Monday, November 21, 2016

Bush Crashed America, Obama Brought It Back: How Could the Dems Lose?

In the wake of Trump’s electoral victory, commentators of all political persuasions are castigating the Democratic Party for ignoring the concerns of rural voters, the flyover states, and working-class Americans in general. 

The irony is that it was the Democratic administration of Barak Obama that relieved the gravest concerns of these constituencies, who lost jobs and homes in the wake of the 2007-2008 Bush Financial Crisis, and regained them under the Obama Recovery. 

If concerns remained, it was only because the Democratic Party and the campaign of Hillary Clinton failed to deliver this winning economic message.  Left to the mercies of a lying demagogue, it is no wonder that ordinary Americans believe they are worse off because of “liberal” Democratic policies.

The George W. Bush Crash was the worst financial crisis since the Great Depression of the 1930s.  Because of deregulation and lax oversight by the Republican administration, investment houses lied about the riskiness of their securities, covertly traded unrated securities in the shadow banking system, and accumulated debt without regard to risk.  Risky mortgages were pushed on ordinary consumers, who piled on more debt, and risky securities were represented as gilt-edge to unknowing consumers and managers of public finances.  Then the crisis hit:

·        At the height of the crisis, in September 2008, there was a bank run on money market funds that threatened to collapse the entire US financial system.
·        Treasury Secretary Hank Paulsen asked Congress for a $700 billion bailout for the Wall Street banks.
·        By the time the markets had stabilized, US unemployment doubled to 10.1%, and median household wealth fell by 35%. 
·        Housing prices dropped 20% from their 2006 peak.
·        People lost their homes when they could no longer pay their mortgages.

If Americans have economic concerns today, there is the cause.  If Americans’ financial well-being has stagnated, it is because they have been catching up from the Bush Crash. 

The story is a simple one:  Republicans deregulated the financial system, Wall Street bankers made money, and ordinary Americans lost their jobs and their homes.  To add insult to injury, Wall Street was bailed out while the ordinary taxpayer paid the bill.

The report of the U.S. Financial Crisis Inquiry Commission says that the crisis was avoidable” and that it was caused by these failures of Bush-era oversight:

·         Widespread failures in financial regulation
·         Dramatic breakdowns in corporate governance
·         Too many financial firms acting recklessly
·         Excessive borrowing and risk by households and Wall Street
·         Key policy makers ill prepared for the crisis
·         Systemic breaches in accountability and ethics at all levels

It has taken until now – eight years – for the economy to recover from the Bush Crash of 2008.  And how did we come back?  It was the Democratic administration of President Barak Obama that brought us back from the brink, and held things together while the banks were nursed back to health and employment recovered.  It was the greatest economic comeback since the end of the Great Depression.

Did we hear about this from Hillary?  Did she position the Democrats as the champions of ordinary Americans?  Did she take a clue from Bernie’s broader appeal?

Whatever the outcome in the Electoral College this time, remember that a majority of voters chose a more enlightened and democratic way.  At the next election, a progressive Democratic message will give voters a clear choice.  

But you need to make sure that Americans hear the message, care about it, and vote for it.