Setting the record straight on financial crisis

In this article, Thomas Sowell takes our dear comrade leader to task for frequently blaming the financial crisis on the previous administration. This is nothing but a political ploy to deflect criticism from the real culprit – congress.

Pres. Barack Obama boldly proclaims, “The buck stops here!” But whenever his policies are criticized, he acts as if the buck stopped with George W. Bush.

The party line that we are likely to be hearing from now until the November elections is that Obama “inherited” the big federal budget deficits and that he has to “clean up the mess” left in the economy by the Republicans. This may convince those who want to be convinced, but it will not stand up under scrutiny.

No president of the United States can create either a budget deficit or a budget surplus. All spending bills originate in the House of Representatives and all taxes are voted into law by Congress.

Democrats controlled both houses of Congress before Barack Obama became president. The deficit he inherited was created by the congressional Democrats, including Sen. Barack Obama, who did absolutely nothing to oppose the runaway spending. He was one of the biggest of the big spenders.

The last time the federal government had a budget surplus, Bill Clinton was president, so it was called “the Clinton surplus.” But Republicans controlled the House of Representatives, where all spending bills originate, for the first time in 40 years. It was also the first budget surplus in more than a quarter of a century.

The only direct power that any president has that can affect deficits and surpluses is the power to veto spending bills. President Bush did not veto enough spending bills, but Senator Obama and his fellow Democrats in control of Congress were the ones who passed the spending bills.

This is a point I have made many times. While the president may influence fiscal legislation and, in some cases spend money through Executive Order, the real control of the country’s purse strings is in the hands of congress.

Another political fable is that the current economic downturn is due to not enough government regulation of the housing and financial markets. But it was precisely the government regulators, under pressure from politicians, who forced banks and other lending institutions to lower their standards for making mortgage loans.

These risky loans, and the defaults that followed, were what set off a chain reaction of massive financial losses that brought down the whole economy.

It was idiotic government policy and legislation that tanked the economy – not Wall Street, although they aren’t totally blameless.

If we are going to talk about “the policies that created this mess in the first place,” let’s at least get the facts straight and the names right.

The current policies of the Obama administration are a continuation of the same reckless policies that brought on the current economic problems — all in the name of “change.” Fannie Mae and Freddie Mac are still sacred cows in Washington, even though they have already required the biggest bailouts of all.

Why? Because they allow politicians to direct vast sums of money where it will do politicians the most good, either personally or in terms of buying votes in the next election.

All I can say is remember this in November.

Thomas Sowell is an economic genius and one of the greatest unknown commentators of our time. He gets it right all the time – too bad no one is listening.

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