By: Shawn Mitchell From: Townhall Finance
The Left and their Old Media amplifiers tell a simple story:
George Bush inherited from Bill Clinton a strong economy and a balanced budget. He proceeded to commit national arson by deregulating Wall Street, cutting taxes for the rich, and fighting two needless wars.
The long fuse of Bush’s fiscal folly finally struck dynamite in late 2008, blowing Clinton’s Camelot economy to bits. President Obama has struggled boldly—against Republican obstruction-- to fix problems so bad not even a modest genius like Bill Clinton could have fixed them in a single term. Clinton modestly admitted this in his convention keynote. So, steady on the transformational path. It’s the only way Forward to redistribution paradise and state allocated happiness.
It’s a measure of the current mood that this narrative has yet to get much pushback from battered conservatives. They’re suffering post traumatic stress from the election, and pre-traumatic stress, bracing for the preordained blame if America dives off the cliff a gleeful president seems to be gunning for.
It’s a shame, because the tidy Bush tale is mostly false and grossly incomplete. It’s little more than a team shout for Democrats, media cheerleaders, and partisan supporters. For that purpose, it’s quite effective, smearing conservative economic positions and providing perpetual cover for the cascading failure of Obama’s liberal policies: The worse things are, the more it will prove how badly Bush screwed things up. Forever, says Madeline Albright.
The fog of national amnesia and unreason hides a lot, and denies the complexity that obviously exists. A nation’s—and president’s--economic success depends on many variables, including business climate, currency and credit strength, a reasonable fiscal balance of taxing and spending, and more. The president doesn’t exclusively control any of the variables. He jockeys for influence among other factors, including Congress, the Fed, the business cycle, and unpredictable world events.
Viewing the big picture, Clinton was very lucky; Bush was very unlucky; and Obama is making it worse....
Also important, Clinton famously lamented he missed the kind of earth-shaking events that can lend presidential “greatness,” but his economic record plainly benefitted from serving in a relatively uneventful decade.
This is not to deny Clinton political “credit” for the prosperity America enjoyed. That’s how the game works. Presidents gain and lose stature for serendipitous reasons. But in debating policy choices, the Clinton years are no endorsement of the Obama agenda, far from it.
Too, if the charge is irresponsible deregulation, Bush deregulated very little. It was Clinton who signed the repeal of Glass-Steagall, allowing depository banks to participate in commercial banking and equity ventures. This broke firewalls that had protected depositors for decades.
Perhaps most critically, Clinton pumped risk and volatility into the finance and housing sectors. He pushed hard on banks to loosen standards and expand home loans under Carter’s Community Reinvestment Act. He authorized government sponsored enterprises Fannie Mae and Freddy Mac to buy subprime securities. That created a market for bundled mortgages. Thus, Clinton greatly expanded lucrative incentives for “predatory lending” that critics would in time blame fully on the private sector.
All of this contributed to the dynamite that exploded in 2008. The smoke and soot are on Bush, but the fingerprints are Clinton’s.
Far from the simple epitaph “tax cuts and two wars,” Bush presided over an extraordinarily turbulent and challenging time for America. The economy endured severe blows quite well. The early internet mania was already tapering, when, months into his term, Bush was called to lead the nation from the smoldering ruins of September 11. The consequences included economic convulsions. Travel and tourism stopped cold and were choked for months. The first surge of the internet bubble popped for good. IPO’s that had pumped out garage-based millionaires dried up. Economic activity and tax revenues dropped sharply. Airports and travel resumed slowly and warily.
It’s surprising that jobs and the economy were as resilient as they were. Critics charge the Bush tax rate cuts didn’t create jobs. But there was job growth, and in context, they may have offered vital incentive for an economy reeling from so many body blows. They certainly have as fair claim to the Obama phrase of “jobs created or saved.”
Bush was not a significant deregulator. Apart from a prow-growth tax policy, he wasn’t a fiscal conservative. Movement conservatives chafed at his big spending, big government initiatives. Importantly, though, Bush and some congressional Republicans raised concerns about the growing risk of Fan and Fred. For their trouble, they were bitterly denounced by Chris Dodd, Barney Frank and others.
If Bush wasn’t a limited government conservative, neither was he a credit balloonist. The fury hit in 2008, on Bush’s watch. He, and his party, understandably answered for it at the polls. But the disease that hit us was not mainly a symptom of the deficit spending liberals denounce Bush for. Rather, the infection flowed from bad loans, inflated portfolios, inflationary fed policy, and the moral hazard of a tax-backed safety net for bad bankers.
The stigma for our credit crisis and slow recovery now falls not on fiscal moderates like Bush, but on tea partiers, populists, and free market advocates who just want government to tax and spend less and take its boot off the economy. Meanwhile, the banker friends of Bill and now Barack, the Bob Rubins, Jon Corzines, Tim Geithners, and Goldman Sachs of the world are covering for, and slapping each others’ backs, and laughing all the way to the tax-payer backed bank.
The mistakes that got us here, indeed.