A Response to @GrassrootTroopr - Part II

Part I details the Twitter dialogue. Part II, the rebuttal.


The rules of the Senate allow for unlimited debate unless cloture is invoked. It takes 60 votes to pass a cloture motion, which means that the 59 Senate Democrats can't do it by themselves: they need at least one Republican. The problem is that Republicans have been threatening to filibuster bills at an unprecedented rate: 131 cloture motions have been filed since the start of the 111th Congress. In the words of Norm Ornstein of the American Enterprise Institute, Republican filibuster threats are "like throwing molasses in the road." Even worse: When bills do come up for a vote, they often pass with significant Republican support: recent votes were decided by 69-26, 74-25 and 84-14 margins. Republicans aren't only using filibuster threats as a way to extract concessions: they're also using filibuster threats as a way to run out as much of the clock as they can. The more time it takes one bill to pass, the less time there is on the Senate's calendar for the rest.

GT's suggestion above to "make necessary changes" is an empty recommendation. The evidence is clear that Senate Republicans are actively working to deny the Obama Administration any political victory they can by passing the least number of bills possible, even when they themselves support the legislation.

Taking Over Car Companies

The subhead of The Economist's August article says it succinctly: "An apology is due to Barack Obama: his takeover of GM could have gone horribly wrong, but it has not." Their conclusion:

Straightforward bankruptcy is usually the most efficient way to allow floundering firms to restructure or fail. The state should step in only when a firm's collapse poses a systemic risk. Propping up the financial system in 2008 clearly qualified. Saving GM was a harder call, but, with the benefit of hindsight, the right one. The lesson for governments is that for a bail-out to work, it must be brutal and temporary. The lesson for American voters is that their president, for all his flaws, has no desire to own the commanding heights of industry. A gambler, yes. An interventionist, yes. A socialist, no.

What happened after that? The GM initial public offering:

(Reuters) - General Motors Co's (GM.N) initial public offering became the world's biggest at $23.1 billion after underwriters swiftly took up additional shares following last week's IPO.

The added shares vaulted GM past Agricultural Bank of China's (601288.SS) $22.1 billion IPO in July and underscored the strong demand for the taxpayer-rescued automaker's stock.

The White House has said U.S. taxpayers are on track to recoup the full investment made by the administration and that it hopes to make substantial progress toward shedding the government's stake entirely by mid-to-late 2012.

So, in response to GT's "The IPO is a joke" tweet - Some joke. The purpose of the auto industry bailouts wasn't to make a profit - it was to bail the companies out and prevent an industry collapse. US automakers are healthier than they've been in years. Costs are down, profits are up, and GT either doesn't know his facts, doesn't care about them, or believes that a successful intervention amounts to nothing more than "a joke."

To answer some of GT's unanswered questions: what percentage of GM do taxpayers own? As a result of the IPO, 43%. Who fired Rick Wagoner? The Obama administration. What would you do with a CEO whose company lost more than 90% of their market valuation on his watch? The UAW has an equity stake in GM? Don't forget that they offered up about $1.2 billion in cost savings per year as part of the deal. Besides, what better way to align everyone's interests than by giving everyone a stake in the company doing well? The bailouts were the right move to make, not just for the auto industry, but for the economy as a whole.

Nationalizing Student Loans

One of the more infamous quotes to come out of the rallies protesting heath care reform was "keep your government hands off my Medicare." A very close second in the irony department would be former Education Secretary and current Senator Lamar Alexander's quote about student loan reform:

"The Democratic majority decided, well look, while we're at it, let's have another Washington takeover. Let's take over the federal student loan program."

Think about that for a moment. Continuing from the NY Times article:

Since the bank-based loan program began in 1965, commercial banks like Sallie Mae and Nelnet have received guaranteed federal subsidies to lend money to students, with the government assuming nearly all the risk. Democrats have long denounced the program, saying it fattened the bottom line for banks at the expense of students and taxpayers.

From an AOL News report:

Under the bloated and inefficient current system, the government provides billions of dollars in subsidies to private lenders every year to originate student loans, while guaranteeing loan repayment of up to 97 percent - a textbook example of socializing the risk while privatizing the profits. According to the latest data, for every $100 lent by the banks, the cost to the government is about $13.81 in subsidies and defaults; the same amount lent directly by the government costs $3.85.

From his tweets, it looks like GT believes that it doesn't matter if the government assumes the risk for student loans, because the government "backs all loans" in a central bank system. That's not true at all:

Its duties today, according to official Federal Reserve documentation, are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions. (source)

GT may be confusing backing loans with backing deposits, which is what the FDIC does. The FDIC is a separate entity and not part of the central bank, however.

"Nationalizing student loans" is a nonsensical talking point: the loans are already serviced through a Federal program. The student loan reform bill saves the taxpayer about $40 billion over eleven years, which is something any deficit hawk should love.

Nationalizing Banks

The only program that came close to "nationalizing" banks was TARP, a Bush Administration program. From its initial authorization of up to $700 billion in troubled asset purchases, recent estimates put TARP's cost to the taxpayers at about $30 billion. On a percentage-GDP basis, fixing the subprime crisis through TARP has been much less costly than fixing the savings and loan crisis of the 1980s.

So, if GT is using TARP as an example of the Administration "nationalizing banks," he's wrong on his Presidents, and he's also wrong on what TARP has done.

Nationalizing Healthcare

GT brings up two points: first, that the health care reform bill is nationalizing health care; second, that the reform bill puts the nation on a path to a single-payer program. Both are wrong.

First, nationalized health care: nothing in the health care reform bill eliminated private insurance companies. In fact, one of the key accomplishments of the bill was to guarantee that more people would be covered under the private insurance system via the individual mandate. Nothing in the bill eliminated private hospitals or private doctor practices, like Britain's National Health System. Private insurance carriers, private healthcare workers, no nationalized healthcare.

GT's second point is a bit more subtle: that progressives are using health care reform as a preface to a single-payer system. The problem with his argument is that there are no single-payer bills in Congress. People on the left may (and do) advocate for single-payer, but unless a bill is written, debated, amended, CBO scored, voted on and signed, all the wishful thinking in the world means nothing. No bill, no single-payer. The law doesn't run on wishes.

A larger point: Democrats have policy goals. So do Republicans. They're often not the same. Is there something wrong or dangerous about two political groups having different political agendas? Each side has objectives they're trying to achieve. Unless they can convince a large enough majority of the public and representatives to agree, the law doesn't change. That's the way the Republic works.

Obama Rammed It Through

Putting aside the linguistic overtones, let's look at the bills and how Congress voted on them:

Student loan reform: The student lending bill passed the House by a vote of 253 to 171. The Senate voted on student loan reform as part of the health care reform bill.

Speaking of health care reform: the House passed the bill by a vote of 219-212. The Senate passed the bill by a vote of 60-39

By comparison, let's look at one more bill: to pass, its supporters used the reconciliation process, but that wasn't enough. The Senate voted 50-50 on the bill, and in the end, the Vice President had to cast the tie-breaking vote in order for the bill to pass. That bill? The 2003 Bush tax cut bill.

One last tweet: "There is no solution to our country's problems short of an informed electorate. Nothing else will work." - Arthur Thompson. Whose tweet? GT's. This post is drafted in that same belief: that a well-informed electorate can solve whatever problems face our country.


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