The One Term Proposition
“Those who cannot remember the past are condemned to repeat it.” – George Santayana, The Life of Reason or The Phases of Human Progress: Reason in Common Sense
In his recent interview on NBC, President Obama seemed to come to terms with the fact that for the first time in his life he will be judged by results rather than rhetoric. In discussing the gloomy economic forecast as it relates to his maintaining residence at 1600 Pennsylvania Avenue the president stated that “I will be held accountable. I’ve got four years and ……A year from now, I think people are going to see that we’re starting to make some progress, but there is still going to be some pain out there……If I don’t have this done in three years, then there’s going to be a one term proposition.”
This hardly sounds like the same self-confident campaigner who only a few months ago seemed to have all the answers, now stating “there are no silver bullets to this”.
Of course he is correct in his admission that there will still be some very trying days, weeks and months ahead as the economy continues to ebb and flow in a spastic seizure. But the disturbing insight into his grasp of economic reality came when the president went on to say that the reason banks are in the condition they are in is because they are still suffering from a “hangover” brought about by a “binge” of risk as if this binge was of their own design.
What the president failed to mention was that this “binge” of risk was sanctioned and instituted by the Democrats during the Clinton administration. In 1999 Fannie May was directed to begin a pilot program to increase mortgages held by higher risk minorities and low income consumers.
”Fannie Mae has expanded home ownership for millions of families in the 1990′s by reducing down payment requirements,” said Franklin D. Raines, then Fannie Mae’s chairman and CEO. ”Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”
Even the news print media arm of the Democratic Party The New York Times reported on September 30, 1999 that “In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980′s.”
Let us put aside the fact that it was Democrats led by Barney Frank that effectively tabled legislation that would have required oversight into the now infamous book cooking done by Mr. Raines at Fannie May, calling it a “solution in search of a problem”. But it was the congressionally directed infecting of the credit markets that has led banks into crisis and in some cases to the point of no return.
I have yet to see any economic authority that is looking at this recession lasting three years. In their recent report asserting the likely ineffectiveness of the currently proposed trillion dollar economic stimulus package, the nonpartisan Congressional Budget Office stated that their forecast was to see improvement prior to the 18 months, calling into question the fact that most of this package would be spent after that. Yet this president, after only 10 days in office, chooses to make his benchmark three years and blame banks for the credit crisis that we are now going to have to “dig ourselves out of”. I doubt he could have set the bar any lower.
Blaming banks for “mismanagement and huge risk taking” as he did during his interview was catchy banter for the campaign trail, but it is a very inaccurate and misguided perception to be avowing as president. Unless this administration is willing to recognize how we got here they will have very little hope of finding their way back to a sound economy, even in three years. Repeating the same mistakes will not lead to recovery. It will only increase the number of non-issues that Democrats will attempt to blame.
“Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein.
I couldn’t have said it better myself.
