The continuing political battle regarding the debt ceiling in particular and the overall economy in general relates nicely to a scene in the masterful short-story “Until Gwen” by Dennis Lehane. The main character and his girlfriend are removing a hidden diamond from the room of a drugged nursing-home patient when the owner of that diamond, and the son of said patient, unexpectedly enters. The man calmly walks out of the room, only to return a moment later, wildly firing an antique pistol. One of the ricocheting bullets plugs his drugged-up mother in the ass and she falls to the floor.
“You shot my mother!” the man cries.
“You shot your mother!” the main character responds.
“No, you did. No, you did,” the man insists.
This string of absurdities finally prompts the main character to ask: “Who’s holding the fucking gun?”
♦◊♦
The debt ceiling will be raised. It will be a messy compromise full of temporary clauses, with the real battle regarding the economy being fought in the upcoming campaigns for president. The current Republican candidates for president seem, relatively speaking, to have regained their sanity. It’s still a predominantly loony bunch of dreamers, but at least they have dropped their fantastic attacks on the president as being a Kenyan Socialist who wants to murder the elderly. At last they were able to recognize super-fiction as a failing strategy.
And if this trend continues, as it probably will with some coo-coo moments along the way in the primaries, Mitt Romney will be the Republican candidate for president in 2012. He’s the only viable candidate, for a number of reasons, but particularly because he is most associated with his fiscal expertise, and, according to the experts, the economy stands to be the only issue on voters’ minds in 2012. That’s reductive, considering the slew of other matters that matter to people, but fine. Throw all the other issues out the window and make the next elections solely a referendum on the economy.
Tax cuts for the wealthy, cutting government programs, and deregulation of major industry will be the Republican prescription, letting the magic of unfettered capitalism and self-sufficiency save our sorry asses. On the other hand, my money’s on the Dems going with job creation in infrastructure, high-speed rail, education, research, and green energy. Oh, and all of this will be paid for by tax hikes on the wealthy. Let’s see how this plays out with the American public.
♦◊♦
But if there’s going to be an honest debate on the economy, a debate minus the fiction of the Kenyan–Socialist–Kill Granny variety, there has to be some honest accounting as to how the economy took a metaphorical bullet in the ass and fell to the floor.
In a nutshell, this is what happened: President Bush inherited a healthy budget surplus from the Clinton administration. President Bush turned that surplus into a massive deficit through steep tax breaks for the wealthiest Americans and waging two wars with costs that didn’t appear in the annual budget. The Great Recession began under President Bush, spurred primarily by the lending crisis created by cuts in regulation, mostly instituted by the Republican controlled Congress (but initiated, in part, under Clinton). TARP was created and implemented by the Bush administration. President Obama inherited a severe recession (remember candidate McCain’s silly suspension of his campaign to address this fledgling economic crisis?).
Despite this gruesome economic hangover from the Bush administration, President Obama and his team have been somewhat effective. The bank bailout worked. The taxpayer loan has been paid back with interest. Wall Street has been somewhat humbled and essentially humming ever since, even factoring in the recent drops (remember the DOW spiraling towards 7,000?). The stimulus package worked, though it should have been bigger in order to create jobs not just save jobs—a compromise that has stymied a real recovery. Still, a potential for a depression was averted. The auto-industry bailout worked. Detroit is starting to work again. The economy in general is slowly, slowly recovering, though it is still in danger and needs to be a priority of the next administration. An honest accounting of how we got here needs to be part of the conversation.
Of course, experts, and hopeful Republicans, will only hear part of these equations, claiming voters don’t want to look back; they only want to look forward. Bullshit. Smart people want answers. Smart people recognize history, and while future policy initiatives will be part of the debate, the appropriate blame for the sorry state of the American economy has to be apportioned, as well, especially when many of those same failed policies are being reintroduced.
Informed voters surely recognize that the economy has been shot in the ass and fallen to the floor. This is not debatable. And when looking for reasons as to how this happened, voters must ask themselves: Who was holding the fucking gun?
—Photo -Tripp-/Flickr
About Andrew Cotto
Nicely done.
This is a clear and concise accounting of the FACTS that got us here. Plain and simple…and somehow rare to the point of absurdity. Thank you Andrew! It is amazing to me how even the most recent history can be twisted and rewritten. Republicans share more than their fair share of the blame for this disaster (in my eyes, a lot more!). Now they want to be the party of small government and fiscal responsibility just a scant few years after they overspent us (and under-taxed some of us) to the brink of Depression. That said, not enough is mentioned about individual responsibility in this mess. How did people come to believe that there was such a thing as “good debt” and that you could buy a $500,000 house on a $40K salary? It is of course not fair that some have less than others, but if you want to insure you have EVEN less, just keep buying things you cannot afford! The vultures will always be there to “help” you do that. There are some old and simple facts that remain constant in this world… don’t buy what you cannot afford, save for a rainy day (because it WILL come), learn to want what you have, strive for more but get there in a way that doesn’t make you an indentured servant .
As for Obama and the Dems, It is easy to argue that their policies have not worked because we can not see what happened in that parallel universe where there were no bailouts. For my money that world is in a whole lot more hurt than we are right now. It takes time to dig out of a deep hole and begin to rise again (look at the Trade center project…how much happened under ground before we ever saw it, and now seemingly it’s sprouting up from nowhere!). It took years of mismanagement, greed, lies, and deregulation to get us here, and it will take many more to get us out. In the end I hope we have learned something about ourselves, all of us…
Righteous rhetoric Cotto!
I support your statements. Clearly the WORST PRESIDENT EVER left us in this economic clusterf*ck. Repubs wanna throw Obama out when he is just getting to the tip of the iceberg of the problems Puppet Bush and Prick Cheney left us with. It will take Obama at least another 4 years to begin to turn things around,fulfill some of his campaign promises, and then,maybe then, just as he maybe getting us in the right direction and making progress, it’s time for him to go. That’s crap…..
Good piece, and it’s always nice to see something end with a legitimate and appropriate use of the F-word.
You forgot a whole lot of history !!!!
Almost no one realizes that this entire subprime lending mess was created by the Community Reinvestment Act, which was passed by President Carter, a Democrat, in 1977. Later on in the 1990s, Bill Clinton, another Democrat, passed laws to enforce the original bill. The purpose of the CRA is to force banks to make risky loans to people who can’t afford to repay those loans.
The extremely left-wing Los Angeles Times explains in 1999 that the CRA was passed to force banks to make risky loans.
Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws.
…
In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains… Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected.
The extremely left-wing New York Times noted in 1999 that the GSEs gave out the risky loans under duress from Democrat Bill Clinton.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.
According to the New York Times in 2003, George W. Bush tried to stop the Democrats from ruining the economy with these forced loans. He was blocked by Democrats like Barney Frank.
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
…
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Here are some video clips to prove that the Democrats opposed regulating the GSEs. They are responsible for this mess, along with the irresponsible people who signed up for these loans that they could not repay.
Timeline of the events in the crisis: Bush was the first to recommend regulating the GSEs in April, 2001. In 2003, Bush tried to create a new federal agency to regulate the GSEs. He was blocked from doing so by the Democrats in the Senate, especially by Barney Frank. In 2005, Alan Greenspan warned that failing to regulate the GSEs could be a catastrophe. Again, Democrats blocked the effort to regulate Fannie Mae and Freddie Mac. The video shows Democrat Chuck Schumer protesting that regulation is not needed. In 2006, McCain and other Republicans introduced a bill to regulate the GSEs. Again, the Democrats voted against it and nothing happened.
Republicans and Democrats in their own words on the GSE accounting practices: Here we have Republican Rep. Richard Baker, Democrat, Democrat Rep. Maxine Waters, Democrat Rep. Gregory Meeks, Republican Rep. Ed Royce, Democrat Rep. Lacy Clay, Republican Rep. Christopher Shays, Democrat Rep. Arthur Davis, Democrat Rep. Barney Frank, Republican Rep. Don Manzullo. Shays notes that the GSEs make many contributions to Democrats who are blocking their regulation.
Fannie Mae CEO addresses Democrats: Fannie Mae CEO calling Obama and the Dems the “Family” and “Conscience” of Fannie Mae. The Democrats obstructed the regulation of the GSEs while taking political contributions from them, especially Obama. Franklin Raines, Jamie Gorelick and Jim Johnson were all executives at the GSEs and are all Democrats. Other Democrats like Penny Pritzker ran other mortgage banks into the ground, and now work for Obama.
According to Human Events, Obama himself sued banks on behalf of ACORN, to force the banks to make these risky loans.
Obama sued Citibank under the Community Reinvestment Act in a typical ACORN-style lawsuit to force the bank to make these risky loans. ACORN filed many of this type of lawsuit alleging racism in all of them.
According to opensecrets.org, Obama was also the second-highest recipient of political contributions from the GSEs. The American Spectator notes that he included 5.2 billion dollars of taxpayer money for ACORN in the porkulus bill
A brief history of the financial crisis, part 1
1977: Jimmy Carter (D) signs the Community Reinvestment Act, guaranteeing home loans to low-income families
1999: Bill Clinton (D) puts the CRA on steroids, pushing Fannie Mae and Freddie Mac to increase the number of sub-prime loans.
2003: The White House calls Fannie and Freddie “a systemic risk.” The Bush administration pushes Congress to enact new regulations.
2003: Barney Frank (D-CN) says F&F are “not in a crisis.” He bashes Republicans for crying wolf and calls F&F “financially sound.” Democrats block the Republican-sponsored regulation legislation.
2005: Federal Reserve Chairman Alan Greenspan voices a warning over F&F accounting. “We are placing the total financial system of the future at a substantial risk
A brief history of the financial crisis, part 2
2005: Sen. Charles Schumer, (D-NY) says “…I think Fannie and Freddie over the years have done an incredibly good job and are an intrinsic part of making America the best-housed people in the world …if you look over the last 20 or whatever years, they’ve done a very, very good job.”
2006: Sen. John McCain (R-AZ) again calls for reform. “For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac … and the sheer magnitude of these companies and the role they play in the marketplace … the GSE’s (government sponsored enterprises) need to be reformed without delay.”
2006: Democrats again block reform legislation.
2008: housing market collapses; Democrats blame the Republicans!
John,
The blame Carter-Clinton-Fannie/Freddie-poor people-Obama card has been played by many before you. This is not news to people. This is the conservative talking point for dismissing blame on the Bush administration for the financial crisis. It, of course, avoids any recognition of the actual policies of the Bush admin which contributed to the crisis. Positing all of the blame on the sub-prime crisis would be convenient if the private sector hadn’t been so heavily invested, and, of course, this investment wasn’t mandated by the government. I mean, did the government make Lehman Bros, Smith Barney, AIG, etc., get involved in this madness? And who were they contributing to during these times?