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Dean Baker, Debunker


During last night's debate, Senator McCain blamed the housing market meltdown on Fannie Mae and Freddie Mac's lending practices. While Fannie and Freddie, as huge actors in the mortgage market, certainly contributed to the bubble, it is absurd to point to them as principle culprits. Their market share actually fell as the bubble grew to ever more dangerous levels, dropping from 50.1 percent in 2002 to just 34.8 percent at the peak of the bubble in 2006.

Fannie and Freddie deserve blame for failing to recognize the bubble (this is their job), but clearly they were not the primary cause.

The media should have highlighted this major gaffe by Senator McCain. This would be like Obama talking about a border between Iraq and Afghanistan or some other major error on a foreign policy issue.

and here:

Much of last night's presidential debate centered on "Joe the Plumber," Joe Wurzelbacher, a plumber who Barack Obama met while campaigning in Ohio. According to the New York Times, Mr. Wurzelbacher says that he is planning to buy a plumbing business that has profits of between $250,000 and $280,000 a year.

While this income would put Mr. Wurzelbacher above the threshold where he could expect to pay higher taxes under Senator Obama's tax plan, the increase in his tax bill would be relatively modest. Under Senator Obama's plan, the tax on income above $250,000 would increase by 3 percentage points from 33 percent to 36 percent. This means that Mr. Wurzelbacher could expect to see his tax bill rise by between $0-$900, assuming that this plumbing business would be his entire taxable income. If he has additional taxable income, then he would see a larger increase in his taxes.

It would have been useful for reporters to explain the extent to which Joe the Plumber would see his taxes increase under Senator Obama's tax proposal. It is unlikely that this tax increase will seriously impair his plans for his business as Senator McCain implied.

I always think it's cute when Dean Baker says that he thinks the press should do its job. By cute, i might mean 'depressing'. And i love the snark about the hypothetical border gaffe; we all know who really made that gaffe and who got away with it.

Also note the part that i italicized. People often don't realize that with our graduated tax scales, it's only the part of your income over the threshold that is taxed at the new level.

By fnord12 | October 16, 2008, 11:47 AM | Liberal Outrage