American Elephants

Who Drove the Economy into a Ditch, Mr. President? by The Elephant's Child

President Obama continues his parable of “They drove the economy into a ditch…” His claim seems to be, of course, that it’s all Bush’s fault.  Obama puts the car in ‘Drive’ (D for Democrat, get it?) and because he’s heading in the right direction, all will be well.  Those other folks that put us in the ditch want to put the car in ‘Reverse’ (R for Republican, get it?) and go backwards ‘Repeating’ ( R for Republican, get it?).  Obama’s clever joke always gets a laugh, especially his.

I have no particular problem with being the butt of political jokes. I do, however, care about the facts.  Obama claims that the economic  crisis and our fiscal problems were caused by the massive debts of the two previous illegal wars (The cost of the entire 8 years of the War in Iraq cost far less than Obama has spent in his first 18 months in office).

Obama also wants to blame it all on Wall Street.  No one has explained how that works, but there’s a pretty clear track of evidence that starts way back in the Carter administration with the Community Reinvestment Act.  It was intended to help get more poor and minority people into their own homes, and home ownership became a popular ideal.  As time passed, home ownership was not increasing fast enough, so regulations were passed to make sure that banks made loans readily available, and lowered standards of traditional prudence so that more people could get a loan.  Easy Opinions succinctly described what happened:

The government bought bad loans, guaranteed them, pressured bond ratings agencies, and ignored experience, restraint, and regulation.  The massive losses of $2 trillion ($2,000 billion) killed our economy.

When we say “the government” we mean those federally guaranteed enterprises Fannie Mae and Freddie Mac.  So when Obama says the economy is heading in the right direction, he means that Fannie Mae and Freddie Mac have been sorted out and reformed, and we will never have that problem again. doesn’t he?  Well, no.  The big financial reform bill doesn’t do anything at all about either Fannie or Freddie, and they are still encouraged to go on doing the same old thing.  If there is anything in government that is not transparent, it’s Fannie and Freddie’s books.

Did you know that George W. Bush called for reform 17 times in 2008 alone? I didn’t think so.  Randall Hoven at American Thinker gathered together a snapshot of what our economy looked like in December 2006, after six years of Bush and in the last month before the Democrats took over both houses of the national legislature.  And Nancy Pelosi became Speaker of the House of Representatives — the source of all financial bills and appropriations.

  • Unemployment stood at 4.4%.
  • Real GDP growth over the previous four years (under a Republican President, House and Senate) averaged 3% per year.
  • A gallon of regular gasoline cost $2.30.
  • Even the S&P 500 stock index stood at 1418, or 84% above its post-9/11 low and more than 7% higher than when Bush took office.
  • Every year of Bush’s presidency, real (inflation-adjusted) disposable income per person went up.  By the end of 2006, the average person was making 9% more in real terms than before Bush became president.

The last election in 2006 was considered a referendum on Iraq.  The war was not going well,  64% of Americans said the country was on the wrong track, but 55% of Americans said the economy was is good shape.  And guess who was saying the War in Iraq was lost? And guess who introduced a bill in the Senate to prevent the Surge?

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