Thursday, September 23, 2010

The GOP's Pledge to America: Extending the Bushonomics Misery

Remember those horrific last days of the Bush Administration when in September and October of 2008 global capitalism collapsed and the Bushies rushed to Congress to get an $850 billion rescue for the big banks? Well, the GOP now pledges to bring that hellish nightmare back if you elect them. That's right, in a desperate effort to escape responsibility for being the party of "NO" during the worst economic crisis of our time, the GOP now pledges to bring back policies that simply cannot be distinguished from the Bushonomics that caused the entire economic maelstrom in the first instance.

For example, today we are all familiar with the efforts of the Bush Administration to render government incompetent and ineffective. This effort allowed New Orleans to be destroyed, Bernie Madoff to engage in an unprecedented Ponzi scheme and the banks to run wild. "Around the world the Bush name is synonymous with arrogance, ignorance, reckless insouciance, torture, violence and ineptitude." The Bush approach proved the costliest episode of near criminal negligence in our history. So now, The GOP plans to freeze federal hiring so that the new financial reform bill will lack any regulators to enforce the new reforms. In other words, they want to let the banks go wild again. Basically, having lost the effort to defeat Dodd-Frank democratically, in Congress, the GOP intends to jam unregulated banks down our throats by refusing to hire regulators to regulate the banks. Defanging Dodd-Frank has been a hard right goal since even before it was signed.

They also pledge to increase unemployment by slashing government spending in the face of an economy that teeters on the brink of deflation, which even conservative voices recognize failed to work in 1937. They pledge to crash the real estate market by ending federal efforts to use Fannie and Freddie to provide the only life support between us and total housing collapse. And of course, they pledge to increase the budget deficit and impose billions in debt upon our grandchildren and great grandchildren by slashing taxes even more than Bush, including for all those making more than $250,000, at a cost of $700 billion.

The ultimate irony here is that they make these upside down proposals just as powerful new evidence has emerged that President Obama's stimulus efforts certainly helped save us from a depression--for now, at least.

Basically, the GOP offers Bush II. So, if you enjoyed the first economic collapse, prepare for Economic Collapse II. The GOP Pledges it.


  1. The decisive policymaking that prevented the collapse of the system came at the end of 2008 with the passage of TARP, when George W. Bush was still president. Whether you approved of the program or not, TARP injected hundreds of billions of dollars into the banking system and made it clear clear that the federal government would and could do whatever was necessary to save the system. To his credit, then-Senator Obama voted for the TARP. But by the time he became president, the moment of crisis had passed; all that was left to do was to begin mopping up.


  2. My constitutional law course opened my eyes to the fact that if something is not directly controlled it can be indirectly controlled based on the consensus and power of the majority and not the vote or right of the people. Having said that, it will be interesting to see how this will play out. I sincerely hope that the results will be in the best interest of the majority of the people and not just one select group.

  3. The artificially inflated housing market during the Bush administration delayed the onset of our current recession. Government spending provides job opportunities for many people desperately in need of a job. This is not the time to revert back to Bush economics. I hope people make the right choice comes November.

  4. For some reason, everyone seems to link the economic collapse back to a particular party. Both parties, democrats and republicans, have equally contributed to this mess. Unfortunately, in order to pay off the national debt, every American will need to pay in excess of $150,000. Read the reports published by the Government Accountability Office, and you'll see that our debts have been accruing for a significant amount of time. Posted by Keith.

  5. I agree with the poster above that everyone seems to blame the current economic crisis on the party that does not "represent them." But do any of these parties really represent all that each individual stands for. True accountability belongs in each individual to learn their own spending limits. While the government is no doubt a large factor in the current crisis, individual are just as much to blame for taking out loans they well knew could not be paid back.

  6. What concerns me almost as much as the ideas driving these (dubious at best, malicious at worst) proposals made by the GOP, is the fact that they are even able to sell this agenda. The collective short-term memory loss of the electorate (propelled undoubtedly by a 'bleed/lead' 24 hour news cycle) has seriously eroded the ability of our country to consider new ideas and policies. Stuck as we are in a pre-electoral season cycle of wheeling out the old, and tried policies, we collectively seem astonished when implementing (or re-upping) the same policies lead to the same results.

    It looks like this november will be the new groundhog day. Lets hope we only let it happen once.

  7. "... they pledge to increase the budget deficit and impose billions in debt upon our grandchildren and great grandchildren by slashing taxes even more than Bush, including for all those making more than $250,000, at a cost of $700 billion." - Steven Ramirez

    First, let's be precise. Bush did not cut taxes, he reduced tax rates. Actual taxes collected (revenue) by the federal government INCREASED with the rich paying a greater percentage of that revenue than before the rate adjustment was enacted. There was, therefore, no "cost" to the government. In fact, just the opposite.

    As reported by the WSJ at the time:

    In the first five months of Fiscal 2006, through February, overall revenue continued to surge, growing at an overall rate of 10.3%, or an $81 billion increase from the year ago period, to $871 billion. That builds on the astonishing 15%, or $274 billion, revenue increase for all of 2005, which various fiscal wisemen assured us would fall off dramatically. Apparently not.

    This year's double-digit increase is roughly triple the rate of inflation, reflecting strong gains in business profits and individual wages and bonuses -- both signs of a vibrant underlying economy. Corporate income taxes are up 30% so far this year, while individual income tax payments have climbed by 10.3% through February.

    ... the revenue data are further proof of the success of the Bush tax cuts of 2003. The fastest way to stop this revenue windfall, and blow an even larger hole in the deficit, would be to fail to extend the 15% tax rate on capital gains and dividends through 2010, thus assuring a huge tax increase after 2008.

    Beltway Windfall, WSJ, March 2006

    In fiscal 2000 before the Bush "tax cuts" federal revenue was $2.025 trillion. Seven years later it was $2.568 trillion, a 27 percent INCREASE.

    An increase in tax rates does not necessarily translate into and increase in revenue, regardless of what the economic illiterates at ABC News say.

    Those are FACTS, and no amount of left-wing bullshit will change them.

  8. "... they pledge to increase the budget deficit and impose billions in debt upon our grandchildren and great grandchildren by slashing taxes ..." - Steven Ramirez

    The federal deficit for the budget year 2007, which was the last budget authored by the Republicans, was $146 billion dollars. Since that time all appropriations have been authored and passed by the Democrats under Nancy Pelosi leading to deficits that are now in excess of a TRILLION dollars a year. Barrack Obama supported all of that spending, either as a senator or as President. Here's his record:

    - Voted "yea" March 18, 2008 on the $3.1 trillion in fiscal outlays with a projected $400 billion budget deficit (only 2 Republicans voted "yea", and not one Republican in the House voted for it after the conference committee)

    - Voted "yea" October 1, 2008 for the $700 billion Troubled Assets Relief Program (TARP)

    - Pushed through and signed into law the $787 billion stimulus bill boondoggle in February 2009

    - Signed into law $410 billion of additional spending in the 2009 budget in March 2009

    If Barrack Obama inherited a mess, he inherited it from his own party.

    How pathetic, that the people most responsible for the current fiscal nightmare we find ourselves in to be wagging their wretched, corrupt finger at others.

  9. I read your "case closed" post on Fannie and Freddie. I guess that you still do not get it.

    The subprime, Alt-A and IO loans didn't have to originate with Fannie and Freddie for the GSEs to have been the main drivers behind the mortgage crisis. Fannie and Freddie simply had to be the largest purchasers of those loans, which they were.

    Fannie and Freddie were the market - the buyers and guarantors - for garbage loans. Without Fannie and Freddie to sell to their would have been no reason to write those mortgages in the first place.

    Charles Calomiris, professor of finance and economics at Columbia Business School and Peter Wallison, former general counsel of the Treasury Department in the Reagan administration.:

    It is important to understand that, as GSEs, Fannie and Freddie were viewed in the capital markets as government-backed buyers (a belief that has now been reduced to fact). Thus they were able to borrow as much as they wanted for the purpose of buying mortgages and mortgage-backed securities. Their buying patterns and interests were followed closely in the markets. If Fannie and Freddie wanted subprime or Alt-A loans, the mortgage markets would produce them. ...

    Subprime and Alt-A originations in the U.S. rose from less than 8% of all mortgages in 2003 to over 20% in 2006. During this period the quality of subprime loans also declined, going from fixed rate, long-term amortizing loans to loans with low down payments and low (but adjustable) initial rates, indicating that originators were scraping the bottom of the barrel to find product for buyers like the GSEs.

    Blame Fannie Mae and Congress For the Credit Mess, WSJ

  10. Continued ...

    Of course, it's esay to see why hyper-partisan Democrats would want to sweep this all under the carpet, they were taking huge campaign contributions from the GSEs and working hand-in-glove with Fannie and Freddie to stifle regulatory oversight and reform:

    One chapter in this story took place in July 2005, when the Senate Banking Committee, then controlled by the Republicans, adopted tough regulatory legislation for the GSEs on a party-line vote—all Republicans in favor, all Democrats opposed. The bill would have established a new regulator for Fannie and Freddie and given it authority to ensure that they maintained adequate capital, properly managed their interest rate risk, had adequate liquidity and reserves, and controlled their asset and investment portfolio growth. ...

    If legislation along the lines of the Senate committee's bill had been enacted in that year, many if not all the losses that Fannie and Freddie have suffered, and will suffer in the future, might have been avoided.

    Why was there no action in the full Senate? As most Americans know today, it takes 60 votes to cut off debate in the Senate, and the Republicans had only 55. To close debate and proceed to the enactment of the committee-passed bill, the Republicans needed five Democrats to vote with them. But in a 45 member Democratic caucus that included Barack Obama and the current Senate Banking Chairman Christopher Dodd (D., Conn.), these votes could not be found.

    Fannie and Freddie Amnesia, WSJ

    If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it.

    Blame Fannie Mae and Congress For the Credit Mess, WSJ

    Case closed.

  11. What more will it take for us to get past party lines and start looking out for the best interests of Americans? The partisan finger pointing needs to stop. Both party leaders, have, and will, continue to make mis-steps. What matters is the direction we're going as a nation. It seems to me that if we have a more cooperative and less self-interested attitude, our country would be better off.

  12. No amount of evidence will ever convince you that laissez faire is an economic dead end. Similarly, you will always stick to your ideological position that Fannie and Freddie caused this mess, despite real estate bubbles in Spain, Ireland, the UK, and elsewhere that were BIGGER than the bubble in the US. Finally, you ignore the risks the banks took in derivatives markets, leverage, and commercial real estate that had NOTHING to do with Fannie and Freddie.

    You should note, on the other hand, that I have frequently criticized the Democrats on this blog, on a wide range of issues.

    I have yet to hear you ever criticize the GOP.

    Not once have you ever blamed the GOP or conservatives for anything.

    Are you a paid troller? (2nd time I have inquired)?

  13. Real estate bubbles in Spain, Ireland and the UK? What? Were these quasi-socialist countries practicing " laissez faire" too? Did George Bush and the Republicans deregulate their economies as well? Or, was it that left-wing boogey-man Karl Rove? And if you want to compare the US to another country, why not Germany?

    Maybe you would understand and accept the link between tax rates, economic growth and revenue if it were put to you by someone you recognize and should trust: LINK

    There was no major financial deregulation during Bush's tenure. In fact, financial regulations that preceded his presidency were a major contributing cause. And I do not ignore the risks the banks were taking. To the contrary, I simply note the fact that they were encouraged, and in some cases required, to take those risks in order to comply with laws and mandates implemented by Democrats as part of some grand social engineering scheme.

    The Bush administration recognized the potential for trouble early and attempted to put in place reforms to address it:

    The risk lurking in the GSE portfolios was acknowledged in the Bush administration's first fiscal-year budget, released in April 2001. It stated that Fannie and Freddie were "a potential problem" because "financial trouble of a large GSE could cause strong repercussions in the financial markets, affecting federally insured entities and economic activity." Fed Chairman Alan Greenspan issued repeated warnings that the GSEs "placed the total financial system of the future at substantial risk." Such warnings went unheeded even after accounting scandals rocked Fannie and Freddie.

    The Culprit Is All of Us , Barrons


    WASHINGTON, Sept. 10, 2003— The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

    Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

    The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

    The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

    New Agency Proposed to Oversee Freddie Mac and Fannie Mae, NYT

  14. Continued ...

    Each and every time reform was killed by the Democrats who were using the GSE's as their own private club and source of campaign cash:

    ... while the GSEs went belly-up, costing Americans dearly, the fortunate few sitting on their Boards of Directors got filthy rich. These same directors — some of the biggest names in Democratic Party politics and business — failed spectacularly to fulfill their fiduciary obligations.

    As it turns out, former President Clinton packed the boards of Fannie Mae and Freddie Mac with virtually as many personal allies and beneficiaries as they could hold. The most visible was Franklin Raines — Fannie Mae chairman, CEO, and former Clinton budget chief — who later resigned in disgrace with a multi-million parachute.

    And then there’s President Obama’s current White House Chief of Staff Rahm Emanuel, who served on Fannie Mae’s board for a mere 14 months and raked in a cool $320,000.

    Clinton also packed the Fannie board with Democratic Senator and “Keating Five” defendant Dennis DeConcini. Hillary Clinton’s confidante Jamie Gorelick got a prized seat, as did Bill and Hillary favorite Harold Ickes, Democratic strategist.

    A federal report by the Office of Federal Housing Enterprise Oversight condemned the boards of both Fannie and Freddie, calling their actions contributing to the housing meltdown “malfeasance.” Freddie Directors like Emanuel were blasted for failing to confront the “management issues that were root causes of many of the problems that led to the ongoing restatement of the financial reports of the Enterprise,” and permitting management to profit from cooking the books to the tune of $5 billion in 2003 alone.

    But even a brief stay on the Fannie or Freddie Boards was its own source of fat profits. Among the rewards for Democratic Party “public service,” a lucrative board membership on Fannie and Freddie was considered the Taj Mahal of plum positions. ...

    Fannie and Freddie purchased two-thirds of all garbage mortgages. Their exposure - and as a result the taxpayers - was greater than all the major Wall Street players combined. Your arguments have never overcome that hurdle.

    You'll be able to convince me that " laissez faire" is an economic dead end when we actually try it. Until then your argument that global capitalism has collapsed is nothing more than the delusion of an aging socialist.

    As for the GOP, I have nothing but contempt for their attempt to use the federal treasury as a campaign fund in the way that the Democrats do as a matter of strategy and policy. But given a choice between two evils, I'll choose the lesser.

    And, no, I'm am not a paid hack for the Republicans "trolling" this site. This site doesn't generate enough traffic to make such an effort worthwhile. As I've written before, I read widely and came across this site while following a link from another site. After seeing that the comments were little more than an intellectual circle-jerk, I thought I'd offer another point of view.

  15. Extending all Bush tax cuts will NOT reduce the unemployment rate or be great for the economy.

    I cannot put a finger on WHY there is disagreement as to only extending the tax cuts for income under $250,000. The tax that the rich are paying is quite insignificant to what these rich taxpayers fund to contribute to a government program that helps millions of poor Americans.

    The GOP has been dilly dallying around what specific cuts they want to impose in order to decrease government spending...but cutting government spending will not directly affect the unemployment rate...the fastest way to cut it is through taxes...and if you are making over $250,000 I am pretty sure that you can live with paying a lil' bit more for the greater good...if not, stop complaining about how bad the economy is if you are not willing to do something about it...other than false promises of impractical cuts!