Bailouts and Slippery Slopes:

An interesting post by Mario Rizzo (Think Markets).

David Welker (www):
Here is the real slippery slope.

First Republicans lost their congressional majority in 2006.

This started a drift in policy in another direction.

Then in 2008 they lost more Congressional seats and the Presidency. Policy has since been "sliding" in a direction that those who are relatively economic conservative disagree with. This particular "slippery slope" is also known as democracy.

It is not as if, even among the Republicans who voted for the bank bailouts, that they are necessarily voting for bailouts in the automotive industry. The problem they have is that there are now less of them and they will soon no longer have a President with a veto to back them up.

Elections have consequences.
11.18.2008 12:57pm
Opher Banarie (mail) (www):
"Elections have consequences." Indeed...

However, in this last one we were voting about whether we should rob Peter to pay Paul, and we allowed Paul to vote.

A democracy will collapse once the majority decide that they can vote for the minority (any minority) to suffer the consequences of their decisions. So "the rich" have to pay for healthcare. And "the rich" have to pay for welfare. And "the rich" have to pay for public schools. Pretty soon "the rich" move to Costa Rica or Fiji or Australia. Then who will pay?

In California the top income tax bracket (that is the highest of eight graduated rates) begins around $44,500. That's where "the rich" are now. And the state is about to raise taxes and cut services to the tune of $10 BILLION per year. Maybe "the rich" should include incomes above $30,000...or $25,000?

How long till the Feds reach the same conclusion? Probably one four-year Obama term would be enough. How long will it take the country to recover? We're still recovering from 40 years of LBJ's Great Society...
11.18.2008 6:43pm
David Welker (www):

A democracy will collapse once the majority decide that they can vote for the minority (any minority) to suffer the consequences of their decisions.

This is just a tad bit too dramatic.

Of course the minority that votes for the other guy nonetheless either "suffers the consequences" or "enjoys the benefits" of decisions made by the majority. That is just basic democracy. It has been that way for a long time, and I have yet to see a precipitous collapse.

Democrats who did not vote for Republicans nonetheless had to "suffer the consequences" or "enjoy the benefits" (depending on your perspective) of laws and policies passed by Republicans. Now, a majority of the country has voted for Democrats and the show is on the other foot.

In neither case, did or will "democracy collapse."

What exactly is the appeal of such dramatic statements?
11.18.2008 7:33pm
David Welker (www):
show = shoe

So much for not using the preview feature.
11.18.2008 7:34pm
Opher Banarie (mail) (www):
David - You are correct, it has been this way for a long time, about 220 years in the US. The difference is that begining with the New Deal, and expanding under the Great Society, and hastened with the recent talk of national healthcare and "mandatory" volunteer service, the scope of services being paid for by the other guys has grown dramatically.

I'm not referring to laws, but to programs. Laws have consequences equally to the society overall. But programs, such as Food Stamps, Public Education, Welfare, etc. not only have consequences but also have constituencies. It's the expansion of the constituencies (the recipients as well as the employees of each program) that your post misses. (For example, there is a NASA sub-contractor in almost every Congressional district. No matter what part of the NASA budget someone wants to cut, there will be a chorus of complaints from people voters who will be hurt.)

Reagan was unable to end a single program in eight years of trying. The peanut farming program that made Jimmy Carter a multi-millionaire was begun as a WWI supply incentive by the "Department of War". Each constituency becomes entrenched and layers on top of all the others. They form coalitions to protect each others' turf. Over time a tipping point will be reached.

Where is the tipping point and when will we reach it? I don't know. I also don't know what the public will do at that point - do they vote to begin cutting programs to back away from the edge, or do they continue to vote for more taxes on the other guy and more programs for themselves? We'll just have to wait and see.
11.19.2008 5:48pm