Obama hasn't even been sworn in it yet. so don't blame him for this mess. blame the man that's sitting in the white house right now.
ENOUGH with idiotic political idealogues already! Sorry, but this isn't due to Bush tax policies. Cutting taxes doesn't result in a crisis with financial and housing institutions or cause a RECESSION. The problems with the financial/credit/housing crisis isn't Bush's fault. It is far more the fault of the Democrat controlled CONGRESS which has oversight and regulatory responsibilities for these institutions -and the CEOs who went along with it even while knowing it was bad business practice. A Democrat controlled Congress thought it would be a fine idea to use their power to do some social engineering by ENCOURAGING Fannie Mae and Freddie Mac to make loans to people who would otherwise have never been given those loans -because they wouldn't be able to pay them back. Bush repeatedly warned Congress what would happen unless regulatory oversight was tightened up on this. He even got a bill that made it to the floor of the Senate and was voted down by DEMOCRATS. McCain warned what would happen unless the Senate acted and HIS bill was voted down. (I posted links to both of these facts.) The Fannie Mae/Freddie Mac regulators testified to the House Banking and Financial committee what was going to happen -where Chairman Barney Franks and other Democrats like idiot Maxine Waters INSULTED them and claimed there wasn't anything wrong at Fannie Mae/Freddie Mac, they were JUST FINE (I posted a link to this hearing where this occurred) and that the real problem was the regulators just weren't any good at their jobs -although their hands were tied by Congress about their ability to properly regulate these institutions.
The only thing Bush can be blamed for here is the mistake of not making this a far more public issue before the crunch hit -if he had, perhaps public pressure would have gotten Congress to act since Bush wasn't able to get them off their asses and DO something to prevent it. Reagan was a master of bypassing a Democrat controlled Congress and going straight to the people -who then turned around and pressured their representatives. Haven't seen a President before or since who knows the real value of his bully pulpit though.
I understand the desire of political idealogues to constantly figure out ways to pretend their party is just soooo "noble" they can't possibly be even SLIGHTLY to blame and must pretend it is entirely the other party's fault at all times -no matter what the issue. To listen to Democrat idealogues, they would have you believe that Democrat politicians are just PERFECT in all things they do, so all-knowing and all-wise at all times, EVERY bill they pass is perfect, they are never wrong about a damn thing. Which is why PERFECT people are Democrats and Republicans are all evil. BULLSHIT buddy. Democrats are just people too and like all human beings -they screw things up ALL THE TIME. And in this situation, they screwed up big time.
No matter which party a President belongs, he still doesn't have oversight and regulatory authority here AT ALL. It is solely a Congressional power. That means the President had NO power or authority to affect this at all beyond urging Congress to act -which Bush repeatedly did for the past 3 years. But both houses of Congress are controlled by Democrats who couldn't care less about a lameduck Republican President they would rather systematically undermine anyway - and without any pressure from the other house of Congress controlled by the other party -Congressional Democrats were the ones who pushed and encouraged Frannie Mae/Freddie Mac to make these bad loans while they patted themselves on their backs about their "successful" social engineering. How they figured they were helping people by getting them suckered into taking out loans they could never afford to pay back is beyond me -but somehow Congressional Democrats thought that was a really good idea.
As for going into a recession -if you are under the impression that the economy hinges on the least little thing government does and one false move will throw it into a recession, you are nuts. It takes one government mistake after another to do that because the economy hinges on what the private sector does FAR MORE. The government can only make conditions as favorable for economic growth as possible or unfavorable for economic growth as possible. Tax cuts and low interest rates are known tools for encouraging economic growth. Raising taxes, discouraging investment by increasing taxes on capital gains and high interest rates discourage economic growth. There are times when raising taxes and interest rates are deliberately used to try and slow down an economy that appears to be super-heated and without a strong foundation under it to explain that kind of rapid growth -but this sure isn't the case here.
Government can make multiple errors like protectionist trade agreements, putting tariffs in place, wage and price controls, raising taxes, raising interest rates all in a short timeframe -and oh yeah, it can cause a recession. About 1/3 of our economy hinges on foreign trade and protectionist trade policies and tariffs in the hopes it will protect US businesses by making foreign goods more expensive to US consumers -has the opposite effect. It harms them because other countries respond in kind by putting tariffs on our goods and adopting their own protectionist policies. When US goods don't sell in foreign countries as a result, the pain from that is felt back here at home where US companies can only raise their prices to try and combat their losses. So US consumers find that EVERYTHING costs much more while their choice of goods is far less at the same time. US companies go bankrupt, unemployment rises. Good times for all to be had. But Bush adopted NONE of these economy killing policies -so he isn't to blame for the upcoming recession either.
Recession and temporary shrinking of the economy are cyclic in nature -it is impossible to have nonstop economic growth that never experiences corrective measures that actually clean out ineffective and nonproductive businesses. In the short run such cyclical economic "corrections" cause some pain as workers are temporarily dislocated -especially in particular industries that experienced faster than usual growth where these corrections are most needed. In the long run, these corrections provide even greater benefit with more efficient and productive companies coming through it and the economy ends up even stronger than before the correction. Such corrections usually last two quarters or less before fully recovering and moving on -and occur on a REGULAR basis every 8-10 years or so. Almost like clockwork. Regardless of who is President. We had one just as Clinton left office and Bush took office -and 8 years later, we are going to have another one.
Bush's tax policies when he took office for an across-the-board tax cut to all taxpayers get a great deal of credit for an economy that had so swiftly recovered from the brief recession and had become so strong -that when 9/11 wiped out nearly a 1/3 of our economy almost overnight, it recovered in a matter of a few months. In another country, it could easily have resulted in a deep depression.
The problem is when the economy is at the brink or in the middle of such a correction, government can take actions that make it teeter into outright depression or help it be a shallow and short recession. People getting hysterical or over-reacting to it can pressure government to make the wrong moves and we can end up with a serious depression that can take years for the economy to recover from. Raising taxes, higher interest rates and tightening credit etc. can all pressure a recessionary economy into a depression. Ask Jimmy Carter how those 20% interest rates and high taxes (which he promised would only hurt the rich) helped out during that recession and how much we all enjoyed those double digit unemployment rates. Had he been given a second term when he promised to do even more of the same and told Americans the best days of this country were behind us - he would have thrown us into a serious depression because the economy showed no signs of recovering and was only getting worse. Instead voters threw out Carter as the disaster he was. It took Reagan's tax cuts and economic policies that were as favorable as possible for economic growth to get it turned around -and even so, it took 3 times longer to recover from Carter's horrific policies than it took for him to inflict them on us.
Now we are all set up for yet another generation of historically ignorant people to learn firsthand why it is never a good thing to turn over control of both houses of Congress, the White House and majority of governorships to just one party. In fact, the country AND economy do their best when power is split between the two -because it provides a system of checks against one party going too far. And those checks won't exist at all for at least the first two years of an Obama administration. Which means if Democrats decide to go hysterical in their belief the economy hinges on government going to extreme lengths with massive increases in government spending, raising taxes to pay for that, implementing protectionist trade policies and increased tariffs and doing some more well-intentioned but disastrous social engineering -start tightening your belt right now.
