Some Republican friends sent me a chain letter from a business owner going off about how Barack represents the end of his wellbeing. It goes into various topics: welfare, the mortgage crisis, liberal failure, etc.
I just sent this reply to about 40 of them. I doubt I'll change any minds, but maybe I can at least blow up their pristine mental state:
Here goes:
Lots to respond to here. Sorry for the length, but I’m wired on a combination of energy drinks and coffee:
On Taxes and Small businesses:
1.Obama’s plan calls for re-applying the tax rates we had in the 90’s for the top 2 percent of income earners. This would potentially include some small business owners who file via Schedule C – but it would only affect the top 2 percent, because it’s a tax on net profit, not gross revenue. The claims that Obama will raise taxes on all small businesses have been debunked dating all the way back to 2004, when Kerry was attacked in the same way.
2.For small businesses generally, Barack is proposing significant infusions: tax-free capital gains, breaks for offering healthcare to employees, etc. And if we’re able to close the gaps on healthcare via a public option (contrary to the falsehoods out there, Barack is NOT proposing a national system), that will benefit everybody, including small businesses.
3.The point of the changes is to restore the fiscal responsibility of the 90’s. During that span, the deficit was eliminated in favor of a surplus (compared to the massive addition of $4 trillion in new debt since 2000); 22 million jobs were created (compared to a mere 5 million under W); and small business growth took off. Bottom line: Republicans have absolutely ZERO credibility on fiscal responsibility – they’ve spent through the roof, hammering our kids with the bill in the form of record debt.
4.John McCain himself agrees with the thrust of Obama’s thinking, since he voted twice against lowering the rates in the first place. At the time, he talked about it in the context of class, saying that he couldn’t vote to help the wealthy at the expense of the middle class.
5.Even Ronald Reagan raised taxes when fiscal needs demanded it. He was the first to tax social security benefits, and when he did, he only taxed those at the top (damn him for being progressive).
6.For people in the early stages of business creation, like the beginning for the guy who wrote the letter, Obama will CUT their taxes to spur growth, not raise them.
On the Mortgage mess:
7.The financial implosion was not caused by poor people obtaining loans; it came largely because there has been no regulatory framework for a lot of these securities – particularly nasty derivatives like credit default swaps (a $60 trillion market in itself). Perhaps more fundamentally, we saw the "agency problem" on a massive scale. Risk was spread out so much that nobody really owned any of it. Front line lenders (even builders got involved) would churn out crappy loans they immediately could resell; hedge funds and investment banks bought up toxic mortgage securities; those same investors thought they were covered through bond insurance, which ballooned the credit default swap market... on and on...So there were time bombs everywhere.
There was a time when a single lender (or close to it) would directly own the risk and relationship with the borrower, or if a bank resold the loans, it would have to uphold high standards under Fannie / Freddie. Now, no single entity has enough skin in the game to see trouble when it's boiling. And what's worse, the incentives are perverse -- I recently saw that half of the borrowers who were stuck with subprime loans could have qualified for better terms, but since agents won higher fees for the crap, that's what borrowers were left holding. Low-income folks weren’t the cause; in a lot of cases they were the victims – predatory lenders would go into poor neighborhoods to talk folks into taking out new loans on homes they already owned. The "liar loans" mentioned in the attached letter were the result of lax standards from Wall Street, which got greedy and lost sight of the fundamentals. It’s simply silly to pin that on Barack.
In the end, I think investors put way too much faith in the magic of complex derivatives. Because they're designed on paper to hedge risk, people just assumed they were foolproof, in sort of the same way folks loved program trading in the 80's, right before that very mechanism led to the crash of '87. Markets are way too complex – and often irrational on top of it -- for that kind of blind faith, imo.
On hard work:
8.It’s a longstanding and cynical myth that liberals don’t value hard work. We most certainly do. Of course, we also think there are important public sector investments that promote stability within the larger system. Or put another way, we think there’s a certain dignity that comes with hard work – and if you put in the effort, you should be entitled to a certain level of minimum economy security. That means making healthcare and education accessible among other things, along with making sure a safety net exists for tough times. It’s a total mischaracterization to say we value entitlements over work; however, we do think the public sector should do certain things to acknowledge the dignity of work. It’s not about handouts, and it never was.
As far as labeling folks as lazy, etc., I can guarantee that if you talk to a factory worker in Ohio who lost his job because it was shipped overseas, he’ll tell you he’s not looking for a handout. He wants a job more than anything else, because he wants to be self sufficient. There’s simply nothing inconsistent between that mindset and the idea that the government has some role to play in promoting security and stability.
Lastly, I think it’s fantasy for people to think that they are responsible for 100 percent of their success (and failure, for that matter). Sure, most of it is us, but we all benefit from the basic stability that’s out there – via investments in public education, a basic safety net, public R&D (sorry folks, there’s no internet without public sector research), etc.
So in the end, Barack simply wants to 1) restore a sense of fiscal responsibility in the nation’s finances, 2) make core investments that will benefit us all, and 3) update our regulatory framework so we get the nastiest of the financial instruments out from the shadows. Folks are going out of their way to make him sound like some sort of radical, but in truth, he’s gonna govern in most ways like Bill Clinton did – and there are a bunch of small business owners who will welcome that.