically psychologically sick people.

  • Doug Hunter


    The military is a great place to start cutting. I thought entitlement ‘social’ spending was the problem? Maybe I need to glance at the budget again.

  • Cindy, I certainly support military cuts, starting with the war in Libya and many of the tea party people agree. The talking point that those who want to cut the budget only want to cut entitlements is a misdirection. Rand Paul’s $500 billion cut proposal did not cut any entitlements nor did it even make major cuts in the military. He was able to find plenty to cut without even going after those sacred cows.


  • troll

    Dave – what gov functions would a few week long shut down actually impact?

  • Here is my proposal for those poor, headed toward being one term, newcomers to congress who want big cuts in the federal budget. Reduce the Defense budget to the total war expenditure level of FYI 2003 at $81.2B. That would cut $89B from the federal budget and still allow us to be at war.

    National Defense is the right’s Holy Call and accounts for about 21% of the budget. One thing is certain from our war expenditures over the past 10 years of $1,291.5B. We have successfully defended ourselves from attacks by Iraq and Afghanistan.

    Tommy Mack

  • Glenn Contrarian

    Cindy –

    Please read comment #75 on this page. I think you’ll find it of great interest.

  • Glenn Contrarian

    Doug –

    Most Americans want to keep collecting checks from their fellow Americans and not contribute anything themselves, even if it means collapsing the system.

    And you base your opinion on…what, exactly? Especially seeing as how every other first-world democracy on the planet is MORE socialized, yet they’re doing just fine, thank you, and their people do NOT just sit and wait on a paycheck.

    Or is this your version of the fabled ‘American exceptionalism’?

  • Please be sure, when you do look, to be clear about Social Security…as the Republicans are currently (maybe always have been?) running a disinformation campaign with the claim that they are enlightening Americans. They are ‘clearing up misconceptions by presenting an argument containing the misconception that Social Security is a federal gov’t budget item.

    Their argument goes like this: people are confused in thinking that the federal gov’t spends more on defense than Social Security. So, let’s be clear. The federal gov’t spends nothing on Social Security.

  • 12 was for Doug.

    (Glenn, I read your reply and I am still going to get back. Been afk in the rehab facility…just got my laptop brought in.)

  • Baronius

    Dave, as far as I know, the Continuing Resolutions cover discretionary spending. Military spending, Social Security, Medicare, and Medicaid haven’t required a budgetary action in the past 100 days. So how was Speaker Boehner supposed to address those areas which represent the bulk of our spending?

  • Baronius

    Tommy – You mention the level of $1,291.5B over 10 years. We’re currently adding that much to our debt every 9 months. As I just said to Dave, you’ve got to look at mandatory spending too.

  • Yes, the defense budget, Medicare, Medicaid and Social Security will have to be dealt with to solve the budget crisis.

    Of course, almost none of the $60-odd billion in cuts being pointlessly argued about in this article and in Tea Party protests come from those parts of the budget. They all come from the tiny sliver of the budget called “domestic discretionary spending.”

    This part of the budget has already been trimmed a great deal, and further cuts will hurt people.

    And of course raising taxes on rich people [even to the rates they paid during the prosperous Clinton years without apparent harm to themselves] is not even open to discussion. The tunnel-vision extremists are allowed to set the terms for the discussion.

    All this would be moot if we had an economic turnaround like that of the mid- to late 90s. It was only 10 years ago, folks, that we had a balanced budget.

    Wars in Iraq and Afghanistan, accompanied by huge tax cuts, took care of that brief period of sanity.

  • Baronius

    Handy, I was right there with you until that last sentence. In 1995, Medicaid cost $89B per year, and Medicare was $157B per year, for a combined $246B. In 15 years, they tripled, with Medicaid costing $273B and Medicare at $446B for a total of $719B per year. That’s half a trillion dollars extra per year.

  • Doug Hunter


    I base my opinion on a $14 trillion deficit. I did mention both collecting benefits AND not paying in. I didn’t specify an optimum level just that we can’t have both so I don’t know what you’re disagreeing with. Yes, lots of other countries have different systems, you don’t see me trying to move to one of them. If I was as enamoured with Europe/Canada as many liberals are I’d seriously consider moving to one of those places, yet the general trend is the opposite so we have(had?) something that was appealing beyond the government security blanket.


    Don’t try and bullshit me with semantics. SS funding is a tax, SS checks are spending. You can break it out, pretend you have a SS account, forget about the half your employer pays (which he just considers part of your salary cost), pretend it’s not government spending, etc., etc. but I’m not into delusions. If I don’t pay the fee the government will be the one to come for me, when the checks arrive they will be from the government, if the government collapses SS is nothing. I call a spade a spade.

  • Debt and deficit are two different things. One is annual, the other cumulative.

    Surprise, I do agree with Doug [in part] on Social Security. The government treats it all as one pile of money coming in and another going out. The distinction Cindy makes is more ideological than fiscal.

    And that last sentence that lost Baronius is nonetheless true: the end of the budget surplus coincided with Bush’s wars and tax cuts. His later Medicare drugs benefit [a great idea shabbily executed] made things worse, it’s true.

  • Glenn Contrarian

    Doug –

    Exactly how many people who lived to collect Social Security have failed to receive it?

    About zero.

    Now think back to all those people who sunk their savings into, say, Enron. Or any of a dozen other big-time corporations that became big-time failures. After they (including more than a few millionaires and almost certainly more than a few “free-market” Republicans) lost everything, exactly what would they have to spend on little things like food and shelter in their golden years?

    About zero…except for Social Security.

    So if YOU, Doug, don’t pay in to Social Security, then what will happen if your investments go waaaay south and you wind up declaring bankruptcy?

    You, Doug, become a burden to the taxpayer.

    That, sir, is why we have a fully-funded Social Security…because crap DOES happen. People – including oh-so-financially-responsible Republicans and Libertarians – DO go bankrupt. Sometimes it’s because of bad investments. Sometimes it’s because somebody ripped them off and they couldn’t get their money back. Sometimes it’s because of natural disasters. Half of all bankruptcies are due to health reasons…and YOU, Doug, WILL eventually need major health care.

    But I suppose if you KNOW that you’ll never make any bad investments, and you’ll never get ripped off, you’ll never be wiped out by a natural disaster, and you’ll never have any major health problems, then you’d never, ever need Social Security.

    Yeah, but crap does happen. That, Doug, is PRECISELY why FDR instituted the FDIC and Social Security, because we had a heaping helping of crap that DID happen before he took office. In fact, five thousand banks failed before he took office and the people who had entrusted those banks with their savings lost EVERYTHING. He started the FDIC to ensure that people who had some money wouldn’t lose it all due to mismanagement by the bank, and he started Social Security to ensure that people who didn’t have money wouldn’t starve.

    Is this really so wrong? Or do you think that when crap happens, it only happens to those people who deserve such misfortune?

  • Kenn Jacobine


    FDIC simply causes moral hazard. It allows Americans to not care about what banks do with their money because they are guaranteed by Uncle Scam to get it back. The Fed of course guarantees some, not all banks, against failure – another moral hazard. What a great system – that is one reason why we are headed for another banking crisis.

    As far as Social Security is concerned, I’ve told you before it is trillions in debt due to unfunded future liabilities. Another great benefit of living abroad outside the scope of the American Welfare/Warfare State is that I don’t pay into the Ponzi Scheme that is Social Security. I feel most comfortable with handling my own retirement. And that is the point, choice equals freedom. Some of us don’t want to pay for the irresponsibility of others and don’t need the nanny state to pilfer our hard earned dollars today only to return them years in the future when inflation has eaten away their value.

  • Glenn Contrarian

    Okay, Kenn –

    Good to know that you have all the time and the opportunity and the understanding of the banking industry that you can follow all the inside workings of banks so that they couldn’t pull a fast one over you…but most of us don’t have that much time, that much opportunity, that much inside knowledge of the banking industry.

    Exactly how many people have lost their life savings due to a bank failure since FDR instituted the FDIC?


    How many bank runs – you know, thousands of people banging on the doors to the bank to get their money (or what’s left of it) before the bank is bankrupt – have there been since FDR instituted the FDIC?


    What the FDIC does, sir, is preserve the confidence in America’s banking system…because without confidence in a banking system, people have a tendency to hide their life savings in the mattress (among other places), where it does NOT earn interest and is vulnerable to all sorts of hazards like fire, crime, etc.

    As far as watching what the bank does, the Obama administration needs to do what the Reagan and Bush 41 administrations did following the S&L crisis – prosecute and jail hundreds of bankers who took irresponsible (and illegal) chances with their depositors’ money.

    What you need to do, Kenn, is to recognize that however good rhetoric might sound, it does NOT always work in the real world.

    And when it comes to Social Security, I’m glad to hear that you’re IMMUNE to ‘crap happening’ – meaning, you’re able to save a few more dollars every month, and there’s absolutely zero chance that you will make a mistake and lose all or your money, there’s zero chance that someone will rip you off, there’s zero chance that misfortune will happen to the extent that when you are old, you will have zero money.

    Good to know you’re immune to all that, and that there’s zero chance you could become a burden to the taxpayer as a result. But most of the rest of us gladly pay into it with the knowledge that – as long as the GOP doesn’t flush it all down the toilet – we won’t starve or freeze to death when we get old.

    Again, Kenn, rhetoric is one thing…and how things really work in the real world is something else altogether. I see that millions of people lost their life savings due to bank mismanagement before the FDIC, and NONE have lost a single penny in a bank account (with an account balance less than the limit, of course) since the advent of the FDIC.

    Give me RESULTS, Kenn – don’t give me rhetoric without basis in hard cold facts.

  • Doug Hunter

    “But most of the rest of us gladly pay into it with the knowledge that – as long as the GOP doesn’t flush it all down the toilet – we won’t starve or freeze to death when we get old.”

    Which is why it should be optional… let everybody have what they want. The problem is that letting people choose is not acceptable to YOU.

  • By the way, Rand Paul voted for the Senate resolution supporting a no-fly zone over Libya, and is now lying about it. Lawrence O’Donnell just delivered a scathing denunciation of this lie on his MSNBC show.

  • Doug Hunter


    That’s a nice technicality and a good chance for democrats to score smear points. In a nonbinding resolution focused on condemning Qadaffi’s attacks on civilians it does indeed near the bottom mention the ‘possibility’ of a no fly zone to protect civilians. Rand Paul should have read more carefully and opposed the resolution condemning Qaddaffi’s attacks on civilians (another good chance to smear him, what kind of nut would oppose a nonbinding condemnation of attacks on civilians?)… although as another technicality he didn’t actually vote for it, he failed to oppose it but let’s not split hairs here. We got good propaganda against the enemy, let’s use it!!

  • The ‘technicality’ is not the issue, it’s the zigging and zagging he’s doing now to avoid self-contradiction.

  • Cannonshop

    The interesting thing about Social Security, is that it pays out regardless of whether there is money coming in to pay it, and that you can’t work a decent job in the U.S. without paying into it-in spite of it being, nominally, a ‘voluntary’ system.

    The second thing that is funny about it, is that it’s direct-transfer-of-wealth. There IS no “Savings Account”, that money was paid out the second it went in. It does not collect interest, it is not limited by how much or how long you pay into it-any shortfalls in the system are made up for…with credit-by borrowing money.

    Thing about borrowing money, is that you have to pay it back eventually, usually with interest, or people will stop lending it to you.

    The USA’s credit rating is in the toilet. Income and GDP are both in real-dollar-terms decline-and “real dollar terms” is what those credit/debt transactions that are funding the welfare/warfare state are based on. This means you can’t inflate your way out of debt by printing more federal reserve notes, nor will the everlasting well of eager borrowers persist in propping the system up.

    If you totally soaked everyone in the United States earning more than 200k a year of ALL their yearly income (not even leaving enough to, y’know, buy food), it would pay off about 1/10th of the debt.

    This would include Bill Gates, as well as George Soros.

    IOW, Glenn, “Taxing the rich” isn’t going to fix the problem. You have to stop digging the hole, first.

  • #12 –

    Don’t try and bullshit me with semantics. SS funding is a tax, SS checks are spending. You can break it out, pretend you have a SS account…

    Ouch, I did a terrible job trying to make my point. Let me try again. Okay. Yes, SS comes from taxes…however, not from income taxes…so it is not a part of the federal budget. It comes directly from payroll taxes. Thus it is accounted for separately and comes from a separate source than federal budget items. When there are excess SS contributions, the fed borrows from the SS trust fund via securities and must repay the money borrowed.

    Why does this matter? To reduce spending in SS one has to reduce payroll taxes not income taxes. Likewise, cutting SS does nothing to reduce income taxes. Declaring war on SS does nothing for the federal budget at all. Yet, Republicans are attempting to have people believe that it does.

  • “Declaring war” on Social Security is not really a central GOP goal.

    I would say Medicaid and to a lesser extent Medicare are closer to the center of their bullseye, at least in the short term — along with unemployment benefits, public employee unions, the EPA, and exaggerated tiny budget pieces like NPR and Planned Parenthood subsidies [plus forbidding tax increases, of any kind for anybody as part of any potential budget solution].

    In the long term, Social Security will stop being able to pay for itself when the Baby Boomer retirees outnumber the younger current workforce.

    Which is uncomfortably soon.

    Some kind of adaptation/adjustment will be necessary. An honest and open discussion about this [still rare in Washington] will not be a declaration of war but an attempt to prevent future hardship. “Privatization” and raising the retirement age may not be the only ways to deal with this, but we have to be willing to discuss them without bursting a blood vessel.

  • I understand that the payroll taxes will begin to fail to be enough to pay SS beginning in 2018 now (previously 2017). And the assets will be used up by what 2041 2047? Something like that. What I would like to know is how do they calculate the payroll input to SS from 2018-2041/47 (whatever that date is)?

  • And based on experience handy, I doubt the issue will get much attention until the assets are near depletion. Based on my dates above, say 2040 or thereabouts.

  • Did I make my point? Let’s make sure:

    It won’t be uncomfortable, nor will any actual pressure be felt, until 2040. That is according to current calculations, imo.

  • There are other consequences to a government shutdown. Speaker John Boehner knows very well about rebellion in the House. He is a former participant.

    After the government shut downs in 1995 and 1996, voters sacked 15 Republican House members after one term, weakening their majority. In 1997, John Boehner and three other House Republican leaders attempted a “coup” to make House Speaker Newt Gingrich either resign or be voted out. It failed, but the next year Republicans lost five more House seats in the midterm elections and the speaker suffered much of the blame. Despite his reelection for an 11th term, Gingrich did not stand for a third term as Speaker, declined to take his seat, and left the House.

    The Speaker is responsible for ensuring that the House passes legislation supported by the majority party. Boehner’s freshmen are challenging his ability to do so.


  • Doug Hunter

    Cindy, the assets consist of government securities to be paid back from taxes/borrowing. Your view of treating SS seperately is a good point of reference to demonstrate. Lets say the SS administration are your well off parents. For the last 30 years and up until 2017 they’ll have been doing well and cutting you (the rest of the government) a check for $1000 a month. At the same time, you’ve written down IOU’s on a piece of paper accounting for all the money they’ve given you so they now have ‘assets’ consisting of promises to pay. With the $1000/mo subsidy you’ve been partying likes it’s 1999 have racked up credit card debt and are up to your eyeballs in a mortgage to the Chinese. After 2017 your parents are going to retire and start cashing in on those paper IOU’s you’ve been giving them but you haven’t saved a dime, you can barely afford what you have with the $1000/mo subsidy. How are you going to maintain your lifestyle that has been subsidized up to this point , not only are you going to lose the $1000 a month that your parents had been loaning you but now you’ll have an additional bill for $1000 to pay them back. That’s a $2000 swing in your personal budget…. ouch. You’d be between a rock and a hard place which is exactly where our government finds itself.

    You see from the analogy, the 2017 date when you stop being subsidized and start paying back is more critical than the time when the paper ‘IOU’s’ run out. (we owe the elderly what we promised them whether there’s a paper IOU to back it up or not)

  • Kenn Jacobine


    How do you think FDIC is financed? It is financed by the taxpayers. Therefore you lose money all the time due to the moral hazard FDIC creates. How many banks have gone belly-up since FDR instituted FDIC?

    In terms of Social Security, the Supreme Court ruled in Flemming v. Nestor that even though you may have contributed to the “Trust Fund” all of your life it doesn’t guarantee that you will ever collect your benefits. That is right Glenn, the government may be the one ripping you off. Wouldn’t that be the ultimate irony. But, with trillions in unfunded liabilities I believe that is a very real possibility. I gladly will take my chances with foreign investment accounts over Uncle Scam any day.

  • Cannonshop

    Okay, I think most of us recognize that there is a PROBLEM with Social Security that may well leave it insolvent.

    The money is going to run out-that is, contributions will be exceeded by liabilities-as happens with nearly every Ponzi Scheme or Pyramid Scheme, eventually you’re paying out more than you’re taking in.

    The question is, “What can you do about it?”

    It is, I posit, the “Doing something about it” problem that causes the argument. Kenn’s method (opt out) works rationally for him-but rational does not always equal moral-what is rational behaviour for an individual can be catastrophic for the society that individual lives in. (Someone actually pointed this out in another article, but I forget which article and which Blogcritic.)

    From my perspective, problem solving requires using honest evaluation of what you have available-which is less than, imho, the government’s assessment of what we have available, since government accounting includes government spending as a positive element of GDP-this would be like including your kids’ allowance as part of your household income.

    ALL government spending, whether payroll, transfer payments, or purchases, is, by definition, SPENDING. Money collected from the tax=payers, it ain’t generated wealth.

    Now, from the remainder, you figure out if you have enough (hint: nope), and start looking at how to increase that non-government-pool of economic activity-of WEALTH GENERATION, so that revenues are created that can then, be taxed to keep the government solvent and pay out locked expenditures like Social Security without bankrupting the entire country in the process.

    Keep in mind the law of diminishing returns-increased taxation doesn’t guarantee increased job creation, increased wages in the private sector, increased reciepts-it may not be possible to sustain the improvement, and you run a very real chance of increasing unemployment and the burden on governments at the local, state, AND Federal levels if you go too far.

    As I found out a decade ago, it doesn’t matter how much you love your business, if you can’t make money at it, you’re going to shut down, or move, depending on size and opportunity-which in turn means you’re no longer contributing to the pool.

    So the next step, is to figure out how to make doing business in the U.S. more attractive than doing it in China, or India, or somewhere else. Because to solve the insolvency problem with Social Security, you MUST have more and better private-sector employment. GOTTA have it, it’s where the money that you’re paying out is coming from.

    This means that the trend-line of less and less wealth generation in the U.S., and more and more tax-funded employment, has to be reversed.

    I propose that the Private Sector must Grow, and the Public Sector remain the same or shrink, to bring the books into balance-there have to be more ACTUAL tax-payers, as opposed to shuffling a rebate from the wages of civil servants.

  • The thing about a shut-down is that it’s by no means clear who will get the blame for causing it. It’s really as much the fault of those who won”t compromise on both sides, assuming the public wants a compromise. I suspect that some folks on both sides will be happy to see th shut down, but it’s not going to easy ot pojnt fingers.sssssssss

  • zingzing

    dave’s a snake!

  • troll

    Cannonshop – alternatively the gov could ‘soak’ the high income earners to fund the country’s retirement net

  • Anyone who is openly or secretly hoping/wishing for a government shutdown will get exactly what’s coming to them if it actually happens. Be careful what you wish for.

  • troll

    handyguy – what gov functions will be impacted…payments on military contracts?…social security check mailings?

  • The messy practicalities are part of it, sure. But the political blowback is likely to be fierce. Why risk it? For the sake of libertarian propaganda? Oh please…

  • troll

    some of the thinking might be that the harder the Republicans look to be coming on the more cover Obama has in moving to the right as Clinton did


  • I suspect Obama and Boehner, to name two, would rather not be facing even the remote possibility of a shutdown. The right-wing hotheads, on the other hand, seem to find something cool about the idea. I think they are fools.

  • we owe the elderly what we promised them whether there’s a paper IOU to back it up or not

    Oh, hell wit’ them! Let ’em eat cake (etc). No? Okay, maybe the free market will take care of ’em?

    (An anarchistic society would take care of them one and all. Perhaps we should do that! I vote YES!)


  • 38 lmao @ zing.

  • /* pokes Dave Nalle with stick */ You okay?

    I was thinking he looks good in the new picture, thinner, but not snake-like, then I seen all them ssssses at the end of his last comment.

    Now, I don’t know about this government shut-down. I’m somewhere between a Libertarian and approaching Cindy and maybe even Pablo as far as how much I don’t love Big Government right now BUT…the little guys who hide under the traffic lights periodically switching them from red to green…aren’t they government employees?

    I anticipate complications.

  • Glenn Contrarian

    C-shop –

    The money is going to run out-that is, contributions will be exceeded by liabilities-as happens with nearly every Ponzi Scheme or Pyramid Scheme, eventually you’re paying out more than you’re taking in.

    Not if everyone paid in what you and I do, because no one pays anything in to Social Security after the first $100,000. If Social Security is a tax as you say, then that, in my opinion, is an unequal tax that benefits the rich. If everyone paid in the same percentage regardless of income, then there’d be NO shortfall. In fact, we’d probably be able to lower the percentage for everyone!

    But this, of course, would offend the American oligarchs – and we must never treat the normal everyday American with the same consideration as we do a Wall Street oligarch….

  • Doug Hunter


    It does not ‘benefit’ the rich in any way, it’s actually the best deal for someone who barely qualifies. I’m embarassed to admit but I had a relative invent ‘pay’ for a person for a couple of years who had barely ever worked so they could qualify. That person got a good deal and payed very little in. Your problem is that it doesn’t soak the rich enough, it’s not redistributive enough. Typical liberal, very generous with other people’s money. The truth is, no one pays enough for the benefits that groups have voted themselves which is why we’re where we’re at today. The poor with children generally have negative rates after ‘refundable’ credits serving as another form of welfare, half the people pay no income taxes, and yes the rich also pay low taxes.

    The answer likely includes all of the above. How about in addition to raising the cap/ lowering the rate we stop paying benefits or pay lower benefits to people who have good pensions, decent retirement, and yes the rich who have no need of the pocket money? Combine that with an age increase tied to growth in life expectancy and youve probably got it licked for a long time without raising taxes. Also, the rich still have a huge loophole in that royalties, dividends, and passive income are not subject to SS/medicare and it’s really easy to choose how to take your money.

    Medicare/aid and the rest of the government are another story.

  • Some of you really need to do some research…check out how much money comes in from the rich when their tax rates are ridiculously high. The more you tax the rich, the more money they hide.

    It’s a fact that EVERY time the govt raises rates on the rich, revenue numbers go down.

    But I saw it in an earlier comment, you could take all the money away from the rich and it wouldn’t touch our deficit…so then what?

    Why is raising taxes the liberal answer to everything? If you were in the same situation at home would you go to your boss and tell him or her that you’re not able to live the way you want, so you want more money? Do you suppose he or she would just reach in their pocket and give you more? Or would they tell you, as some of us are trying to tell our govt, to get it together and live within your means?

    AS the song says, you can’t always get what you want…I want a big screen TV, but I’m still watching a tube TV…I want a new car, but I’m still driving my ’98 Dodge…I want a lot of things, but I can’t afford them, so I don’t have them. I’m not gonna go out and buy them and worry about paying for them years down the road and I don’t want my govt doing it either!

    Pay as you go, or, stay the fuck home and don’t go!

  • troll

    Andy – the rest of that lyric is ‘you get what you need’ which is what we as members of a human community need to figure out how to provide for each other

    we’ve done a pretty shoddy job

  • Doug Hunter

    “we’ve done a pretty shoddy job”

    In comparison to what? Who? When?

  • troll

    Doug – if the gov were to stop paying SS to all then it would be forced to admit to redistributive socialism…iirc this was debated back in the day and was rejected in favor of smoke and mirrors

  • troll

    Doug – as I referred to the human race I guess my comparison would have to be apes or aliens

  • And who says what you need?

  • Practice makes perfect, Andy. Just picture your dear old gran and what she needs. Then assume that everyone needs about the same. You’ll get the hang of it in no time.

  • Closing tax loopholes so that, for example, GE actually pays taxes, and oil companies swimming in profits do not receive government subsidies — this should be revenue reform we can all agree on. But blowhards caricature commonsense reforms as ‘tax increases,’ and the farce continues.

  • Glenn Contrarian

    Kenn –

    How do you think FDIC is financed? It is financed by the taxpayers. Therefore you lose money all the time due to the moral hazard FDIC creates. How many banks have gone belly-up since FDR instituted FDIC?

    If you add up ALL the bank failures that have occurred since the FDIC was instituted, you MIGHT equal the FIVE THOUSAND BANKS that failed in the four years before FDR took the oath of office.

    And here’s an interesting graph – it shows that from 1940 to 1980, there was NEVER more than fifty bank failures per year…but once Reaganomics took effect, we had close to THREE THOUSAND bank failures.

    Clinton took over (after Bush 41 courageously raised taxes and set up the Clinton era for prosperity)…and the numbers of bank failures plummeted once more and were held to a minimum until the Great Recession hit…and as bad as the Great Recession is, in terms of bank failures, it’s nowhere near as bad as the first ten years of Reaganomics.

    In other words, Kenn, IT IS CRYSTAL CLEAR that the FDIC is NOT in the least responsible for bank failures. The same cannot be said for Reaganomics.

  • I think Kenn is mistaken about the FDIC’s funding:

    The FDIC receives no federal monies but instead receives its funding from insurance payments that the FDIC charges bank and thrift institutions for held deposits. Earnings from U.S. Treasury, security investments also comprise FDIC funding.

    The insurance fund came close to running out of money during the recent crisis. The Dodd-Frank financial reform act passed last year attempts to protect the fund from future shortfalls.

  • Cindy – all my grandparents are dead…they have no needs or wants!

  • Sorry to hear that, Andy.

  • In other words, Kenn, IT IS CRYSTAL CLEAR that the FDIC is NOT in the least responsible for bank failures. The same cannot be said for Reaganomics.

    Actually, you’re both wrong on this. In the depression, in the 1980s and in our recent crisis the clear cause of all of the bank failures was poor policy which permitted unsafe loans for real estate speculation, though in our recent crisis the speculation was government sponsored, which kind of makes it worse.


  • As for a shut-down, provisions have already been made to cover essential services like mailing out SS checks and military payments, which are legitimate functions of the federal government. What would stop is largely the intrusive overregulation and meddling which is exactly what we’re trying to get rid of. A shut down would mean a weight lifted off the backs of every citizen.

    The reason government leaders and bureaucrats fear it is that if it lasts long enough we’ll realize we don’t need their nanny state.


  • #63 is proof, if needed, that Nalle no longer thinks it necessary to write factual statements grounded in actual, you know, reality. He has become a pure, anything-goes propagandist: Ignore all counter-evidence and pile on the distortions.

  • The “unsafe loans” were only part of the story. The securitization of those bad loans into derivatives by modern-day alchemists on Wall Street turned a bad situation into a worldwide catastrophe; it gigantically modified the scale.

    And the greed was contagious. It’s [sorry to keep using the word but it’s the right one] propaganda to lay all the blame on government policies.

  • Boeke

    In spite of republican efforts to scapegoat someone else, anyone else, or everyone else, the responsibility for the economic collapse lies with Wall Street.

  • Boeke

    In spite of republican efforts to scapegoat someone else, anyone else, or everyone else, the fault lies with Wall Street.

    Michael Hudson

    Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown

    by Michael Hudson

    Michael Hudson is a staff writer with the Center for Public Integrity and author of The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America—and Spawned a Global Crisis.

    Mortgage giants Fannie Mae and Freddie Mac have been cast as the major villains of the financial crisis, but Michael Hudson reports that Wall Street firms were the prime offenders.

    Ask many Americans who’s to blame for the nation’s economic mess, and two names come to mind: Fannie and Freddie.

    They see Fannie Mae and Freddie Mac as the villains of the financial crisis.

    GOP.gov, the official website for Republicans in the House of Representatives, says flatly: “Fannie Mae and Freddie Mac were the main cause of the nation’s current financial turmoil.” Many critics, including Republican appointees to the federal Financial Crisis Inquiry Commission, blame the two government-chartered mortgage underwriters for pushing lenders to make riskier loans and leading the way into the financial crash.

    There’s a problem with this narrative: The numbers tell a different story, a Center for Public Integrity review finds.

    The evidence indicates Fannie and Freddie contributed to the mortgage meltdown, but they played a secondary role to Wall Street. Wall Street firms and the mortgage lenders they bankrolled led the growth of the market for subprime loans and other risky mortgages.

    Government data show Fannie and Freddie didn’t take the same risks that Wall Street’s mortgage-backed securities machine did. Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.

    Tagging Fannie and Freddie as the primary suspects in the mortgage debacle diverts attention from bigger offenders and from policy decisions that helped create the climate for out-of-control lending.
    Some 6 percent of Fannie- and Freddie-sponsored loans made during that span were 90 days late at some point in their history, according to Fannie and Freddie’s regulator, the Federal Housing Finance Agency. By contrast, the FHFA says, roughly 27 percent of loans that Wall Street folded into mortgage-backed investments were at least 90 days late at some point.

    “The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

    Fannie and Freddie, Cecala said in a telephone interview, didn’t start making a big move into riskier mortgages until the mortgage boom was already under way, and they were fighting to reclaim market share they’d lost to more aggressive Wall Street players. Even then, they were more cautious than Lehman Brothers and other investment banks. For example, just over 15 percent of Fannie- and Freddie-backed loans made in 2007 have been seriously delinquent, compared to nearly 42 percent of mortgages bankrolled by Wall Street, according to the FHFA.

    None of this should excuse Fannie and Freddie for their role in the mortgage debacle. Their latter-day bets on high-wire mortgages contributed to a sea of government red ink and exacerbated the size of the mortgage meltdown and level of pain that borrowers and other Americans are now suffering. Taxpayers have already had to shell out some $150 billion to keep them alive.

    In comparison, taxpayers have shelled out more than the $145 billion to the eight largest Wall Street banks, but they have repaid most of the bailout money extended to them by the government.

    When it comes to public policy, though, a sense of context and proportion is important. Tagging Fannie and Freddie as the primary suspects in the mortgage debacle diverts attention from bigger offenders and from policy decisions—such as deregulation in the mortgage market and on Wall Street—that helped create the climate for out-of-control lending.

    A spokeswoman for the House Republican Conference, which publishes GOP.gov, did not respond to requests for comment.

    The debate over Fannie and Freddie’s role is likely to heat up in late January, when the Financial Crisis Inquiry Commission is expected to release its report to the nation. The 10-member commission, created by Congress to investigate the economic disaster’s causes, has been split by discord between Democratic and GOP appointees.

    According to Democratic member Brooksley Born, Republicans insisted that the words “Wall Street” and “deregulation”] be banned from the panel’s final report. Peter Wallison, a Republican appointee to the commission, responded that the GOP members didn’t seek to “ban” any words—they simply wanted to ensure that terms such as “Wall Street” were used with precision.

    Soon after, the four Republican appointees issued a preliminary “Financial Crisis Primer.” The 13-page paper doesn’t use the terms “Wall Street” or “deregulation,” but refers to Fannie and Fannie three dozen times. Through Fannie and Freddie and other instruments of government policy, the paper says, Washington “subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.”

    Critics of the primer counter that Countrywide Financial Corp., Ameriquest Mortgage, and other aggressive lenders made dicey mortgages not because of government incentives or pressure, but for simpler reasons: The loans were wildly profitable and investors were willing to shell out trillions of dollars to fund them.

    In assessing these competing views, a few more numbers are worth considering:

    • Fannie and Freddie lost market share to Wall Street during the very time the mortgage market was spinning out of control. FHFA data shows Fannie and Freddie’s share of new mortgages fell from almost 55 percent in 2003 to less than 35 percent in 2006.

    • The loans that Fannie and Freddie purchased had consistently better risk characteristics than loans backed by Wall Street. For example, roughly 5 percent of loans originated from 2001 to 2008 and acquired by Fannie and Freddie had “FICO” credit scores of less than 620, a figure often used as a cutoff for labeling borrowers as subprime. More than 30 percent of Wall Street-bankrolled loans in the same period had FICO scores under 620.

    • In addition to buying loans directly, Fannie and Freddie also purchased mortgage-backed securities produced by Wall Street. From 2002 to 2007, Wall Street produced more than $3 trillion in securities backed by subprime mortgages and so-called Alt-A mortgages, another class of risky home loans. During that time, Fannie and Freddie purchased 23 percent of Wall Street securities underpinned by subprime and Alt-A loans, according to Inside Mortgage Finance.

    That’s a big chunk, but still not enough to make the case that Fannie and Freddie were the main drivers of the growth in risky lending.

    • As of September, Federal Reserve data show, 2.2 percent of Fannie- and Freddie-backed mortgages were in foreclosure, compared to 13 percent of all subprime mortgages, 11.3 percent of all Alt-A mortgages, and 2.9 percent of all prime mortgages.

    Fannie and Freddie, in other words, have outperformed the overall mortgage market. If they had been the real ringleaders of the mortgage debacle, the numbers would tell a darker story.

    When it comes to the lending spree that sparked the financial crisis, Fannie Mae and Freddie Mac were followers, not leaders. They were, at first, not-so-innocent semi-bystanders and, eventually, too-willing accomplices who followed Wall Street as it led the nation’s economy off a cliff.

    Michael Hudson is a staff writer with the Center for Public Integrity and author of The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America—and Spawned a Global Crisis.

  • Boeke, please don’t re-post lengthy articles from other sites in the comments space but make your own comments that reference such material and link to it or just use small, relevant quotations.


    Christopher Rose
    Blogcritics Comments Editor

  • zingzing

    on a related note of presenting shit from other websites, blogcritics needs to cut it out with the autoplay videos. i know it’s money in the bank, but it also makes for a highly annoying website. if i want to watch a disney commercial on cats, i’ll watch it. but goddamn if i want to hunt around on open links for the faux-tribal drums and sub-planet earth monologue on them.

    it’s a bad decision. rectify that shit, blogcritics moneymen. i’m listening to music, not your ads. no one listens to autoplay bullshit. it’s always an annoyance, and the sign of a terrible website.

  • Boeke, how many times does someone have to tell you before you understand what they mean?

  • Boeke

    Pardon me, I thought that a fact-based article by a knowledgeable person would alleviate the constant interpersonal abuse that characterises BlogCritics.

    Go back to flinging scat.

  • zingzing, autoplay video is the work of the devil and I fully agree with you. Please direct your complaint where it will at least be be noted, presumably our publisher.

    Boeke, the comments space is for people to make their own thoughts made known, that’s all.

    We are trying to reduce the amount of abuse that passionate people sometimes slip into and it is gratifying to know that we can count on your support. We can, right?

  • zingzing

    chris, if we were to direct our complaints where they might do some good, we’d never comment here. besides… i haven’t noticed any video autoplay today so far… so maybe you should be thanking me for my hard work! hahahah.a.a…