Bush the Gambler
Monday, October 6, 2008; 12:30 PM
It's too early to say how much success President Bush's $700 billion bailout will have in restoring stability to the financial markets. (So far, not so good.)
But it's certainly not too early to examine Bush's role in creating -- and hyping -- the crisis.
Andrew J. Bacevich writes in a Washington Post opinion piece: "It's widely thought that the biggest gamble President Bush ever took was deciding to invade Iraq in 2003. It wasn't. His riskiest move was actually one made right after the Sept. 11, 2001, terrorist attacks when he chose not to mobilize the country or summon his fellow citizens to any wartime economic sacrifice. Bush tried to remake the world on the cheap, and as the bill grew larger, he still refused to ask Americans to pay up. During this past week, that gamble collapsed, leaving the rest of us to sort through the wreckage. . . .
"To understand this link between today's financial crisis and Bush's wider national security decisions, we need to go back to 9/11 itself. From the very outset, the president described the 'war on terror' as a vast undertaking of paramount importance. But he simultaneously urged Americans to carry on as if there were no war. 'Get down to Disney World in Florida,' he urged just over two weeks after 9/11. 'Take your families and enjoy life, the way we want it to be enjoyed.' Bush certainly wanted citizens to support his war -- he just wasn't going to require them actually to do anything. The support he sought was not active but passive. It entailed not popular engagement but popular deference. Bush simply wanted citizens (and Congress) to go along without asking too many questions.
"[T]he administration made no effort to expand the armed forces. It sought no additional revenue to cover the costs of waging a protracted conflict. It left the nation's economic priorities unchanged. Instead of sacrifices, it offered tax cuts. So as the American soldier fought, the American consumer binged, encouraged by American banks offering easy credit. . . .
"Bush seems to have calculated -- cynically but correctly -- that prolonging the credit-fueled consumer binge could help keep complaints about his performance as commander in chief from becoming more than a nuisance. Members of Congress calculated -- again correctly -- that their constituents were looking to Capitol Hill for largesse, not lessons in austerity. In this sense, recklessness on Main Street, on Wall Street and at both ends of Pennsylvania Avenue proved mutually reinforcing.
"For both the Bush administration and Congress, this gambit has turned out to be clever rather than smart. The ongoing crisis on Wall Street has now, in effect, ended the Bush presidency."
Dean Baker writes for the Center for Economic and Policy Research on Bush's recent maneuverings: "This is the first time in the history of the United States that the president has sought to provoke a financial panic to get legislation through Congress. While this has proven to be a successful political strategy, it marks yet another low point in American politics.
"It was incredibly irresponsible for President Bush to tell the American people on national television that the country could be facing another Great Depression. By contrast, when we actually were in the Great Depression, President Roosevelt said that, 'we have nothing to fear, but fear itself.'
"It was even more irresponsible for him to seize on the decline in the stock market five days later as evidence that his bailout was needed for the economy. President Bush must surely understand, as all economists know, that the daily swings in the stock market are driven by mass psychology and have almost nothing to do with the underlying strength in the economy.
"The scare tactics of President Bush, Secretary Paulson and Federal Reserve Board Chairman Bernanke created sufficient panic, so that by the time of the vote, much of the public believed that the defeat of the bailout may actually have had serious consequences for the economy. Millions of people have changed their behavior because of this fear, with many pulling money out of bank and money market accounts, and in other ways adjusting their financial plans.
"This effort to promote panic is especially striking since the country's dire economic situation is almost entirely the result of the Bush Administration's policy failures."