“You’re approved!”
Something many Americans heard in the 2000’s when looking for large loans to buy a house or a car, even though they could not afford the loan. A storm was growing on the horizon over the past decade, of course the average American did not see this. This brewing storm was the impending “Great Recession,” as coined by many media outlets. There is a long list of why this happened. The average American does have some blame in this, but not much. The policies that former president George W. Bush and his republican constituents set up laid the foundation for the collapse in 2008. Of course, both parties have blood free hands, the democrats are guilty too, but the burden and more weight fall on what Bush and the republicans set up.
Let’s take a trip back in time. The year is 1999. Bill Clinton is president and there is a balanced budget, a republican congress. It is October 22nd in the early hours of the morning. An embattled Clinton, who recently survived an impeachment from congress, comes to an agreement with republicans what is called “Financial Services Modernization Act of 1999.” This act “…(did) away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933,” which set into place after the Great Depression, and set up the staging ground for America (McLaughlin WSWS). The legislation that the Glass-Stegall Act enacted was described as a “the center pillar” of Franklin Roosevelt’s New Deal by Martin McLaughlin in his story “Clinton, Republicans agree to deregulation of US financial system.” Now in congress they are arguing over how to re-regulate everything.
It may appear that Clinton was responsible for this mess that bubbled to the surface recently. Remember this; he had only so much control in legislature. The House of Representatives and Senate at the time were both controlled by republicans, 55-45 in the Senate, and 228-206 in the House. Not only that, Clinton was feeling pressure from the impeachment trial that occurred earlier in the year.
Strangely enough, republicans had a chance to stop this all. A bill was in the works just prior to the housing market crash that started in 2007. The bill was meant to regulate Fannie Mae, and Freddy Mac, both of which are government run programs that take care of home buying, and both of which fell hard in 2008. This regulation bill made it out of senate committee, but never was brought out on the floor. Arizona senator John McCain signed onto it, but was a step too slow. The market had started to fall. During his 2008 run at becoming president, McCain used an excuse that this was blockaded by democrats, when in fact it never actually reached the house floor. The democrats never got the opportunity to take a chance to stop it from passing, or pass it (factcheck.org). Once again this proves that republicans missed a chance to stop, or fix the problem.
Another thing that was at the root of this recession was dredged word, “outsourcing.” A Bush adviser, Dr. Greg Mankiw, had “suggested outsourcing could eventually help the economy” (Cook, Nyhan) Now looking back at what Mankiw said has proven very wrong. In a country that is job hungry, Bush and his staff watched as jobs leave the country and did nothing to stop them. John Kerry, who was running against Bush in 2004 said, “He would tear out every page of the tax code” that promoted outsourcing jobs. He also called CEOs that did send jobs overseas “Benedict Arnolds.” The stance of democrats was obviously to keep jobs inside the country, while the right did nothing to stop them from leaving. Leaving many Americans unemployed, and despite for work. Hence the term that is thrown around a lot these days, “jobless recovery,” do the lack of jobs in the country (Simpkins).
Along with the lack of jobs, there was a lack of tax. It was a belief was had that the lower the taxes in the country the more companies would hire, and keep jobs in America (Mason). This however proved to be a huge fallacy. Just because a business had next to no taxes to pay, and might be able to make a more of a profit, doesn’t mean that they will be hiring droves of employees. The whole game of business is to make the most money as possible, and if you are staffed well enough, and making a huge profit there is no need to hire more and lose money. Even if people say, “you’re making so much money, hire people,” it is all business. They have no right to hire anyone. This tactic has run its course already, in Ireland.
Cutting cooperate taxes seems like it may work, but republicans are wrong, so wrong. There is an eerie shadow that is following the United States, and that shadow being Ireland. Once again McCain is the subject of controversy, he suggested to fix America to “do what Dublin did” (Zarroli). What did Dublin do? In the article by Jim Zarroli titles, “Debt Crisis Casts Spotlight on Ireland's Low Taxes,” Zarroli depicts a tale of how Ireland used a corporate tax reduction to entice business to come to the country. Sounds good right? Then Zarroli tell how that all back fired when the housing market crashed in 2007. With credit markets dried up due to banks collapsing, Ireland had no way to borrow money to help them. The country realized that it needed to raise taxes, even though Zarroli said that many “do-gooders” decried they can’t afford taxes. Similar to what is going on in America today. To simplify it, taxes are needed to keep things moving. Even though it may seem logical to make a move to cut them, jobs aren’t going to come back because of tax breaks.
The article on Factcheck.org also called the recession as “collective delusion,” and basically called Bush ignorant for not watching what was going on, and missing the bus. The delusion was pushed forward after September 11th and really sent the snowball down the hill. In a Bob Burnett article he says how Bush told Americans to “go shopping” after the attacks, “Rather than call on our patriotism…”Bush preached to “consumerism “rather than doing something else productive. With the credit crisis that happened, this appears to be a leaping point for it. Americans go out and spend mindlessly because it is what the president told them. Not only did Bush seem to preach to the wrong crowd, he was rarely there. He was notorious for taking vacations to Camp David. He abandoned the American people as the world around them started to crumble.
There was something despicable about Bush though. Bush was described as someone who was looking for “What can I get out of this,” rather than what I can do to fix any mistake that is presented (Burnett). There was a feeling around him of more of a “self interest” aspect that Burnett would go onto say. Not only that, the poor decisions he made. One could look no further than the war in Iraq, when America needed to be in Afghanistan looking for who actually attacked the States.
In American history there seems to be a wave of job creation, and massive expansion during times of war, see World Wars I and II. With taxes so low this country has not been able to afford what is going on. The two wars make up a very large part of the budget deficit, and big add-on the national debt. As seen with Zarroli said with how Ireland for the most part bankrupted itself, how could America afford this? The original estimates for the war according to Joseph E. Stiglitz of the Washington Post it was supposed to cost “50-60 million dollars” to fight. Unfortunately that was greatly under estimated. The war in Iraq has cost close to three trillion dollars, and continues to get higher. How can anyone blame democrats for such a high deficit when there is a war that has cost three trillion dollars?
This storm that was brewing came together at just the right time. The housing market collapsed, banks lost control of themselves, and the deficit reared its ugly head at just the right time. If one or the other happened at a time this country could have handled it. This was not the case. It all crept up on this country like a lion freight train, but the republicans who had power during it refused to stop, or put a valiant effort out.
The finger has been pointed all over. Currently the democrats are being blamed for what has happened. Why, because they are in power, and it’s easy. They are not as innocent as they say they are. Democrats do have some blame on their shoulder, as seen by Clinton not putting up more of a fight to stop sweeping deregulation in 1999, and seeing work that FDR and Lyndon B. Johnson work get thrown out (Ferrira). Current president Barack Obama has a chance to fix what has been made wrong. Not only that he has his “Herbert Hoover” like FDR had when he took over during the Great Depression. It appears that there has been some slow progress fixing things, but again now there is that storm brewing with the 2010 election. Can this recovery continue, or will a double dip recession be the future this great country faces.
(This is my essay for ENG 102. The ()'s are for citations that I am not including because it is just a blog.)-SS
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