Quote of the Day: Barney Frank Edition

"I do want to add one thing though to your question about those poor beleaguered bankers who have been forced to do so much to keep from not being able to pay their debts, that they can’t lend money. If they really are running businesses that are so stressed that they can’t do their basic work, why are they paying themselves so much money?"

Barney Frank, on Meet the Press

Daily Kos has the video of Frank's MTP appearance. Host David Gregory, former Treasury Secretary Henry Paulson and CNBC anchor Maria Bartiromo were left speechless. These Wall Street apologists couldn't believe Frank spoke the truth about the unjustifiable executive bonuses.

Lloyd Blankfein was at the helm when Goldman Sachs almost went under. In 2012, Blankfein received a $26. million bonus. So much for the saying about cream rising to the top.

Trent Franks: Deficit Peacock

"We know that if we grow this economy, that nothing will do more good toward bringing in additional revenues to government. And that’s not to theory; that’s a historical observation. Even the much-maligned Bush tax cuts brought in an additional $100 billion a year to government coffers. We forget that unless someone is out there producing, there’s no tax revenue. There’s no revenue. There’s no nothing for anyone."

Rep. Trent Franks

Even George W. Bush appointees said to Congress that the tax cuts did not bring in more tax revenue.


Robert Carroll, deputy assistant secretary for tax analysis at the U.S. Treasury Department during Bush’s second term.

“As a matter of principle, we do not think tax cuts pay for themselves.”

Alan D. Viard, a former economist at Council of Economic Advisers during President Bush's first term, said there is no proof that the Bush tax cuts brought in more tax revenue.

"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

Former Treasury Sec. Henry Paulson.

“As a general rule, I do not believe that tax cuts pay for themselves.”

Edward Lazear, former chairman of the chairman of the Council of Economic Advisers, told Senate Budget Committee that the Bush tax cuts lost tax revenue.

“Will the tax cuts pay for themselves? As a general rule, we do not think tax cuts pay for themselves. Certainly, the data presented above do not support this claim. Tax revenues in 2006 appear to have recovered to the level seen at this point in previous business cycles, but this does not make up for the lost revenue during 2003, 2004, and 2005. The tax cuts were a positive step and have contributed to the enhanced economic growth, additional jobs, higher real disposable income, and the low unemployment rates that we currently see today.”

Even Bush's economic team admits that the tax cuts do not increase tax revenue. Simply mathematics dictate that you do not add by subtracting. Franks is another deficit peacock. Franks doesn't care about reducing the deficit. He just wants more tax cuts.

Sen. Shelby Wants to Gut Financial Reform

Richard Shelby would most likely become chairman of the Senate Committee on Finance if Republicans take over the Senate. Shelby made it clear to ABC News that he plans to gut the Financial Reform bill.

"The bill is so sweeping and such a game changer in many ways that it's incumbent upon us to revisit it," Shelby said at the Reuters Washington Summit.

Yes, things were working so well before. That is why taxpayers were left paying for the bank bailout. Financial institutions were taking huge risks with naked credit default swaps. AIG sold too many naked CDS. AIG was unable to pay all the financial institutions that bought CDS. AIG nearly went under and other troubled financial institutions could not get the CDS revenue owed to them.

Federal Reserve Chairman Ben Bernake and Tresury Sec. had this revealing conversation about AIG.

On Wednesday, September 17th, a day after the Fed agreed to inject eighty-five billion dollars of taxpayers’ money into A.I.G., Bernanke asked Paulson to accompany him to Capitol Hill and make the case for a congressional bailout of the entire banking industry. “We can’t keep doing this,” Bernanke told Paulson. “Both because we at the Fed don’t have the necessary resources and for reasons of democratic legitimacy, it’s important that the Congress come in and take control of the situation.”

Shelby wants to maintain the status quo.

"I don't believe it's good for business, it's not good for the financial sector and ultimately I don't believe it's going to be good for credit for a lot of people who need it. It's gonna cost," Shelby said.

I have no problem with the free market and people making money. My concern is systemic risk that could cause a depression. There is a difference between encouraging free market growth and reckless financial practices. Shelby would be encouraging the latter.

Shelby has set his sights on the newly created Consumer Financial Protection Bureau.

"The consumer agency bothers me the most," said Shelby, who failed to reach a compromise with Democrats and voted against the bill. "I thought the creation of it and the way it was created was a mistake," he said.

Notice Shelby didn't offer an alternative to make sure that consumers aren't vulnerable to shady financial practices. It is absolute insanity for Republicans to think different results will be achieved using the same faulty financial practices.

Shelby saves his most wingnuttery attack for Elizabeth Warren.

"I believe she's got a big ax to grind and she's sharpening that ax," said Shelby. "I don't think that you need somebody in a position like that with all these preconceived ideas and I believe she has a lot of them."

Warren is serving the American people and not special interests. Warren hasn't been afraid to put Treasury Sec. Tim Geithner in the hot seat. Sen. Chris Dodd has been against Warren's nomination. Warren is scaring members of both political parties. She must be doing something right.

Profile In Courage Award: Suzanne Kosmas

"Given the choice between a Republican and someone who acts like a Republican," President Harry Truman said. "People will vote for the real Republican all the time." Rep. Suzanne Kosmos has not learned that lesson. Kosmas voted against the Affordable Health Care for America Act. An internal poll of potential Republican opponent Craig Miller finds 66 percent of Republicans undecided. The best way for Kosmas to differentiate herself is not parrot Miller's position on the Bush tax cuts.

Kosmas wrote a letter to Speaker Nancy Pelosi urging her to extend the Bush tax cuts. Kosmas writes tax cuts for dividends and capital gains. These are taxes on profitable stocks. Wall Street is hiring again. Increased earnings in the financial industry have not produced jobs. The Bush tax cuts decreased the size of the middle class by 4.2 percent. What Kosmos is proposing is nonsense and an act of political cowardliness.

Dear Speaker Pelosi, Majority Leader Hoyer and Chairman Levin:

As you are aware, without action, the tax rates established under the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 are set to expire at the end of the 2010. As I have discussed with my colleagues and with economists, we must extend these tax rates in order to give our fragile economy the time it needs to recover from the ongoing crisis. Working families and small businesses in our communities are doing everything they can to make ends meet during these difficult times, and we need to make sure that they continue to have the tools they need to succeed.

Continuing this tax-relief is a common-sense measure that will ease the burden for middle-class families and provide tax certainty for small business owners looking to invest and create jobs. Extending the 2001 and 2003 tax rates will provide continuing stability to the millions of families who have benefited from reduced taxes. In addition, the 2001/2003 tax cuts lowered rates not only for ordinary income, but also for dividends and capital gains, which create incentives that are crucial to private sector investment and give our small business owners the opportunities and financial security they deserve. If we allow these tax rates to expire we run the serious risk of weakening job growth and economic expansion at a time when our economy has begun to recover.

The best way to reduce our deficit is to grow our economy. Allowing the 2001 and 2003 tax rates to expire before our economy fully recovers may reduce our ability to support our small businesses, stimulate the economy, and bring our deficit under control in the future. Given our fragile recovery, I urge you to support extending the 2001 and 2003 rates in order to allow our economy to fully strengthen and grow.

Sincerely,

Suzanne Kosmas

Member of Congress

Kosmas is promoting trickle down economics. I find it hard to believe any economist told her extending the Bush tax cuts would create a surplus. Conservative economist Bruce Bartlett has a list of quotes from Bush administration economists saying the opposite.

Alan Viard, senior economist at Council of Economic Advisers during Bush’s first term.

“Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that.”

Robert Carroll, deputy assistant secretary for tax analysis at the U.S. Treasury Department during Bush’s second term.

“As a matter of principle, we do not think tax cuts pay for themselves.”

Former Treasury Sec. Henry Paulson.

“As a general rule, I do not believe that tax cuts pay for themselves.”

I challenge the Kosmas campaign to provide me with the economists who told her the Bush tax cuts would reduce the deficit. I will be waiting for a response.

No Blank Check Paulson Petition

Litbrit sent me this petition urging citizens to tell Congress not to give Henry Paulson his requested power in the bailout, without oversight.

Congress is on the brink of making a one-sided deal to give George W. Bush a blank check to bail out his pals - offering nearly (or perhaps more than) a trillion taxpayer dollars to Wall Street to cover its bad debts. That works out to somewhere between $2000 and $5000 from every American family. So what do the taxpayers get in return?

Nothing. No new regulation or oversight to help avoid this kind of crisis in the future. No public interest givebacks to help people whose homes are in the hands of the banks. Perhaps most shockingly of all, the taxpayers get absolutely no share in the profits if and when these finance giants bounce back, even though we are now assuming a great deal of the risk.

The taypayers are going to lose money on the bailout. With or without oversight. The other option is letting the mortgage industry collapse. Recouping tax dollars from selling high-risk illiquid assets is unlikely. Times like these makes me wish I was running an entertainment gossip blog.

Sign the petition

The Bailout

The Wall Street Journal op-ed must be read to be believed.

Last week, we did our best to destroy the financial system but somehow came through it. This week, Congress will have only 72 hours to ruin the Treasury’s $700 billion mortgage plan before it recesses.

If our luck holds, Hank Paulson will get the extraordinary authority he seeks. If we are really lucky, Paulson may actually fix the mess we have made. So why not give him whatever he needs?

1. Because the bill would make Paulson a federal CEO of lending instituions. Questions remain on what the Sec. of Treasury would do with those piowers.

2. The bailout will create a bigger federal deficit. The Federal Reserve will have have to borrow money to buy the mortgages. The Fed and taypayers eat the loss if the mortgage values depreciate.

3. Greater regulation is needed to make sure future bailouts aren't needed. Taxpayers can't afford to continulously bailout lending institutions. The market rewards selling mortgages to people that can't financially afford a home. Banks sell that debt off as assets. A flow of credit that eventually has to be paid.

4. The Paulson plans is a band-aid. Nothing will be changed by a bailout. Except temporary security; until the sky falls again.

Paulson's plan appear to be dead. Senator Chris Dodd has offered an alternative plan. Economist Paul Krugman likes the plan. The issue is regulation over the mortgage industry.

Lawmakers from both parties, while acknowledging the urgency of the moment, nevertheless object to giving what they characterize as a "blank check" to Treasury Secretary Henry Paulson to buy troubled assets from financial institutions. They want provisions that would explicitly protect taxpayers.

"We don't have a lot of time. We want to act but we want to act responsibly," said Senate Banking Committee Chairman Christopher Dodd, D-Conn., at a press briefing Monday afternoon.

Republican operative Patrick Ruffinni urged GOP candidates to use the bailout as a political issue and vote against it. Ruffinni has taken the post down from his blog. Kos, Digby, and Ed Kilgore pointed out how Ruffinni gleefully wanted to turn a disaster into an opportunistic wedge issue.

Republican incumbents in close races have the easiest vote of their lives coming up this week: No on the Bush-Pelosi Wall Street bailout.

God Himself couldn't have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration. That's why I want to see 40 Republican No votes in the Senate, and 150+ in the House. If a bailout is to pass, let it be with Democratic votes. Let this be the political establishment (Bush Republicans in the White House + Democrats in Congress) saddling the taxpayers with hundreds of billions in debt (more than the Iraq War, conjured up in a single weekend, and enabled by Pelosi, btw), while principled Republicans say "No" and go to the country with a stinging indictment of the majority in Congress.

This creates pressure on the "change" message. If this issue is made controversial, and Obama is not the first to make it an issue, how exactly is a Washington deal backed by Bush's Treasury Secretary "change?"

But for this to be actionable, it has to be controversial. So this can't be a few lonely voices like Coburn and DeMint. It needs to be the bulk of the Republican conference. In an ideal world, McCain opposes this because of all the Democratic add-ons and shows up to vote Nay while Obama punts.

Ruffini is one of the smartest young GOP operatives. There is good reason to believe Republicans will vote against any bailout package. It's easier to watch Rome burn and blame the Democrats for not putting out the fire.