Tim Fernholz

Tim Fernholz is a former staff writer for the Prospect. His work has been published by Newsweek, The New Republic, The Nation, The Guardian, and The Daily Beast. He is also a Research Fellow at the New America Foundation.

Recent Articles

Why There Was No Irish Bail-In.

I wasn't impressed with the EU's rescue of Ireland -- it simply doesn't share enough of the costs with the private-sector lenders, putting all the (unsustainable) financial pressure on Irish taxpayers. Matt Yglesias has a good post on the politics behind this. Basically, Germany and France set the tone for the EU's monetary policy and are very happy to blame Ireland first -- even though their bankers made many of the bad loans now dragging down the Celts' financial system (German banks are owed $139 billion by Ireland, for instance). When the EU bails out Ireland -- and Irish citizens will pay them back for their loans -- they're bailing out their own banks, who will take little to no responsibility for the failure of their underwriting. One simple lesson of the financial crisis still hasn't been fully appreciated: Creditors need to take some share of responsibility when a loan fails. Understanding this could make our problems in the housing markets, the challenges of "too big to fail...

But Why, Barack?

Ezra Klein usefully distills a long-observed Obama phenomenon: "concessions the White House has unilaterally made to Republicans" and what little has come from them. What's always boggled me is that no one in the White House has an even vaguely compelling explanation for this decision-making process -- it's obviously not what partisanship looks like, and it's not how a bipartisan deal has ever been crafted before, either. Ta-Nehisi Coates catches Robert Gibbs claiming the most recent example of this dynamic, the newly announced pay freeze for federal workers, is simply "the right thing to do." But the president's budget for next year has always contained a pay increase for federal employees, so I'd be curious to know when exactly the administration changed its policy and why. Yet I suspect even that wouldn't tell us the method to this madness. I find it hard to believe there even is one -- this practice seems to be a sign of a dysfunctional administration, not one executing a dumb...

What's Changed in the Fiscal Commission's Final Draft?

I'm still digesting the fiscal commission's final draft [PDF], which was released this morning , and won't have extensive analysis until later. In the meantime, here's a little scoop for you: I obtained this list of changes [PDF] which catalogs how the budget balancing plan changed since the commission's chairmen released a working paper a month ago. It's a nice window into the group's deliberation -- and who wanted what. Most disappointing? The committee shelved a plan to raise the cap on Social Security taxes, so any salary over approximately $106,000 is still tax-free. Turns out I'm wrong, and my beloved increase in the cap on Social Security taxation remains in the plan. Now, my new least favorite change is the return of the mortgage interest deduction, though now as a credit, which is slightly more progressive. You'll also see Democratic Sen. Kent Conrad walking back a plan to cut agriculture subsidies. The best changes? Delays in spending cuts and a front-loaded payroll tax...

Let Us Now Praise Famous Bailouts.

TARP, originally some $700 billion, will cost the American taxpayer approximately $25 billion, according to the Congressional Budget Office. (That last bit of money could be recouped with a handy bank tax , but, you know, Congress.) TARP, for all of its moral and mechanical problems, has turned out to be a relatively cheap way to keep the financial system functioning through a crisis. It’s too bad that failures to address some of the problems in the financial sector that created a need for TARP, and hold more people accountable for those problems, have been attributed to this program. — Tim Fernholz

The Fiscal Commission Failed ...

... and I can tell you that before reading the final report , officially released at 9:30 this morning. Why? The members of the commission released their plan today but are going to vote on its recommendations Friday -- meaning that the whole report is now one big trial balloon. Remember that the point of the fiscal commission was to isolate the budget-making process, allowing the members to agree on a grand bargain and bring the tablets down from the mountain, so to speak. By floating the report before the vote, however, they've simply injected politics back into the process, making it even more unlikely they'll agree to its recommendations after a few days of everyone treating their final document like a piñata. Whether you agree with the commission's report or not, the idea was to bring together experienced people who could set aside their differences and come forward with a grand bargain, and it seems clear that they were unable to do that. Which is, ultimately, to be expected:...

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