Thank-You Tea Party for our Damaged Retirement Accounts

August 10, 2011 by  
Filed under Fools of Finance

Mr. ToughMoneyLove is as fiscally conservative as most but I am also pragmatic. The same can’t be said for our tea party members of Congress who robotically activated their “no new revenues” autopilot.  Then they didn’t know enough to deactivate it. They refused to see what was apparent to everyone else – that compromise was the only way to reach an agreement that consumers and the investing community would accept as a positive outcome.

As a result, we experienced the S&P credit downgrade and continued general fear about the future of our economy. These have combined to sink the markets again.  People still won’t spend and businesses still won’t hire because they know nothing has been fixed.

That’s our new Republican party, now infected with tea party disease.  The dominant symptom seems to be lost ability to think independently.

No I don’t want more taxes. However, the damage done to our personal balance sheets by tea party intransigence far exceeds what would be caused by higher marginal tax rates.

Don’t people realize this?  Is the tea party view of the wealth forest that obscured by a fixation on tax trees.  Is it so important that you bring Obama to his knees that you destroy billions in personal wealth in the process?

Why didn’t the Republicans dig in their heels when Bush was President and spending like crazy?

The Democrats deserve some blame for building a wall around entitlement programs. But I believe that wall would have been breached if the Republicans had put new revenues on the table in return.

We need economic leadership and statesmanship. I don’t see any.


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21 Responses to “Thank-You Tea Party for our Damaged Retirement Accounts”
  1. And then Bachman has the audacity to claim that it’s Obama’s fault that the US’s credit was downgraded.

    “Essentially,” she says, “what the president said is this: The markets reacted because we had a debate in Congress over whether we should raise the debt ceiling. So apparently the markets and the rating agencies decided to punish Congress and all of you because you didn’t want the debt ceiling raised. Are you kidding me?”

    http://www.slate.com/id/2301160/pagenum/2

  2. Peder Rice says:

    Taxes are way too high. End of story. If the Federal Govt wants a balanced budget, they have a lot of places to look: Social Security, Medicare, Defense (<- this 10,000 times).

    Also, this is NOT the Tea Party's fault. Did you miss the manufacturing data #s? The weakness in Italy? BAC and their idea of letting Countrywide go bankrupt as a separate entity? The comments by the Fed that we will see weakness through 2013?

    What about the other structural issues, which you've written about? Is consumer credit card debt fixed? Is the mortgage crisis over? No, and no. This economy is still awful, and it will be prone to swings.

  3. Dangerman says:

    “However, the damage done to our personal balance sheets by tea party intransigence far exceeds what would be caused by higher marginal tax rates”

    Can you give us any clue how you calculated this? Or, did you not do any actual calculations and just felt upset at those evil Republicans?

    A decrease in stock market prices is an asset transfer from the old to the young (see Scott Burns on this theme). And since the people who would be paying those higher marginal tax rates, for the most part over the long haul, are also the young (since the old are, of course, going to retire sooner)… lower stock prices and lower taxes sounds like a double-whammy good thing to me.

    • So the tea party objective is to transfer wealth from the old to the young? Stated another way, the tea party wants to transfer wealth from those who have more of it to those who have less of it. Isn’t that precisely what liberals are accused of wanting? As I said in the post, if there is one characteristic of the tea party that keeps surfacing, it’s the absence of deep thinking on any issue.

      • Dangerman says:

        No, of course that’s not their “objective” – I’m judging consequences, not intentions. Intentions are irrelevant.

        And yes, the “tea party” (in so much as it might be considered to have any single policy platform) does want to transfer wealth: from those who don’t work to those who do.

        • Dangerman – I’ve worked hard for 40 years and I’m still working. Why should I want to transfer my wealth to you as an “unintended” consequence of tea party intransigence? (It’s only “unintended” because some tea party members are incapable of thinking beyond slogans.) Take control of the Senate and White House in 2012 then take a stand.

          • Dangerman says:

            Of course you don’t want government to have policies that transfer your wealth… just like everyone else.

    • kitty says:

      You are forgetting the impact on the economy. A stock market crash and credit downgrade has a potential to have problems in the economy and result in 1. higher rates on mortgages in some point in future 2. higher unemployment.

      It’s basically hurts everyone and no, it doesn’t do much good to republican party either given as it’s now associated with the extremist tea party movement.

      The independents like me are sure blaming tea party for this — I’ve lost more money in the last couple of weeks than whatever extra taxes I may pay in a year. A lot more. If in the past I was leaning to voting republican in the next election (I voted against Obama before), I’ve almost changed my mind now. Basically if it’s between Obama and the likes of Bachman, I will definitely vote for Obama. At least he is open to compromise. Tea party is the minority that wants to impose their views on everyone.

  4. Brian says:

    The Tea Party and the rest of the republicans in the house proposed a budget and the senate ignored it and is now closing in on 900 days with no budget. Obama’s budget died in the senate 0-97, so bad it was unable to even muster any votes from his own party. There comes a time when people have to either in their own sitution or for a city, state or country say “STOP there is no more money to be spent”.

    Isn’t that the reason you blogged

    Wisconsin is Definitely Off My Retirement List

    • I agree with you but you are missing the big picture. There are others who think just the opposite and they control the Senate and White House. I’m not interested in having our economy and my personal balance sheet go down in flames while the Republicans take a stand on a position in 2011 that they ignored 2000-2008. Compromise now and if we gain control of the Senate and White House in 2012, undo it and make it right.

      • Jack Clark says:

        “if we gain control of the Senate and White House in 2012, undo it and make it right.”

        Well at least you can sleep well knowing that won’t be happening.

        With the GOP’s cast of nincompoops and idiots that are currently running for the WH Obama will waltz and strut to victory next year.

        The GOP is now what the Democrats were when The Shrub was in office:

        Disorganized with no good policy ideas and too busy fighting among themselves instead of being united.

    • kitty says:

      Their proposal was doomed from the start and they knew it; we’d be in the same situation in a few months. They basically said it’s their way or no way.

      Sure there are times when people should say they don’t want to spend more money, but the time to do it is when you decide whether you want to buy something and not at the time when you have to pay for the bill. You need to decide if you can afford a TV before you buy it, but not at the time your credit card bill is due. When your bills are due you pay for the bills, then think about the savings.

      Debt ceiling debate was about paying for expenses that HAVE ALREADY BEEN APPROVED by the congress. Debt ceiling had to be raised in order to PAY THE BILLS. After the bills are paid is the time to discuss future expenses.

      This is why the US lost the credit rating the impact of which for the future is unknown and has potential to hurt everyone for many years to come.

      • Brian says:

        In your earlier post you talked about compromise and now it’s “Their proposal was doomed from the start and they knew it” so only the TEA Party had to compromise and Democrats didn’t have to propose anything till the last minute and point fingers taht they weren’t getting their way.

        The debate wasn’t about paying the bills, we have the money to pay the bills. It was a question of going deeper into the red so as to continue free spending of all things. The only way to get out of debt is to quit spending money you don’t have.

        • kitty says:

          What are you talking about? The tea party wasn’t open to any compromise at all, and they got most of what they wanted. The proposal as it was would’ve resulted in new negotiations in just a few months. They had known that senate wouldn’t have signed in that form yet they went ahead with the proposal.

          “The debate wasn’t about paying the bills, we have the money to pay the bills”

          So much for rewriting history. The treasury clearly said that past Aug 2 they couldn’t guarantee to have money to pay the obligations – for expenses that were ALREADY APPROVED by congress. Maybe you should check your facts. But I forgot that lying is the tea party IMO.

  5. Grace says:

    As you already know, I am fiscally more liberal than you are. But I didn’t start out hating the Tea Party. Truth to tell, I admire grass-roots movements, from whatever political spectrum they spring. But you are so right when you talk about the Tea Party’s intransigence and refusal to compromise in any way. Compromise is NOT a dirty word. Careful thought would tell them that they absolutely should have compromised (at the best level they could) and pressed their agenda during the 2012 elections. Personally, I think the democrats and Obama have no better ‘friends’ than the Tea Party and Bachman, whose collective failure to think through what they want and develop smart strategies for getting there will not only doom them but the entire Republican party.

  6. Rob Bennett says:

    My view is that what you’re missing is the long-term effect, Tough Money. If the Tea Party gets people talking about the realities, in the end we are all better off and our retirement accounts do just fine. If we go along with too many more tax increases without getting any real (not pretend) spending cuts in return, things just keep going a little bit more downhill year after year after year.

    Do you hear anybody talking about real spending cuts today? Why not? There are lots of people talking about real tax increases, no?

    The Tea Party people are not just looking at what the politicians write on pieces of paper. They are looking at the realities too (or at least I think that is what they are trying to do).

    My take.

    Rob

  7. MasterPo says:

    I dunno TML. You seem to be sniffing the Kool Aid fumes lately.

    The S&P downgrade was coming one way or another. It’s been openly telegraphed for months. Frankly surprised it took this long.

    So it’s the Tea party’s fault, a hand full of Congress people who’ve only been in office a few months. Not the fault of the President for the last 2.5 years or prior Presidents or prior Congress people. Just the Tea party.

    Yea, Kool Aid.

  8. Spring says:

    TML “Compromise now and if we gain control of the Senate and White House in 2012, undo it and make it right.”

    You are no dumbbell. So, be honest. What is the rap against Repubs? That they talk conservatism and don’t follow through. They compromise and act like big spending Dems. In the last election, what did the Repubs promise? We WILL be true to our cause. We won’t rubber-stamp spending. That was THE theme for their huge election victory. Now, because they are following through with their explicit promises, you want them to “compromise” again? Guess you are a Democrat.

    If not a Democrat, then review for us…and for your own conscience…a few facts.
    How much has Fed gov spending/month increased under Obama?
    How much has it increased per month compared to Bush?
    How much does the budget deficit increased each month under Obama compared to Bush?

    Answer those questions and you might begin to understand the gravity of the situation.

    Second…..you consistently mention Repub unwillingness to compromise. Well, is if fair to say the Dem Senate would not compromise? All bills on taxation begin in the House..per the Constitution. House passed budgets. Why couldn’t the Senate? Why no budget when the Democrats controlled both houses?
    Where is/was Obama’s budget revision to the one that was defeated 97-0?

    Can you really handle clear, critical thinking as you blog implies?
    Or do you compromise outcomes by looking through the prism of your balance sheet? So, did you favor bailouts to AIG, GM, etc.? Do you favor more public waste like Solyndra?

    Finally, everyone on WStreet knew SP had telegraphed the down-grade. What caused the market plunge was two other points: 1. release of a poor GDP number of 1.x % which was a complete surprise when most assumed it would be 2.x or 3.x — and, 2. the realization that fiscal stimulus would NOT happen before the next election. Blame for the Tea Party may be comforting, but it is mis-placed.
    PS…the Feds are running out of money AGAIN from excess spending. New debt ceiling of 15.1 TRILLION won’t even last until the end of the year!

    http://www.zerohedge.com/news/us-starts-news-fiscal-year-14837-trillion-debt-142-billion-increase-two
    -days

  9. Buck says:

    In the ’80’s, the republicans and Reagan agreed to tax increases for budget cuts but got screwed, Bush I agreed to taxes for budget cuts and got screwed. The republican congess agreed to tax increases under Clinton for budget cuts and got screwed. The American voters elected in 2010 a tea party Congress who said enough is enough. Budget cuts and NO TAX INCREASES. How can the US govt. have AUTOMATIC 7% budget increases every year mandated by law when inflation rate is less?

  10. missinformation says:

    What a bad case of ‘blame the messenger.’ Do you get angry at the fire alarm when it goes off?

    You do realize the dems entire re-election strategy for 2012 is to be intransigent and blame the ‘tea party,’ don’t you? The House passes bills, the Senate sits on them and never takes them up to negotiate. Then they lie about it.

    Or are you falling for it?

    I was always a democrat, but really – I mean they (the current dems) lie and double spending, flinging it away on their cronies, demanding more taxes from us all, and blame everyone else in order to win elections, and it works for them. It works for them! But it is KILLING our economy. Wake the heck up. God, I hate being tied to the mast on the ship of fools.

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