The US Meltdown Lowdown (No. 1) - by Dean Baker
During its spring recess, Congress heard from constituents who were concerned about losing their homes and about plunging home equity. Spurred into action, the Senate quickly approved a bill whose main provisions would give tax breaks to banks and homebuilders and provide an incentive to carry through foreclosures. The tax break allows firms to write off losses this year and next against the prior four years' profits. Under current law, they can only seek to reclaim taxes paid in the last two years. Who has big losses now but large profits three and four years ago? That's right, homebuilders who got caught up in the irrational exuberance of the housing bubble and mortgage bankers who pushed predatory loans. I'm sure that we're all sympathetic to the plight of homebuilders and bankers who have fallen on hard times, but whatever happened to personal responsibility?
We have had four consecutive months of job loss in the private sector. This has never happened except in periods associated with a recession. There are enough other pieces of economic data that scream "recession" -- declining retail sales, rising unemployment rates, plunging tax collections -- that we really should no longer be debating whether the economy is in a recession; the question now is how long will it last and how bad will it get.
No comments:
Post a Comment