McClatchy's Latest: Economists say House GOP plan would be ineffective, costly

[babylonsister]

Economists say House GOP plan would be ineffective, costly

By Kevin G. Hall | McClatchy Newspapers



WASHINGTON — House Republicans are rallying behind an alternative to the Bush administration's taxpayer rescue of Wall Street. That plan that may be good politics, but experts say it is bad economics.

The lawmakers, led by Rep. Paul Ryan, R-Wis., and Rep. Joe Barton, R-Texas, are calling for a temporary elimination of the capital gains tax, a two-year tax holiday that allows U.S. companies to repatriate earnings from abroad, and an insurance program that would be a private-sector alternative to the $700 billion taxpayer rescue proposed by Treasury Secretary Henry Paulson.

The problem with the House GOP plan — which as of late Friday boiled down to a page or two of talking points — is that it doesn't get at what is ailing the U.S. economy right now. That's a lack of confidence that's causing credit markets to seize up and raising the cost of doing business for corporate America, thus threatening jobs.

Paulson has proposed having the government buy bad assets on pennies on the dollar, getting them off balance sheets and restoring health to banks and other financial companies sitting on mortgage bonds that no one wants to buy.

At a Friday afternoon news conference, Barton said he and fellow Republicans want a market-based solution and proposed an insurance-like program instead of the government buying the bad assets.

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http://www.mcclatchydc.com/251/story/53158.html

[MichiganVote]

1. Oh well...that's shocking isn't it.......the dead fish solution.

[GodlessBiker]

2. Fuck the first two points of the proposal, but insuring the bad debt rather than buying it seems ok.

[gravity]

3. Their plan is a joke

It makes no sense once you start implementing the details. Anyone who understands the markets and the crisis says it won't work.

The Republicans are either idiots or just using this as a way to say that they want to protect tax payers.

[wishlist]

4. Barney Frank pointed out today that Repubs want tax cuts as part of deal

The House Repubs agenda of further tax breaks for the wealthy has not been mentioned often enough tonight by mainstream media. I think most Americans would fail to see how removing capital gains tax will help the situation when supposedly there are capital losses, not gains going on lately in the markets and only those profiting from the current situation would be rewarded by the tax cut.

[babylonsister]

5. "only those profiting from the current situation would be rewarded by the tax cut."

THAT grabbed my attention, and I'm a doofus with this stuff. Thanks for the insight.

[stillcool]

6. didn't they also include..

less regulation?

[OhioChick]

7. K&R

:kick:

[riverdeep]

8. But, you know, that's part of the process.

Different factions propose different ideas, out in the open, and we get to see which one is the best. I have no problem with that. Let each one stand or fall on the merits. What I have a problem with is this one solution shoved into immediate legislation without fair reading, much less open debate.

"We have to do this now, right now, don't think, just sign away on the dotted line! The wolves are at the door, hurry!" No thanks.

[babylonsister]

10. I agree with you. So they have to go back to the drawing board. They

need to go and get it right, all of them.

[Mojambo]

9. Picture Richard Shelby angrily tearing up that list of economists he was waving around yesterday. nt

[babylonsister]

11. I think there are a lot of economists out there with differing opinions.

I wonder what Shelby thinks about this current plan. He didn't like the initial bailout and the way it was presented, but I wonder if he agrees with this?