Republicans need something to say about 2008.Oct 26, 2015, Vol. 21, No. 07 • By PETER FERRARA and STEPHEN MOORE
After the Great Depression, Democrats ran against Herbert Hoover for 30 years—and with great success. Even though Hoover’s policies were anything but market-oriented—he greatly raised spending, taxes, and tariffs in response to the 1929 Wall Street crash—Republicans took the fall for Hooverism. It wasn’t until Ronald Reagan that free markets were fully politically rehabilitated.
History may be repeating itself. Speaking in New Hampshire in July, Hillary Clinton warned voters not to turn back control of the economic levers to Republicans: “We wouldn’t have had to have a recovery if we hadn’t had the kind of poor management and bad economic policies that put us into the ditch in the first place.” She added, “We can’t go back to the old policies that failed us before.” This will become the Democratic mantra in the 2016 campaign.
The liberal narrative of the real estate meltdown of 2008 has been repeated over and over for seven years. To wit: Republican tax cuts and deregulation led to a massive bubble and overinvestment, which crashed the economy. And then Republicans bailed out their rich Wall Street fat cat friends, while working Americans lost their jobs, homes, and savings. Barack Obama’s activist government intervention helped save America from a second Great Depression.
Republicans by and large have had no response and instead pretend that the 2008 Great Recession never happened. The presidential candidates have had almost nothing to say about why the collapse occurred or what they would have done differently. Liberal and conservative voters are still seething with anger over the GOP’s hundreds of billions in bailouts to the bad actors of Wall Street. Republicans seem to hope delusionally that voters don’t remember what happened eight years ago or don’t care.
Oh, but they do. And an inability to explain the 2008 meltdown undermines the GOP’s strongest case against electing another Democrat to the White House, which is that Obama-nomics has given us a paltry recovery with the middle class and the poor losing ground.
After almost eight years, Republicans can surely do better. There are three points to be made about this ugly episode. First, liberal government policies are what caused the real estate bubble. Second, Democrats and the Fed are enacting policies that are inflating yet another financial bubble. Third, and most important, it’s time to swear off all future corporate and Wall Street bailouts.
The real estate meltdown isn’t that hard to explain. The stage was set with regulations during the 1990s, such as the revised Community Reinvestment Act, that strong-armed banks to relax their traditional mortgage underwriting standards and led to a culture of bad home loans, especially to low-income borrowers. All of this was done in the name of preventing discriminatory “redlining” loan practices.
Bill Clinton announced in June 1995, at a White House ceremony on expanding home ownership, that his new lending rules would “not cost the taxpayers one extra cent.” In 1996 HUD established quotas requiring Fannie Mae and Freddie Mac to devote at least 40 percent of their funds to low- and moderate-income housing. Former Texas senator Phil Gramm noted in the Wall Street Journal,
By the time the housing market collapsed, Fannie and Freddie faced three quotas. The first was for mortgages to individuals with below-average income, set at 56% of their overall mortgage holdings. The second targeted families with incomes at or below 60% of area median income, set at 27% of their holdings. The third targeted geographic areas deemed to be underserved, set at 35%.
Peter Wallison, an expert who served on the federal Financial Crisis Inquiry Commission, explains how this corrupted the entire lending industry: “Once the standards were relaxed for low-income borrowers, it would seem impossible to deny these benefits to the prime market. Indeed, bank regulators . . . could hardly disapprove of similar loans made to better qualified borrowers.”
Alas, the Bush administration added fuel to the burgeoning subprime mortgage crisis by obsessively promoting through HUD higher and higher rates of homeownership. By 2006 about half of all mortgage loans made in the United States could be classified as nonprime for one reason or another.
12:01 AM, Aug 8, 2015 • By IRWIN M. STELZER
On Friday, the government reported that the economy added 215,000 jobs last month, and that the unemployment rate remained a low 5 percent. That could support a decision by the Federal Reserve Board to raise its key interest rate in September.
7:18 AM, May 9, 2015 • By IRWIN M. STELZER
Prices matter. They are the economists’ canary in the coal mine, an indicator of what is to come. Not necessarily as grim an indicator as when we have here a dead canary, but a pointer that cannot be ignored. When oil prices plummeted, analysts paid attention, hunting for causes and effects. Wages are the price of labor.
12:01 AM, Apr 4, 2015 • By IRWIN M. STELZER
The economy might, but only might, be slowing. In March we added only 126,000 jobs, the lowest increase since December 2013, barely enough to absorb new entrants into the workforce. Almost all measures of the health of the labor market -- the unemployment rate, the number of workers jobless for more than 27 weeks, the number involuntarily working short hours or too discouraged to continue looking for a job -- remain more or less stuck at present levels.
12:01 AM, Mar 7, 2015 • By IRWIN M. STELZER
Sometimes -- not often, but sometimes -- anecdote is more revealing than data. Especially when the data are subject to major revisions, which is the case with most monthly economic data. This is one of those times. Last week’s jobs report -- 295,00 new nonfarm jobs in February -- was a bit more robust than most experts had expected, and the unemployment rate ticked down from 5.7% to 5.5%.
8:35 AM, Sep 26, 2014 • By DANIEL HALPER
A new chart from the minority side of the Senate Budget Committee shows a startling fact: Almost 1 in 4 Americans between the ages of 25-54 (or prime working years) are not working.
Here's a chart showing those in that age group currently employed (95.6 million) and those who aren't (28.9 million):
9:42 AM, Aug 21, 2014 • By GEOFFREY NORMAN
First time claims were expected to be come in at 303,000. The actual number was 298,000. As Shobhana Chandra of Bloomberg reports:
8:32 AM, May 2, 2014 • By DANIEL HALPER
The latest jobs numbers from the Bureau of Labor Statistics:
Total nonfarm payroll employment rose by 288,000, and the unemployment rate fell by 0.4 percentage point to 6.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Employment gains were widespread, led by job growth in professional and business services, retail trade, food services and drinking places, and construction.
Household Survey Data
12:17 PM, Mar 4, 2014 • By JERYL BIER
Here's a rather harsh assessment of the last four years under the Obama administration's economic policies:
The corrupting effects of Obamacare.Feb 24, 2014, Vol. 19, No. 23 • By JAY COST
On February 4 the Congressional Budget Office dropped a bombshell. Analysts there found that Obamacare’s structure will create an enormous implicit tax on work, such that people on the lower end of the economic scale will have an incentive to quit their jobs or scale back to part time to maximize their premium subsidies. In an earlier study, CBO had estimated that this disincentive to work would destroy the equivalent of less than a million full-time jobs. Now, it projects that an equivalent of more than 2 million jobs will be lost as people voluntarily leave the workforce.
10:26 AM, Sep 2, 2013 • By GEOFFREY NORMAN
The celebration of work and the working man and woman feels a little forced this year. Union have, as Kevin Bogardus of The Hill reports:
'More people retiring early, going on disability, turning to welfare, and giving up looking for work altogether.'9:01 AM, Sep 2, 2013 • By DANIEL HALPER
Alabama senator Jeff Sessions, a Republican, is marking Labor Day with a statement lamenting the decline in America’s workforce and the strident push toward passing an immigration bill.
8:31 AM, Jul 5, 2013 • By DANIEL HALPER
The latest jobs numbers from the the U.S. Bureau of Labor Statistics:
THE EMPLOYMENT SITUATION -- JUNE 2013
Total nonfarm payroll employment increased by 195,000 in June, and the unemployment rate was unchanged at 7.6 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in leisure and hospitality, professional and business services, retail trade, health care, and financial activities.
Household Survey Data
8:31 AM, Jun 7, 2013 • By DANIEL HALPER
The unemployment rate ticked up, according to new numbers from the Bureau of Labor Statistics:
Total nonfarm payroll employment increased by 175,000 in May, and the unemployment rate was essentially unchanged at 7.6 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, food services and drinking places, and retail trade.
Household Survey Data
Both the number of unemployed persons, at 11.8 million, and the unemployment rate, at 7.6 percent, were essentially unchanged in May. (See table A-1.)