George Michael: Obama's blame game

July 14, 2012|By GEORGE MICHAEL

In his recent campaign speeches, President Obama has been asking “Why would we want go back to something that didn’t work before?” This is a variation of his repeated “We had a really big hole to dig out of” theme and a corollary to the “This is George Bush’s fault.” Mr. Obama could go down in history as “The Excuse and Blame” president.   

The president had all the answers four years ago. We were told repeatedly that the Bush tax cuts which only benefitted the wealthy and the lack of governmental oversight and regulation were responsible for the 2008 economic collapse. 

If that premise is true, then the massive government intervention by the president and his allies in Congress (at least his first two years) with trillion dollar budget deficits, historic and massive stimulus programs, and more and more regulation, should be the solution for what ails us. How is this prescription working?

Not too great. This is the weakest recovery of any economic downturn since the end of World War II. Maybe the original premise is faulty.

Keep a few facts in mind. The Democratic party was running the nation at the time of the collapse. Nancy Pelosi and her party won the election of 2006 and made some big claims of how things were going to be different now that they controlled both houses of Congress. Her promise even included bringing spending under control and balancing the federal budget.  The evil, free-spending and free-market Republicans had been vanquished. 

Several critical factors impacted the Bush years. First, we were coming out of the “Clinton Recession” in 2000-01 following the bubble bursting just before George Bush became President. Then 9/11 happened eight months into the Bush presidency, which resulted in an historic stock market drop and a major drop in economic progress. 

At the other end of the Bush presidency, the housing collapse was the main culprit contributing to the financial fiasco in 2008-09. The housing debacle, thanks to Democratic leaders Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), were crushing blows to the economy. 

For years, Dodd and Frank made many assurances that there was no reason for concern, despite the questions and warnings by officials of the Bush administration. Twenty years of bad policy from the Community Reinvestment program and Fannie Mae and Freddie Mac providing loan guarantees for unworthy applicants finally blew up in our faces.

President Bush’s tax cut law was passed to move us out of the 2000-01 economic doldrums.  Following the 9/11 tragedy, it was decided to speed up their implementation.  The cuts were across the board for all tax brackets. The only people not to get a tax cut were those who paid no income taxes. 

And what happened once the new tax brackets were fully in place in 2003? 

Unemployment dropped from 6.3 percent in June 2003 to 4.4 percent by October 2006. Federal tax revenues increased a strong 32.5 percent from 2003 to 2007. So much for the theory that tax cuts cause deficits.

By 2007, the federal budget deficit had dropped to $161 billion dollars. We were headed in the right direction. Compare that to the more than $ 1.2 trillion deficits each year for the last three years. The Bush tax cuts had delivered a strong recovery from the 9/11 tragedy until the housing collapse brought it to an end.

The weak and ineffective response by George Bush in 2008 allowed his enemies to make the case that it was “all Bush’s fault.” Unlike the current president, he did not make excuses or spend time defending his record. Consequently, the worse the economy got, the higher Barack Obama went up in the polls going into the election. The more he went up in the polls, the worse things got as many wondered what would happen next if Obama won the White House. Now we know. 

So I wouldn’t mind going back to the Bush years, economically. Obama and his allies have concocted a template to describe those years that is not totally accurate.  Attempting to salvage his credibility appears to be their agenda. Hopefully, they won’t succeed.

George Michael is a Williamsport resident who writes columns for The Herald-Mail.

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