Financial crisis + 2 years: Obama, the Tea Party, and the US attention span

by | Sep 18, 2010

NPR’s Planet Money has been conducting an ongoing case study of a toxic asset, and there was an interesting observation in Friday morning’s installment examining the origin of this toxic asset, the housing bubble circa 2005:

DAVID KESTENBAUM: How weird would it be to, like, get in a time machine and go back? You would feel like everyone was on some sort of strange drug.

LISA LIBERATOR-KINNEY: Yeah, I think so. And, you know, I could probably shout at the top of my lungs of what was to come and I don’t think anyone would have paid any attention.

Now, let us mark the anniversary of the financial crisis: September 18, 2008 was the day America’s leaders were told that the U.S. economy was utterly and disasterously in a ditch. It has been exactly 2 years. Seems much longer, doesn’t it?

It was a Thursday evening when Fed chairman Ben Bernanke and Treasury Secretary Henry Paulson held an urgent meeting with congressional leaders in the House Speaker’s office at the U.S. Capitol. In describing the sense of doom, the New York Times noted “stunned silence,” and gulps, and a gesture like a plummeting bird.

The next morning, Sen. Chris Dodd told Good Morning America “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”

American citizens, however, paid little attention. As I blogged that weekend, even while respected historians like Kevin Phillips were estimating that the next “couple of decades” would be “very difficult for America,” the stunning financial crisis of 2008 took a back seat in our national consciousness to more important matters like NFL football and Talk Like a Pirate Day. This was, after all, no O.J. verdict or even an American Idol finale, but merely our wrecked economy.

Election season continued, the Dow fell 679 points on October 9 during Wall Street’s worst week ever, and on Inauguration Day 2009, we collectively patted ourselves on the back for at least finally electing a black president. We paid little attention to the grim tone of his address, because Super Bowl XLIII was on the horizon.

Finally, in late February, Americans began to get seriously upset upon finding themselves in an economic ditch. Nobody alive today can remember that far back, but ironically it was CNBC analyst Rick Santelli who began all the Tea Party outrage when, after the Wall Street bailouts under the Bush administration, the Obama administration proposed assistance to homeowners. Santelli went ballistic. Then, in April, he participated in an Economic Leadership Forum hosted by the George Bush Presidential Library Foundation.

Sparked by that initial burst of Wall Street insider rage, the anger of Americans over being in an economic ditch has been carefully kindled, fanned, fueled, and built by other special interests — like the healthcare industry in the summer of 2009, Dick Armey and FreedomWorks, and David Koch‘s Americans for Prosperity.

Given our severe attention deficits, we Americans make outstanding targets for all sorts of bar bets and shell games. Under the hypnotic spell of spokesmodel Sarah Palin, the Tea Party has grown into a ridiculously successful industry in its own right, funneling thick stacks of cash into elections from coast to coast in order to return control to the same lushes who drove us into the ditch in the first place.

I had a father who was an alcoholic, and certain aspects of our current political climate remind me of those perplexing days. For example, the more obvious my dad’s driving mistakes became to us kids in the car with him, the more he would loudly and angrily insist that he was capable of driving.

Tea Party followers blame President Obama for driving us into the ditch, but he didn’t get into the driver’s seat until 4 months after the horrendous crash. Republican policies had been steering our country for 8 years. It was a Republican administration at the wheel 2 years ago today, and for another 4 months after that. The Troubled Asset Relief Program (TARP), for example, was signed into law by President George W. Bush on October 3, 2008.

Nevertheless, after lots of irrational yelling from the big and angry Tea Company, Americans seem frightened enough to let Republicans have the keys back.

I’m sorry, but the standard Tea Party protests don’t pass the sobriety test:

“Taxes are out of control!”

Taxes are at their lowest levels since 1950. Look, nobody likes to pay taxes, but taxes are how we fund things as a group — things we all want, like roads, police and fire protection, a military, and meat inspectors. It’s getting to be like we all expect to eat a delicious potluck dinner, but are outraged at being asked to bring a dish.

“The deficit and spending are out of control!”

The latest figures show that Federal government finances continue to improve. When you drive into a ditch, you have to expect tow truck and repair expenses. But the deficit is smaller than it was, and spending is coming down too. Also, should Republicans, who drove us into that ditch after turning the $237 billion Clinton budget surplus into a $1.3 trillion deficit really be cautioning anyone about deficits? Modern conservatives worship Ronald Reagan, but he actually quadrupled the national debt during his presidency (from $700 billion to $3 trillion), switching the U.S. from the world’s largest creditor nation to its largest debtor.

“Unemployment is out of control!”

If you take a look at the unemployment rate for the past decade, it’s clear the skyrocket took off in January of 2008, a full year before President Obama took office, and that its climb was stopped within his first year, then brought down to the current 9.6 percent. Compare this with President Reagan, who took office with a 7.5 percent rate and 23 months later was facing 10.8 percent unemployment.

“Illegal immigration is out of control!”

The number of illegal immigrants plummeted from 12 million in 2007 to 11.1 million in 2009, largely because of our wrecked economy.

“Obama’s recovery plan has not worked!”

Again, compare President Reagan’s performance, and remember that the financial crisis handed to Obama was much deeper than anything Reagan faced. There was a real possibility that General Electric would collapse 2 years ago, and that McDonald’s could not make its payroll. The Great Depression of the 1930s lasted a full 10 years. Obama has been in office just 1 and 2/3 years, and his efforts have been fought by Republicans tooth and nail, yet he and Congress have made an astounding amount of progress in fixing our many broken systems.

“Obama and the tax and spend Democrats are turning us socialist!

The very same hysterical rants were heard from some of the very same people — Newt Gingrich, Dick Armey — back when Bill Clinton was getting his Deficit Reduction Act passed in 1993 without a single Republican vote. Of course, no one alive today can remember how that worked out, but history seems to indicate an economic boom and a $237 billion budget surplus by the end of Clinton’s 8 years in office..

We have tried both Republican and Democratic approaches, and we have seen where they have led. For some reason, there is still a public impression that the Republicans are the party of fiscal responsibility and income growth.

History, however, does not support these impressions. When you look at the numbers since World War 2, Americans of every income level — even the highest incomes — have enjoyed better income growth under Democrats, not Republicans:

Republicans are also thought of as the party under which business does best. After all the business failures and near-failures we have so recently witnessed, how anyone can still believe this is beyond my comprehension.

Will Americans, just 2 years after a profoundly serious crash — one that caused so many job losses, foreclosures, bankruptcies, hunger, and even suicide — yet again take the same wrong turn which led them into that ditch?

This is where I wonder whether everyone has taken some strange drug.

I know this much: If we drive into that ditch again soon, we will not be getting out.

As President George W. Bush once explained, “Fool me once, shame on — shame on you.”

That was during his first term.

Oh — and go Bears!


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