Let’s start with the tax cuts. This is like tribal cultures who sacrifice some members based on superstition. Some Americans must be sacrificed to the collective world. How callous can this adminstration be? We have to give up our income so politicians can look good to foreign leaders. Talk about stepping on the little people. We’ve seen this game before. Don’t be fooled by the $250,000 income number. It’s a two-step process, and a bait-and-switch. The first step is to sell the public on a tax increase. That number was politically chosen, not economically, to make it easier to sell a tax increase to the public. Their thinking is most people won’t mind a tax increase on those rich people as long as they don’t come after me. Hence the $250,000. If the debate over whether taxes should be increased is won, a new debate will emerge that will focus on how much to raise taxes. Then they’ll say the $250,000 threshold does not bring in enough revenue, which means it goes lower. If you agreed to the tax increase in general in the first step, you have been fooled and face a tax increase now.
On housing and Fannie and Freddie, Geithner still have not learned anything. He says the government must continue to “deliver affordable financing”. In other words, continue the subsidies that look like they help individual families but in fact increase the systemic risk for another problem down the road.