EXPOSING THE LIE (That the economic collapse of 2007/8 was Bush's doing)

OPENING COMMENT:

If your intention is to argue against this position, I have ABSOLUTELY no issue with that. In fact, I invite it; I welcome it. BUT, if you refuse to provide a fact-based, statistic-based, history-based argument, don’t be surprised when I dismiss your opinion. If you cannot provide evidence to contradict this argument (legislation, Congressional record), don’t be surprised when I dismiss your opinion. (By the way, opinion pieces are meaningless to this discussion, so feel free, but your…rather, THEIR….opinion will be dismissed).

The key to Obama’s legacy will undoubtedly be the success of the revisionism (already taking place) of the Bush/Obama economies. As the (Liberal) story goes, Obama has had the greatest success of ANY President in history in not only rescuing our economy from the disastrous Bush years, but revitalizing and growing it in what is now the LONGEST single, uninterrupted, period of growth in American history.

And, certainly, it seems to be a very accurate assessment; that is, unless you look at the whole picture.  Viewed thusly, the truth is this:

Obama failed to recover an economy which was destroyed by DEMOCRATS, during the Bush administration; specifically, Nancy Pelosi’s national minimum wage increase and the housing market collapse.

MINIMUM WAGE INCREASE

Nancy Pelosi promised, should Democrats regain control of Congress (in the 2006 midterms), elevating her to Speaker, that her first piece of legislation would be a national minimum wage increase. The midterms happened and Democrats DID, indeed, gain control of both Houses of Congress. Pelosi fulfilled her promise and ramrodded the national minimum wage increase (which was set to take effect mid-year 2007).

SOME FACTS WORTH CONSIDERATION:

Regarding the deficit:

1.     During the Bush administration, the deepest budget deficit was (just under) $500 Billion.

2.     The budget deficit in 2006 was reduced to around $120 Billion.

3.     The historic RISE in budget deficits began mid-year, 2007.

Regarding unemployment:

1.     Bush’s worst (U3) unemployment number was in June of 2003, at 6.3%.

2.     Bush’s best (U3) unemployment number (previous to Democrats taking control of Congress in 2006), was 4.4%.

3.     The dramatic RISE in unemployment began around mid-year, 2007, and rose to 10% late in 2009

So, two events (increase in unemployment rate AND increase in deficit) took place at the same time: the activation of Pelosi’s national minimum wage increase. 

Coincidence? I doubt it.

THE HOUSING COLLAPSE

What exacerbated the American economic disaster was the collapse of the housing market. Of course, this, too, is blamed on President Bush. Here are some of the relevant events and dates….all sourced…..contained in, and copied from, the Congressional Record. All pertain to the housing collapse, and they paint a VERY clear picture:

1. Bush worked to REFORM Fannie Mae and Freddie Mac, anticipating a looming disaster. 
2. Democrats, led by Barney Frank and Christopher Dodd, prevented any reform from taking place.

(On an interesting note, according to “Open Secrets”, Dodd and Senator Obama BOTH received significant campaign contributions from Fannie and Freddie. Coincidence? I doubt it.)

2001

• April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."  (2002 Budget Analytic Perspectives, pg. 142)

2002

• May: The Office of Management and Budget (OMB) calls for the disclosure and corporate governance principles contained in the President's 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac.  (OMB Prompt Letter to OFHEO, 5/29/02)

2003

• February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. 

• September: Then-Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.

• September: Then-House Financial Services Committee Ranking Member Barney Frank (D-MA) strongly disagrees with the Administration's assessment, saying "these two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."  (Stephen Labaton, "New Agency Proposed To Oversee Freddie Mac And Fannie Mae," The New York Times, 9/11/03)  

• October: Senator Thomas Carper (D-DE) refuses to acknowledge any necessity for GSE reforms, saying "if it ain't broke, don't fix it."  (Sen. Carper, Hearing of Senate Committee on Banking, Housing, and Urban Affairs, 10/16/03)

• November: Then-Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk."  To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE."  (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

2004

• February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital and calls for creation of a new, world-class regulator:  "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore … should be replaced with a new strengthened regulator."  (2005 Budget Analytic Perspectives, pg. 83)

• February: Then-CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted."  Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator."  (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)

• April: Rep. Frank ignores the warnings, accusing the Administration of creating an "artificial issue."  At a speech to the Mortgage Bankers Association conference, Rep. Frank said "people tend to pay their mortgages.  I don't think we are in any remote danger here.  This focus on receivership, I think, is intended to create fears that aren't there."  ("Frank: GSE Failure A Phony Issue," American Banker, 4/21/04)

• June: Then-Treasury Deputy Secretary Samuel Bodman spotlights the risk posed by the GSEs and calls for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system.  Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs:  Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System."  (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

2005

• April: Then-Secretary Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America … Half-measures will only exacerbate the risks to our financial system."  (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)

• July: Then-Minority Leader Harry Reid rejects legislation reforming GSEs, "while I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process." ("Dems Rip New Fannie Mae Regulatory Measure," United Press International, 7/28/05)

2007

• August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions.  Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options."  (President George W. Bush, Press Conference, the White House, 8/9/07)

• August: Senate Committee on Banking, Housing and Urban Affairs Chairman Christopher Dodd ignores the President's warnings and calls on him to "immediately reconsider his ill-advised" position.  (Eric Dash, "Fannie Mae's Offer To Help Ease Credit Squeeze Is Rejected, As Critics Complain Of Opportunism," The New York Times, 8/11/07)

• December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly.  So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission.  The GSE reform bill passed by the House earlier this year is a good start.  But the Senate has not acted.  And the United States Senate needs to pass this legislation soon."  (President George W. Bush, Discusses Housing, the White House, 12/6/07)

2008

• February: Assistant Treasury Secretary David Nason reiterates the urgency of reforms, saying "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully."  (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

• March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac.  They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages."  (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

• April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac.  [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes."  (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

• May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further. 

• "Americans are concerned about making their mortgage payments and keeping their homes.  Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow state housing agencies to issue tax-free bonds to refinance sub-prime loans."  (President George W. Bush, Radio Address, 5/3/08)

• "[T]he government ought to be helping creditworthy people stay in their homes.  And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac.  That reform will come with a strong, independent regulator."  (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

• "Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans."  (President George W. Bush, Radio Address, 5/31/08)

• June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac."  (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

• July: Congress heeds the President's call for action and passes reform legislation for Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

• September: Democrats in Congress forget their previous objections to GSE reforms, as Senator Dodd questions "why weren't we doing more, why did we wait almost a year before there were any significant steps taken to try to deal with this problem? … I have a lot of questions about where was the administration over the last eight years."  (Dawn Kopecki, "Fannie Mae, Freddie 'House Of Cards' Prompts Takeover," Bloomberg, 9/9/08)

Anyone who chooses to continue to believe that a) Bush CAUSED the economic collapse and that b) Obama SAVED our economy, must find the legislation which supports their argument. Short of that, continued belief in either notion is nothing more than willful ignorance and wishful thinking. Those unable to find such legislation, yet continue to perpetuate the Bush/Obama misrepresentation are doing so deliberately; their intention is to lie to you in order to support their personal beliefs.

Hirota
December 2016