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Friday, September 7, 2012

False Choices From a Failed Messiah

Quin Hillyer
A boundless ego laid bare as he slams GOP's "past policies."

The Anointed One, the Occupier of the Oval Office, who will accept his party's renomination for president tonight in Charlotte, has created chapter and verse of the political version of an Old Testament -- a mythology explaining how the United States fell into economic difficulties and why his attempts to extricate us from distress so far have been unavailing. The problem is that, like most mythologies but very much unlike the real Old Testament, the Anointed One's explanations are entirely wrongheaded, and sometimes outright dishonest.

The Anointed One (henceforth A.O.) has repeated ad nauseam the claim that the only thing his opponent Mitt Romney offers is "the same failed policies that got us into this mess in the first place." The problems with this claim are two-fold. First, the Romney-Ryan team clearly does offer different policies than those of the past. Second, the policies of the past that Obama blames implicitly (he's never very explicit about the details) are far from the ones that caused our "mess."

The first point could be elaborated at great length, but let's zip through it as quickly as possible. Romney and especially Paul Ryan offer a bold break from the previous 14 years: Rather than accelerating the rate of federal spending growth, a problem that has been growing steadily since the fall of 1998, they propose to go in the exact-opposite direction by slowing the spending train. Instead of increasing regulation, which (despite A.O.'s false claims) has been growing on numerous fronts for the whole of this young millennium, the Romney-Ryan team pledges to roll back regulations, especially those costing the economy more than $100 million each. Instead of adding more and more complications to the tax code, which is conduct to which politicians of both parties have shown an addiction since they began unraveling the 1986 Reagan-Kemp-Bradley-Gephardt nearly-flat tax almost as soon as its ink was dry, the RR team has repeatedly dedicated itself to simplifying the code.

Also: Unlike in the past, RR would expand individual choice in health care. Unlike in the past, RR would push determinedly for all-systems-forward energy development. (G.W. Bush barely even tried to allow more drilling in the Gulf and offshore of the Mid-Atlantic states.) Indeed, the only "past" policies RR would emulate (updating them, not copying them) are the ones that held sway and worked well from 1994 through 1998 and from 1981 through about 1989. As we shall see, those are policies, and certainly results, for which Americans should devoutly yearn.

Here's where the second part of A.O.'s meretricious mythology comes in. Of the only two (vague) "policies" I can find him specifically blaming for today's crisis, one was actually non-existent and the other was demonstrably beneficial. The first is a rather generic claim that a specifically Republican failure to "regulate" somehow caused the financial crisis. This, of course, is nonsense. It is instructive that A.O. never identifies which regulations were left undone. The truth is that the regulatory state overall grew during the Bush presidency. The other truth is that one major area that went unregulated, namely the market in credit default swaps and related entities, was left wild and woolly due to a decision made jointly by bipartisan (Reagan-Bush-Clinton) Fed Chair appointee Alan Greenspan and by Democratic power brokers Arthur Levitt, Larry Summers, and Robert Rubin. Such regulations are indeed among the only ones conservatives of a certain strain (I am one of them) wholeheartedly support. Because derivatives in effect become traded/used as the equivalent of money itself, and because we believe money as a basic unit of exchange should be regulated just as a football's size and shape must remain the same throughout a game in order that the entire rest of the game be fair and sensible, we always support "sound money" and some controls over instruments (such as derivatives) that themselves become units of exchange.

Yet another truth, almost certainly even more important than the first two, is that rather than a lack of regulations being largely responsible for the 2008 financial crisis, it actually was government interference and regulations that demonstrably caused much of the crisis. Conservatives elsewhere have documented the outsized role of the Community Reinvestment Act, and especially the Clinton-era regulatory changes therein, in adding horribly to the housing bubble by forcing lending institutions to allow people to buy houses even though they by all commonsense standards couldn't afford them. Perhaps even worse, the government-sponsored enterprises Fannie Mae and Freddie Mac were given carte blanche to deliberately distort the market while its Democrat-crony board members made millions of dollars off the backs of the middle class. As is well known, when the Bush administration tried to rein in these out-of-control entities, Democrats led by Barney Frank fought them off, thus adding dangerous amounts of new helium to the aforesaid bubble.

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