RWB News: In debating politics online, no matter what the discussion, the spending, the tax, or what the current administration is doing, someone always deflects from the policy at hand with "It's Bush's fault." While I have no idea why blaming Bush for the economy excuses Obama's socializing American business or health care, this argument has become so prevalent and widely accepted that it necessitates addressing.
Personally, I do not believe Bush is blameless when it comes to growing the scope and power of the federal government. I can see blaming him for going to war, or for signing the Patriot Act, or for signing the original bailout. However, if we need to hold people accountable for the lending crisis and the economy, then it should be the right people — and they should be held accountable. Following are a few of the most common accusations made at George W. Bush and some quotable responses to the most inaccurate of them.
1. The accusation: George Bush's spending caused the recession.
First of all, it's a false premise that is too often ignored. You can only blame a president solely when he has two houses of Congress to pass his party's agenda. So, in reality, it is Congress' fault. Always. They hold the purse strings. They fund the budgets. They pass the bills. A president can spend nothing without a willing Congress. With that in mind, a look at who was in control of Congress and their budget numbers is in order. (I received this gem via email, and the uncontestable commentary has gone viral online):
While the White House proposes budgets, funding for budgets does not come from the White House. It comes from Congress, and the party that controlled Congress since January 2007 is the Democratic Party. Democrats controlled the budget process for FY 2008 and FY 2009, as well as FY 2010 and FY 2011. In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush belatedly got tough on spending increases.
For FY 2009, Nancy Pelosi and Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Obama could take office. At that time, they passed a massive omnibus spending bill to complete the FY 2009 budget.
Where was Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY 2009. Let's remember what the deficits looked like during that period and what is projected into the future to 2019 (picture above).
If the Democrats inherited a deficit, it was the FY 2007 deficit, the last of the Republican budgets. That deficit was the lowest in 5 years, and the 4th straight decline in deficit spending.
After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets. If Obama inherited anything, he inherited it from himself. In a nutshell, what Obama is saying is: I inherited a deficit that I voted for and then I voted to expand that deficit 4-fold since Jan. 20.
2. The accusation (Human Events posted this as Obama's most outrageous myth): Bush's policies were responsible for the subprime mortgage collapse and the subsequent recession.
The Fact is: It was two powerful Democratic committee chairmen, Rep. Barney Frank of Massachusetts and Sen. Chris Dodd of Connecticut, who pushed government mortgage giants Freddie Mac and Fannie Mae hard for these subprime loans that have cost taxpayers billions.
Julie Dana posted a great summary of housing bubble history in her Facebook note: Was it really Bush's fault? Throughout her post, which follows, I have added a few videos that expose the major players, and support the written history.
During Jimmy Carter's days in the White House, the Community Reinvestment Act came into being. The act says that banks have to make sub-prime loans to people in low-income areas, loans to people that lenders would otherwise not risk in low-property value areas. To not make these loans a bank could be charged with Redlining. Redlining is against the law. It is a discriminatory practice, involving lenders which refuse to lend money or extend credit to borrowers in certain "struggling" areas of town. It is against the law to discriminate against borrowers based on race or income level, among other factors. Redlining became known as such because lenders would draw a red line around a neighborhood on a map, often targeting areas with a high concentration of minorities, and then refusing to lend in those areas because they considered the risk too high.
In 1995, Bill Clinton made some changes to the CRA, demanding increases in these loans — larger loans to people with even less or no income in these same areas. This was in response to pressure from Democrats in the House and Senate, and "community organizers."
"How The Democrats Caused The Financial Crisis: Starring Bill Clinton's HUD Secretary Andrew Cuomo and Barack Obama
Click here to view the embedded video.
http://www.youtube.com/watch?v=Lr1M1T2Y314&feature=player_embedded
In 2003, President Bush proposed "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." His proposal: An agency within the Treasury Department to supervise mortgage giants Fannie Mae and Freddie Mac. Fearing that mortgages would no longer be available to people who might be considered poor risk due to their inability to pay them back, Democrats eventually killed the proposal. The current meltdown in the mortgage industry is a direct result of giving mortgages to people who could not pay them back, a practice protected by Congressional Democrats.
"Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown"
Click here to view the embedded video.
http://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=player_embedded
(Video Posted by ProudToBeCanadian, September 24, 2008. See web site for more.)
The proposal worked its way around Congress for a couple of years. Efforts at reform of the kind proposed by President Bush were shot down by Democrats each time.
"Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam, 2004 Hearings"
Click here to view the embedded video.
http://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=player_embedded
(Video Posted on NakedEmperorNews, September 26, 2008)
Between 1988 and 2008 Christopher Dodd D-CT received $133,900, John Kerry D-MA $111,000, Hillary Clinton D-NY $75,550, and Junior Senator Obama D-IL (only 143 days in the Senate) — received a whopping $105,849 from Fannie Mae and Freddie Mac. Pennsylvania Democrat representative Paul Kanjorksi, who also opposed new Fannie Mae and Freddie Mac regulations, was given more than any other member of the House of Representatives. He was paid $65,500 by representatives of each of these entities.
And, in case you were wondering, John McCain co-sponsored a bill requiring greater Fannie Mae / Freddie Mac regulation in 2005. It was also blocked procedurally by Democrats.
Fannie Mae and Freddie Mac received money from TARP in bail-out funds and the federal government seized control of the mortgage firms in September 2008.
January, 2010: The Obama administration approved base salaries of $900,000, plus $3.1 million in deferred payments, and another $2 million in bonuses for the CEOs of the failed mortgage giants Fannie Mae and Freddie Mac. The $6-million compensation packages were approved by the Treasury Department and the Federal Housing Finance Agency, and made public on Dec. 24, 2009, Christmas Eve.
September 15 ,2010 The Los Angeles Times: Taxpayer losses from the government seizure of failed housing finance giants Fannie Mae and Freddie Mac could reach nearly $400 billion.
Bonuses are paid for work well done out of Profits. Econ 101 teaches you that profit is the positive gain from an investment or business operation after subtracting for all expenses…the opposite of loss. Where is the work being done well at either Fannie or Freddie where there are NO PROFITS?
So, the Democrats are the devil in the housing and lending crisis, and Bush tried to warn them. Does that mean he bears no blame in the economic crisis at all? While Bush didn't cause the housing bubble, his support of no-down-payment policies took criticism from conservative economist Thomas Sowell, who is one of many who condemned Bush for continuing policies set up before him. Even still, Sowell is not alone in "easily" placing the bulk of the housing-bubble accountability on Representative Barney Frank.
Thomas Sowell Blames Housing Bust on Frank, Bush, Greenspan, but mostly Frank
Click here to view the embedded video.
3. The accusation: Bush deregulation caused the lending crisis. Blaming the philosophy of free markets.
Another common accusation aimed at Bush and his Republicans in Congress is that deregulation of the banking industry caused our economic downfall. National Review Online posted an article with a time-line of deregulation that makes a compelling case against Bush/Republican deregulation even existing let alone being the economic culprit:
The argument that a lack of regulation caused the crisis is seductive in its simplicity; it completely ignores the other side of the government equation. Regulation is seldom necessary unless the discipline of a truly free market is absent — such as when the government indemnifies companies or industries against failure, or when it juices markets with generous subsidies. In the case of the housing bubble, both of these distortions were present. Wall Street titans, led by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, juiced like Jose Canseco until they grew "too big to fail." In retrospect, it looks like a failure to regulate; in fact, regulations wouldn't have been necessary if the government hadn't provided the steroids.
The Left continues to propagate the myth that a zeal for deregulation did us in, because it prefers government interference in the marketplace. That's why it's important to remember that, for the current economic disaster, government interference bears much of the blame.
In another NRO article: Those who wish to blame deregulation or the supposed "laissez-faire" philosophy of the Bush Administration are going to have to identify the deregulation in question, which will be a challenge given that the last deregulatory legislation in the financial industry was in 1999 under Clinton. These folks will also have to explain how the enormous growth in the Federal Register and domestic spending over Bush's two terms reconciles with his supposed belief in laissez-faire. Answer: it doesn't.
The two key causes of this crisis are expansionary monetary policy on the part of the Fed and a series of regulatory and institutional interventions that channeled that excess credit into the housing market, creating a bubble that eventually had to burst. In other words, the boom (and the inevitable bust) are the product of misguided government policy, not unbridled capitalism.
Lately, as Republican tax cuts imposed during the Bush administration near expiration, Obama shifted his blame game from Bush's economy to Bush's tax cuts during his first term.
4. The accusation: President George W. Bush's income tax cuts are responsible for the trillion-dollar deficits and $13 trillion national debt we have under Obama.
The Fact: The Congressional Budget Office, using static analysis that does not account for growth incentives, says the Bush tax cuts were responsible for only 14% of the deficits. A dynamic analysis factoring higher economic growth would have shown that the tax cuts account for even less than that, says the Heritage Foundation's chief budget analyst Brian Riedl. "Bush should not get the blame for [Obama's] trillion dollar deficits. After all, the year before the recession hit [in 2007], the deficit was only $161 billion," Riedl told HUMAN EVENTS. "Today's massive deficits are the result of the recession, as well as the stimulus and other failed attempts to spend our way out of the recession," Riedl said. Besides, if the Bush tax cuts are so bad, why does Obama want to keep 98% of them?
Posted September, 10, 2010, National Review Online: In Friday's dreary news conference, Obama acknowledged that economic progress is "painfully slow," and that voters may blame him for the economy. Yet he nonetheless continued to finger Bush "for policies that cut taxes, especially for millionaires and billionaires, cut regulations for corporations and for special interests, and left everyone else pretty much fending for themselves."
"Millionaires and billionaires" has become Obama's favorite phrase as he calls for tax hikes on the wealthy and renews his attacks on Bush. In Cleveland last week, Obama actually blamed the Bush tax cuts for the financial meltdown and severe recession. Now that's a reach. A big reach.
While Mr. Bush made plenty of economic mistakes, his 2003 reductions of marginal tax rates led to more than 8 million new jobs in the next four and a half years. Under Bush, the unemployment rate dropped to 4.6 percent.
And almost all economists agree that the 2007-08 financial meltdown was a housing-bubble and credit event. It had nothing at all to do with cutting taxes….
The idea that cutting taxes is the reason we have deficits in our budget is backwards DC-beltway thinking. Cutting taxes does not cause deficits in the federal budget. Overspending causes deficits in the federal budget. To blame a president for a budget deficit gives a free pass to the real crooks in our government, the crooks who write the budgets and spend the money: Congress.
Source: LA Times: "Losses from Fannie Mae, Freddie Mac seizures may near $400 billion": http://articles.latimes.com/2010/sep/16/business/la-fi-fannie-freddie-20100916
Source: "Who's Really to Blame for the Banking Meltdown": http://www.realestatethedarkside.com/TheMortgageMeltdown.htm
Source: National Review Online:
"Blame not the deregulator": http://nrd.nationalreview.com/article/?q=ZjJhNzUxNTZhYTA0MDA4M2E3ZjZmMGMzMzk2NDgzNjY=
"How We Got Here": http://www.nationalreview.com/corner/179706/how-we-got-here/jonah-goldberg
"Bashing Bush and Boehner won't work": http://www.nationalreview.com/articles/246267/bashing-bush-and-boehner-won-t-work-larry-kudlow
Source: Human Events: "Obama's Biggest Lies": http://www.humanevents.com/article.php?id=39385
Source: Was it really Bush's fault? By: Julie Dana
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