October 19, 2008
The Last Two Years
The Obama/Biden ticket's entire campaign theme is based on "the last eight years." Maybe we should really look at "the last two years," or the time period when both the House and the Senate were run by Democrats.
In December 2006, after six years of Bush and the last month before the Democrats took over both houses of the national legislature, a snapshot of our economy looked like this.
- 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.
- The S&P 500 stock index stood at 1418, or 84% above its post-911 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 .
If you recall, that 2006 election was considered a referendum on Iraq. The people wanted change, so they threw out the Republicans and replaced them with Democrats. Welcome Harry Reid and Nancy Pelosi.
Here is how they handled Iraq once in office: Harry Reid told us that the Iraq war was "lost" and the surge was not "accomplishing anything." Senator Obama introduced legislation that would have prevented the surge and would have taken all US troops out of Iraq by March 2008 (that would be seven months ago, as you read this) .
Were they right?
Barack Obama now admits that "the surge succeeded." So much for that change. And as the surge succeeded, Congress's approval ratings plummeted. The latest CBS/New York Times poll has it at 12%, well less than half of the already low level it stood at when the Republican Congress was being tossed out in 2006.
The Democratic Congress did a great job, if what you're looking for in a Congress is continual investigation of Republicans. Did the White House out CIA agent Valerie Plame? No, it was the anti-White House Richard Armitage at State, but Congress investigated anyway. Did Alberto Gonzalez, with White House urging, fire nine prosecutors for political reasons? Probably not, and it wouldn't be a crime anyway, but Congress investigated, and is still investigating. Did the CIA, under orders from the White House, "torture" prisoners? No evidence of that yet, but Congress is on the case.
What Congress would not investigate was anything about Fannie Mae and Freddie Mac. In fact, they fought against such investigations and cast aspersions against anyone who would even doubt the soundness of those institutions. Here is what Barney Frank said:
These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.
You can also see on YouTube how Democrats treated the regulators trying to reign in Fannie and Freddie.
But now we know what happened. Fannie and Freddie were run corruptly and ineptly and went bankrupt. Their $1.5 trillion portfolios had to be rescued by the government this year. Franklin Raines, the Clinton-appointed CEO of Fannie Mae who was vigorously defended by Congressional Democrats, was sued by government regulators for cooking the books to the tune of $10 billion to increase his own bonuses to the tune of tens of millions. He settled his suit for an estimated $25 million.
On the other hand, here is what the New York Times had to say in 2003 .
The Bush administration is rightly pushing for the Treasury Department to regulate the two giants, along with the network of federal home loan banks. Freddie Mac and Fannie Mae provide financing to lenders by creating a secondary market for mortgages. All told, these two institutions' debt portfolio exceeds more than $1.5 trillion. Their current regulator is ill equipped to keep tabs on Freddie's and Fannie's sophisticated hedging strategies and the other financial moves they use to manage their huge investments.
And here is what John McCain said on the Senate floor:
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac... I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
So on the big things, the surge in Iraq and the failure of Fannie Mae and Freddie Mac that led to our recent financial mess, the Democrats were wrong. Dead wrong. One hundred eighty degrees out wrong.
On the other hand, who supported the surge? George W. Bush and John McCain.
Who tried to strengthen the oversight and regulation of Fannie Mae and Freddie Mac? George W. Bush and John McCain.
In the case of the surge, Bush and McCain got their way. The result? Apparent victory in Iraq, a country that is now a democracy, at peace with its neighbors, no longer a WMD threat, no longer a terrorist sanctuary, and no longer filling hundreds of mass graves with hundreds of thousands of its own citizens.
In the case of Fannie and Freddie, Bush and McCain did not get their way - Barney Frank did. The result? The failure of Fannie and Freddie, law suits against their executives and the spark that sent banks failing and stocks falling across the globe to the point of threatening a Great Depression.
Let's vote for change. Let's undo what we did in 2006.
Randall Hoven can be contacted at firstname.lastname@example.org or via his web site, kulak.worldbreak.com/.