Later On

A blog written for those whose interests more or less match mine.

Where fiscal conservatives have taken us

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From the Center for American Progress via email. Conservatives do not like regulation—they believe that businesses should be trusted to do the right thing and the market will take care of everything. So oversight and regulation of the financial sector was abandoned, and now we’re paying the price.

On Tuesday evening, the Federal Reserve announced that it would lend troubled insurer AIG $85 billion in return for a 79.9 percent stake in the company. This move comes on the heels of the bailouts of Freddie Mac and Fannie Mae and just months after the bailout of Bear Stearns. CNBC has put the total tab for the recent government rescues by the Fed and the Treasury Department at $900 billion. The rescues, while necessary to prevent a wider financial meltdown, will cause the already near-record federal deficit of $407 billion to explode. Before the bailouts, the projected federal deficit for 2009 was $546 billion. When President George Bush came to office eight years ago, it was projected that America would have a budget surplus next year of $710 billion. So what happened? As an analysis by the Center on Budget and Policy Priorities shows, 42 percent of the “fiscal deterioration” was due to the Bush tax cuts enacted in 2001 and 2003. For FY2009, roughly $1 trillion of the $1.3 trillion deterioration in the nation’s fiscal finances stems from policy actions. Tax cuts account for 42 percent of this $1 trillion deterioration.

Written by Leisureguy

19 September 2008 at 9:16 am

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