As always, plenty of bluster, threats and lies from the financial industry. The problem is that too many politicians fall for this rubbish time after time. Do they really believe the banks or are they lining up a more profitable position for themselves or their team down the road? Whatever the reason, it's not helping anyone other than the banks. Besides the small excerpt below, you want to click through and read everything. The final paragraph below needs to be raised a lot more with the Republicans to counter their "cut everything and we will be fine" lies. NY Times:
No one forced the banks to take on so much risk. Top bankers lobbied long and hard for the rules that allowed them to behave recklessly. And these same people effectively captured the hearts, minds and, some would say, pocketbooks of the regulators – in the sense that a well-regarded regulator can and often does go work for a bank afterward.
The mega-recession, which is starting to look more like a mini-depression in terms of employment terms for the United States (which lost 6 percent of employment and is still down 5 percent from the pre-crisis peak), caused a big decline in tax revenues. Falling taxes under such circumstances are part of what is known technically as the “automatic stabilizers” of the economy, meaning they help offset the contractionary effect of the financial shock without the government having to take any discretionary action.
Whatever you think about the effectiveness of the additional fiscal stimulus packages provided to the economy in early 2008 (under President Bush) or starting in early 2009 (under President Obama), remember that the impact of these on the deficit was small relative to the decline in tax revenue.
