Calling The Obama Bluff

Just recently, Barack Obama said, for the five or sixth hundredth time in the last year and a half: “The worst thing we could do is to go back to the very same policies that created this mess in the first place.”

He was referring of course to the profligate policies instituted under George W. Bush — about whom I’ve written here — and yet the question remains: why then has Barack Obama, from the beginning of his term, “gone back to the very same policies” instituted by his favorite scapegoat, without whom he’d be lost?

Unfortunately, I have no good answer for that question, but here’s something everyone, including Barack Obama, should know:

The President of the United States can’t create budget deficits or budget surpluses.

All spending bills, without exception, are born in the House of Representatives, and all taxes are voted into law by Congress.

Quoting Thomas Sowell:

Democrats controlled both houses of Congress before Barack Obama became president. The deficit he inherited was created by the Congressional Democrats, including Senator Barack Obama, who did absolutely nothing to oppose the runaway spending. He was one of the biggest of the big spenders.

The last time the federal government had a budget surplus, Bill Clinton was president, so it was called “the Clinton surplus.” But Republicans controlled the House of Representatives, where all spending bills originate, for the first time in 40 years. It was also the first budget surplus in more than a quarter of a century.

The only direct power that any president has that can affect deficits and surpluses is the power to veto spending bills. President Bush did not veto enough spending bills but Senator Obama and his fellow Democrats in control of Congress were the ones who passed the spending bills.

Today, with Barack Obama in the White House, allied with Harry Reid and Nancy Pelosi in charge in Congress, the national debt is a bigger share of the national output than it has been in more than half a century. And its share is projected to continue going up for years to come, becoming larger than national output in 2012.

Having created this scary situation, President Obama now says, “Don’t give in to fear. Let’s reach for hope.” The voters reached for hope when they elected Obama. The fear comes from what he has done since taking office.

“The worst thing we could do is to go back to the very same policies that created this mess in the first place,” he said recently. “In November, you’re going to have that choice.”

Another political fable is that the current economic downturn is due to not enough government regulation of the housing and financial markets. But it was precisely the government regulators, under pressure from politicians, who forced banks and other lending institutions to lower their standards for making mortgage loans.

These risky loans, and the defaults that followed, were what set off a chain reaction of massive financial losses that brought down the whole economy.

Was this due to George W. Bush and the Republicans? Only partly. Most of those who pushed the lowering of mortgage lending standards were Democrats– notably Congressman Barney Frank and Senator Christopher Dodd, though too many Republicans went along.

At the heart of these policies were Fannie Mae and Freddie Mac, who bought huge amounts of risky mortgages, passing the risk on from the banks that lent the money (and made the profits) to the taxpayers who were not even aware that they would end up paying in the end.

When President Bush said in 2004 that Fannie Mae and Freddie Mac should be reined in, 76 members of the House of Representatives issued a statement to the contrary. These included Barney Frank, Nancy Pelosi, Maxine Waters and Charles Rangel.

If we are going to talk about “the policies that created this mess in the first place,” let’s at least get the facts straight and the names right.

The current policies of the Obama administration are a continuation of the same reckless policies that brought on the current economic problems– all in the name of “change.” Fannie Mae and Freddie Mac are still sacred cows in Washington, even though they have already required the biggest bailouts of all.

Why? Because they allow politicians to direct vast sums of money where it will do politicians the most good, either personally or in terms of buying votes in the next election.

(Link)

5 Comments

  • ScummyD

    September 7, 2010

    “The President of the United States can’t create budget deficits or budget surpluses.

    All spending bills, without exception, are born in the House of Representatives, and all taxes are voted into law by Congress.”

    But NOTHING actually becomes law without a president’s signature. The president ALONE is ultimately responsible for fiscal policy because he ALONE has the final say on what does or does not become law.

    No law is passed with the president’s signature so the idea that the POTUS can’t create deficits and surpluses is no more true than saying that Congress alone can create them. Without both parties working together no spending would occur. The POTUS either signs off on or does not sign off on the taxing and spending bills coming out of Congress. On this basis the POTUS is far more responsible for deficits and surpluses than legislators are who, essentially, merely put forth suggestions for laws which the POTUS then decides on.

  • Ray

    September 7, 2010

    I think you make a very legitimate point, ScummyD, but I don’t think you can say that the president ALONE is responsible. It’s a collaborative effort.

  • Marshep

    September 7, 2010

    @ScummyD “Without both parties working together no spending would occur.” Correction: without approval of Congress and POTUS, or Congress super-majority (veto override), no spending. If Dems (or Repubs) have super-majority, or elites abandon the pretense, spending process only requires Congress approve and president sign; party is not relevant.

    We know the truth of what you quote above, Ray, it has been in the public record all along. “Resistance is futile” they say, “you will be assimilated” into the collective health care Obama-way social justice. Forget the damn facts, and sing the lie of how good giving homes to all was for the American way.

  • KJJ

    October 14, 2011

    ” Forget the damn facts, and sing the lie of how good giving homes to all was for the American way.”

    Not too smart; we all paid for that stupid mistake.

    I don’t think we should have to bail out anyone. Let them learn the hard way – like all the rest of us do.

  • KJJ

    October 14, 2011

    Also, if you can’t blame Bush, how can you blame Obama?

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