By Michael Abramowitz and Dan Eggen
Washington Post Staff Writers
Saturday, September 20, 2008
President Bush's decision to shore up the financial markets with massive government intervention is the latest sign of a broad ideological transformation of his presidency.
After a first term in which he largely adhered to conservative -- or neoconservative -- principles, Bush has moved away from long-standing positions on a range of foreign and domestic issues. In the final year of his second term, he has reached out diplomatically to North Korea and Iran, engineered a dramatic midcourse correction on the Iraq war and increased the government's role in the daily workings of the economy to a degree that would have seemed unimaginable when he first pursued the nation's highest office.
Given that Bush toppled two foreign governments and slashed taxes dramatically in his first term, the policies of his second term are striking, particularly to those who had hoped his presidency might usher in enduring conservative rule in Washington. Some leading conservatives seemed stunned yesterday by the turn of events that has left the federal government in control of one of the world's biggest insurance companies and the two largest financiers of home mortgages.
"I believe that the president is exhausted and the vice president has been marginalized, and what you now have is the Washington interests . . . dominating the administration," former House speaker Newt Gingrich (R-Ga.) said in an interview yesterday. "We have now launched big-government Republicanism. If we saw France do this, Italy do this, we would have thought it was crazy. We would have had pious speeches about the folly of bureaucrats running businesses."
Given the gravity of the financial crisis, others in the political world did not begrudge Bush his deviation from conservative purity on economic policy. Some in both parties considered the administration's moves a welcome abandonment of ideology to cope with a global economic slowdown, instability in Pakistan and Afghanistan, the ongoing war in Iraq and the nuclear ambitions of Iran.
"He has become overcome by hard realities, including his weaker political base and intractable problems," said Fred I. Greenstein, a leading presidential scholar at Princeton University. "That makes him more like a garden-variety pragmatist and less like a mission politician who is driven by a creed."
John Gardner, a speechwriter and consultant who served in Bush's first administration, said he saw the president's recent moves on the economy as less driven by an ideological shift than a reaction to unusual events. "I am just not convinced that if these things had happened in 2002 or 2003 the answers would have been any different," he said. "The Fed and Treasury have had policy tools that have been in existence for some time, and they are being used because of the pressure of events. I don't think any president would want to say, 'Credit collapsed on my watch.' "
Former congressman Vin Weber (R-Minn.), once a close ally of Gingrich, agreed. "We're beyond ideology," he said. "Most Republicans and Democrats don't like the idea of a taxpayer bailout and expansion of regulations," but right now, he said, "I think it's a necessary course correction."
That was the view yesterday at the White House, where the president and his aides suggested they had little choice but to act to avoid an economic calamity.
"Our system of free enterprise rests on the conviction that the federal government should interfere in the marketplace only when necessary," Bush told reporters in the Rose Garden. "Given the precarious state of today's financial markets, and their vital importance to the daily lives of the American people, government intervention is not only warranted -- it is essential."
One of his top economic advisers was more blunt in a subsequent briefing for reporters. "The consequences of inaction here were crystal clear and were far worse, far more severe, than any concerns about the consequences of the action," said Keith Hennessey, director of the National Economic Council. "This president has always been averse to government intervention in markets, and he only has wanted to do that when it's been necessary. It is clearly necessary now, as those markets are not functioning properly."
Bush has always been less ideologically rigid than his critics have granted, embracing a dramatic expansion of the Medicare program with a new prescription drug program (albeit one tailored along free-market principles) and pushing, unsuccessfully, for a liberalization of immigration rules. He also presided over a dramatic increase in federal spending, disappointing many conservatives.
Longtime conservative activist Richard A. Viguerie argues that Bush moved away from conservative principles long ago, saying the president did not fight hard enough to limit the growth of government and defend conservative social positions, such as opposition to same-sex marriage. "He did betray us, just like his father did," said Viguerie, who has written a book that sharply criticizes the current president's tenure. "He promised he would govern like a conservative, and it just hasn't been the case."
Few outside analysts disagree that Bush moved to the center, especially after Republicans lost control of Congress in 2006, much as Ronald Reagan and Bill Clinton did after they confronted political setbacks. The changes are reflected in an overhaul of personnel at key Cabinet agencies, particularly State, Defense and the Treasury, where secretaries pursued -- or were allowed to pursue -- much more pragmatic policies than their predecessors.
Secretary of State Condoleezza Rice, for instance, has tried to restart a Middle East peace process that had been largely abandoned in the first term, and she was given more flexibility by Bush to pursue a diplomatic deal with North Korea over its nuclear weapons program.
Defense Secretary Robert M. Gates has been open to different approaches on Iraq and sought to defuse the tensions between civilian leaders and uniformed officers that endured at the Pentagon under his predecessor, Donald H. Rumsfeld.
The change was also pronounced at Treasury, where Paulson was delegated extensive powers over economic decision-making and has used them in a wide-ranging effort to avert economic collapse. Along with other top economic officials, he has led the takeovers of Fannie Mae, Freddie Mac and American International Group -- and an emerging plan for the government to take hundreds of billions of dollars in distressed mortgages and other assets off the hands of banks and other financial institutions.
"What's going on is learning -- it does happen in the light of the experience," said John Lewis Gaddis, a diplomatic historian at Yale University who has been friendly to the administration. "I think the second term is quite different than the first term, particularly in foreign policy and now it is happening on the economy. . . . There is a far greater degree of pragmatism and less ideological rigidity."
In a roundtable interview with White House reporters yesterday, national security adviser Stephen J. Hadley took issue with this sentiment, saying basic elements of Bush foreign policy remain in place -- such as an aggressive effort to fight terrorism -- even while circumstances have changed over the course of the administration. "The basic principles are the same, the fundamental approach is the same, but we have tried to be flexible and entrepreneurial and creative about how we carry out those policies," Hadley said. "We've tried to learn as we've gone forward in this situation."
"I see a lot more continuity, certainly in terms of who this president is, what he stands for, what his values and principles are," Hadley said. "I mean, I think you've heard him, you've been listening to his speeches over the last eight years. This is a man who is remarkably unaffected by eight years as president, in terms of who he is, what he stands for, how he thinks of himself."