With the economy mending, Republican challenger Mitt Romney has shaken up his etch a sketch and come up with this, “I keep hearing the president say that he’s responsible for keeping America from going into a Great Depression,” Romney said. “No, no, no. That was President George W. Bush and [then-Treasury Secretary] Hank Paulson.”
It’s not entirely untrue. Accounts of the great panic in the fall of 2008 show a largely detached Bush, although he warned, “If money isn’t loosened up, this sucker could go down,” referring to Congress’ initial rejection of the $700 billion bank bailout. Paulson, then New York Fed President Tim Geithner and Federal Reserve Chairman Ben “Whatever it Takes” Bernanke, desperately improvising, were really the key players in averting total collapse.
GOP presidential candidate John McCain froze in the headlights. Barack Obama was supportive of the measures taken that fall and continued them into his presidency. He added a stimulus which, although too small, also helped avoid another great depression. But what’s striking is the continuity between administrations.
All along the way, Geithner and other policymakers made the argument that the banks must be saved and any real reform, such as a new Glass-Steagall or breaking up the Too Big to Exist banks would risk another meltdown. Mr. Obama went along. The Fed, meanwhile, learned the lesson of the Depression and didn’t tighten credit; nor did the federal government try, a la Herbert Hoover, to balance the budget in the face of the worst economic crisis in living memory.
Romney cracks a door that should be pushed wide open: Mr. Bush presided over eight years of captured regulators and risky banking, especially made possible by the repeal of Glass-Steagall in 1999. That was engineered by Democratic President Bill Clinton and Republican Sen. Phil Gramm. There was the easy bubble money from Alan Greenspan, disciple of Ayn Rand (the “free market” did not police itself). The Bush years saw little job growth, stagnant wages and the collapse of manufacturing, as well as major redistribution of wealth upward. His tax cuts to the wealthy, which failed to trickle down or ignite a boom of investment in American jobs, were renewed by Mr. Obama.
Continuity again. Is it any wonder Americans are angry, whether their anger is informed by the facts or not? The real struggle is not between Republicans and Democrats, or freedom and SOCIALISM!, but between a comfy plutocratic elite and the rest of us.
And Don’t Miss: The triumph of ‘you’re on your own’ economics || Rolling Stone
Today’s Economic Haiku:
Paul Allen’s big gift
Great stewards make great cities
Brainy thing to do