Don’t Blame Bush

The blame is already being dished as John McCain’s presidential campaign sputters toward a crushing election defeat and the Democrats are poised to take control of the White House and both houses of Congress.

Most of the pointing fingers are aimed at the universally loathed George W. Bush, who has become the public face of both economic catastrophe and battlefield disaster.

Other leading candidates for the role of principal victim in the Republican blame game are John McCain – he didn’t run a tough enough campaign or didn’t appeal enough to the party’s evangelical or populist base – and Sarah Palin – she wasn’t ready to be president or didn’t broaden her appeal beyond the party’s evangelical or populist base.

But George W. Bush is not the cause of the Republican Party’s looming election debacle, and neither John McCain nor Sarah Palin is the reason for their party’s 2008 collapse. 

Americans like to personalize politics, preferring to embrace or repudiate personalities rather than policies.  When we evaluate our politicians, we talk about their personal qualities – such as leadership, competence, integrity, consistency, and authenticity.  We like to say that we vote for the candidate not the party.

For this reason, our public debate on the causes of the Republican has focused on questions of Bush’s incompetence, McCain’s temperament, and Palin’s ignorance.

But blaming any or all of them for the coming massive Republican defeat misses the real culprit and lets too many others off the hook.

The cause of the Republican’s imminent electoral disaster is not the personal qualities of their elected officials and candidates, but the fundamental beliefs and policy assumptions of the Republican Party. 

It is these fundamental beliefs and policy assumptions that have caused the nation’s economic meltdown, which has in turned caused the meltdown of the Republican Party.

And every single Republican office holder, from the president to the lowest down-ticket county official, regardless of their personal qualities, shares in the blame.

The modern Republican Party, and every Republican, has embraced these two basic beliefs:

• No to government regulation of markets and the economy.  A fundamental belief of every Republican is that the economy works best – that is, it is more productive and creates more wealth – when unconstrained by regulation.
•  No to taxes.  Every Republican believes that taxes, especially on the wealthiest Americans, should be always lower and eliminated whenever possible.  Under no circumstances should there be a tax increase, even in order to fund necessary government program. 

These two fundamental tenets of Republican policy have created the economic crisis the nation is now suffering, and nearly every other crisis that the nation is now facing can be traced to Republican adherence to these principles – including our soaring national debt, our crumbling infrastructure, our failing schools, our ecological vandalism, our oil dependency, our exploding prison population, our shameful veterans hospitals, and our inequitable and dysfunctional heath care system.

Every other Republican talking point – from abortion to immigration to support for continuing the war in Iraq – is contingent and conditional.  There are Republicans who disagree with the party leadership on these issues.

But there are no Republicans who have not sworn eternal hostility to taxes and economic regulation.  One simply cannot be a Republican without embracing these two fundamental policies that have brought near catastrophe to the world economy, to the operations of federal, state and local government, and, finally, and deservedly, to the Republican Party itself.

What has brought America to the brink of disaster and the Republican Party to the brink of an election defeat of historic proportions?

It’s not just Bush.

It’s not just McCain and Palin.

It’s Republicans.

Each and every one of them.

Don’t let Rush Limbaugh, Newt Gingrich, Tom DeLay, Chris Shays, or your local Republican senator or schoolboard member put the blame on someone else.

As another famous Republican once said, they’re all bad.

Begging the Banks

Treasury Secretary Henry Paulson today called on the banks that the federal government has just given $250 billion dollars to make that money available to others in the economy.

“We must restore confidence in our financial system,” Paulson said. “The needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it.”

The “needs of our economy” might require that the banks not hoard the money that the government has given them, but the Bush administration isn’t requiring much of anything.

I agree with Paulson that the economy will not begin to recover until there is liquidity in the credit markets.  That, indeed, was the rationale behind the government’s massive and unprecedented bailout of the financial industry.

Why, then, is Paulson asking the banks to do the only thing that justified giving them those billions of taxpayer dollars?

If, as is apparent to just about everyone, the economy will not recover until liquidity is restored to financial markets, why doesn’t the federal government require that the banks not hoard the billions that the government is giving them?

The answer is that, despite the acuteness of the financial crisis, and despite the government’s belated decision to take large scale action, the basic approach of the Bush administration has not changed.

In fact, for the past year, the Bush administration has taken a consistent, and faulty, two pronged approach to dealing with the expanding economic crisis, and this approach has not changed with the latest bailout.

This two pronged approach is

• (1) make capital available at extremely low rates to banks and financial institutions with the goal of restoring liquidity, and then
• (2) beg and plead with these same banks and financial institutions to move this capital into the economy.

As the housing and mortgage crisis worsened, Federal Reserve Chairman Ben Bernanke announced a series of cuts in interest rates.  Each time, Bernanke repeated his call for lenders to voluntarily reduce the principal on delinquent loans to adjust them for the drop in home prices, rejecting the far more more forceful action proposed by Democrats favoring legislation that would require the refinancing of hundreds of thousands of mortgages.

Of course, the banks did not voluntarily do what Bernanke requested.

Now Treasury Secretary Paulson is following the same dead end path in asking the banks to voluntarily take the actions that are needed for the restoration of the market.

The Bush adminstration’s beg and plead approach did not work in the past, and it will not work now.

Of course, no one, except the apocalypticals of the far Left and Right, and Libertarians driven crazy by ideology or alcoholism, want to see the global economy collapse.  Sane people don’t want to see bread lines or live with their guns at the ready in a bunker in the woods.

But we can now longer expect that capitalists, driven by personal gain, will voluntarily act to save the system that sustains them.

What is needed is a comprehensive and mandatory overhaul of the entire banking and financial system and the credit markets on the order of the Securities and Exchange Act of 1934.

And for that, we’ll have to wait at least until a new Congress, a new administration, and a new political and economic philosophy take over in January 2009.

I hope we last that long.