This post (I have figured the Sanders appeal out … and it ain’t good‼️) generated several comments. You can read them all by going to the post.
However, I found this comment uniquely thorough and insightful and well worth your time reading. Consider all this in light of the political promises (and accusations) being made on the campaign trail. Pay particular attention to the paragraph I placed in italic. The CBO predicts a significant increase in the deficit after Obama leaves office.
MAKE NO MISTAKE; shortsighted government policies, not the private sector get us into most of the problems we face and we are not going to simply tax others and resolve them.
All the good you are describing, low inflation, low unemployment, low mortgage rates etc. – all under Obama policies 🙂
I agree with Reader that low inflation is a good thing, however, the Obama policies that created low inflation basically are the result of the stagnant economy.
I agree with Reader that low unemployment is a good thing, however, the Obama policies that created low unemployment have nothing to do with getting government to facilitate growth by business and employers, but have reduced unemployment by lowering the labor participation rate, triggering retirement by baby boomers prior to their intended date while also increasing the disabled rolls.
There is a reason why we needed a Social Security Disability Income trust bailout – the dramatic change in disability claiming rates, turned into a supplemental unemployment program.
I agree with Reader that low mortgage rates are a good thing, however, the Obama policies that created low mortgage rates are the result of actions by the Federal Reserve to counter troubling fiscal policy with monetary policy.
Just think how bad GDP of 2% – 2.5% would have sunk without the Fed priming the pump with low interest rates. Note that none of the Obama policies were in effect when the US economy emerged from recession. Much like FDR and the Great Depression, Obama’s policies have tended to dampen the vigor of the recovery. These same Obama policies (mostly unchanged back to the time when the Democrats had super majorities in both the House and Senate – before Scott Brown) have doubled the national debt from $10.626 Trillion (when Obama took office) to $18.96 Trillion (1/26/16), or ~104% of 2015 GDP.
An increase in interest rates back to historic levels would mean that interest on the public debt would immediately become the 2nd largest component of the federal budget – after entitlements and before national defense. Just think of it, tax increases in future years will be needed not to build roads or pay social security benefits or defend the country, but, to pay interest on borrowed money. Tell me again why the American Recovery Act was worth $1+T of long term debt.
Home ownership by individuals who were not fiscally responsible was SOLELY the province of Democrats. How soon we forget who the sponsors were of gambling with the mortgage market, and who was actually trying to rein in Fanny Mae and Freddie Mac (note the dates):
House Financial Services Committee hearing, Sept. 10, 2003:
– Rep. Barney Frank (D., Mass.): “I worry, frankly, that there’s a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see.”
– Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez: “Secretary Martinez, if it ain’t broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?”
House Financial Services Committee hearing, Sept. 25, 2003:
– Rep. Frank: “I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .”
– Rep. Waters: “Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. . . .”
– Rep. Frank: “I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.”
Senate Banking Committee, Oct. 16, 2003: Sen. Charles Schumer (D., N.Y.): “And my worry is that we’re using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddie’s mission. And I don’t think there is any doubt that there are some in the (Bush II) administration who don’t believe in Fannie and Freddie altogether, say let the private sector do it. That would be sort of an ideological position.”
Senate Banking Committee, Feb. 24-25, 2004: Sen. Christopher Dodd (D., Conn.): “I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time. And we don’t want to lose sight of that and [what] has been pointed out by all of our witnesses here, obviously, the 70% of Americans who own their own homes today, in no small measure, due because of the work that’s been done here. And that shouldn’t be lost in this debate and discussion. . . .”
Senate Banking Committee, April 6, 2005: Sen. Schumer (D. NY) : “I’ll lay my marker down right now, Mr. Chairman (Greenspan). I think Fannie and Freddie need some changes, but I don’t think they need dramatic restructuring in terms of their mission, in terms of their role in the secondary mortgage market, et cetera. Change some of the accounting and regulatory issues, yes, but don’t undo Fannie and Freddie.”
Senate Banking Committee, June 15, 2006: Sen. Chuck Hagel (R., Neb.): “Mr. Chairman, what we’re dealing with is an astounding failure of management and board responsibility, driven clearly by self interest and greed. And when we reference this issue in the context of — the best we can say is, “It’s no Enron.” Now, that’s a hell of a high standard.”
The Bush II weenies attempted to rein in the stupidity in the home mortgage market.
Here is a New York Times article from 9/11/03 (five years before the collapse) http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html.
It is important to remember that $1+T of the debt at the time of the collapse was so-called “liars loans” issued between 2005-2007. In fact, Fannie Mae and Freddie Mac “accelerated their imprudent behavior AFTER the Bush weenies proposed legislation in 2003 – buying almost as much mortgage debt from 2005 through 2008 as the GSE’s bought in their first 30 years of their existence.