By Jonah Goldberg
Wednesday, October 10, 2012
"Now Gov. Romney believes that with even bigger tax
cuts for the wealthy, and fewer regulations on Wall Street, all of us will
prosper. In other words, he'd double down on the same trickle-down policies
that led to the crisis in the first place." -- President Obama in an ad released
Sept. 27.
This is Obama's core message. In one way or another, he
says it all the time. It's his kicker on the stump. You cannot watch an
interview with the president or one of his subalterns without hearing it.
And yet, I don't think I've ever heard a TV interviewer,
host or pundit ask, "What are you talking about?"
Finally, the Washington Post's "fact-checker,"
Glenn Kessler, (not exactly a darling of the political right) tackled it
recently. He found that it's a lie, giving it three "Pinocchios" out
of four. He also found that the Obama campaign has virtually no citations to
back up the claim. The supporting material for the ad quoted above cites a
single column by the Post's liberal blogger, Ezra Klein, who told Kessler:
"I am absolutely not saying the Bush tax cuts led to the financial crisis.
To my knowledge, there's no evidence of that."
Klein is right. So is Kessler. "It is time for the
Obama campaign to retire this talking point," Kessler concluded, "no
matter how much it seems to resonate with voters." He would have given it
the full four Pinocchios save for the fact that Obama occasionally throws in
"deregulation" along with "tax cuts" as part of the
explanation. In its defense, the Obama camp says it means all of Bush's
policies, not just the tax cuts it harps on almost exclusively -- never mind
that even Obama admits Bush issued more regulations than he did.
The question of what caused the crisis is obviously still
controversial (though, Kessler notes, the official inquiry makes no mention of
Bush's tax cuts). But a consensus seems to be forming around the following
narrative: The federal government, out of an abundance of concern for the
plight of the poor and middle class, made it too easy to buy a home. Congress,
on a bipartisan basis, set unrealistic affordable-housing goals for Fannie Mae
and Freddie Mac. President Clinton used those goals to expand access to
mortgages to low-income borrowers. Then President George W. Bush, with the
approval of Congress, expanded the practice, until way too many low-income or
otherwise underqualified Americans owned mortgages they couldn't afford.
A mixture of greed, idealism, cynicism and stupidity led
to the practice of bundling those iffy mortgages into financial instruments
that Wall Street didn't know how to handle and regulators didn't know how to
regulate. As Rep. Barney Frank (D-Mass.) put it in 2003, he wanted to "to
roll the dice a bit" on regulating subprime mortgages.
When the Washington-abetted housing boom went bust,
regulators demanded immediate markdowns of mortgage-backed securities, which
required financial institutions to sell them, creating a fire-sale atmosphere
that fueled the panic even more. The Federal Reserve responded by letting money
tighten in a way it hadn't since the 1930s.
Some Obama defenders will say that Bush's deficits made
it harder to deal with the crisis. That seems reasonable, even if it's a red
herring in the debate about what caused the crisis. And Obama's record on
deficits hardly gives him much standing.
I once thought that Obama's relentless Bush-blaming was
simply a mix of political expediency and gracelessness. But the truth is more
complicated. Liberals have smartly, albeit cynically, laid the case that Bush
was Herbert Hoover in order to make the claim that Obama is Franklin D.
Roosevelt. For this to work, Hoover must be remembered as a do-nothing
free-market guy. But Hoover was no such thing. He nearly tripled government
spending in response to the Depression. FDR used Hoover's spending as a
baseline for his own, even as he dishonestly decried Hoover's passivity.
Obama has done largely the same thing. The first bailouts
of the crisis were supported by Obama but launched by Bush. The same goes for
the first stimulus. Obama simply tripled down on all that while claiming he was
breaking with Bush.
Or maybe I have that all wrong. Maybe we could get some
clarity by asking the president, "What are you talking about?"
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