Department of Offense

How the Democrats Nearly Destroyed the Economy
About The Author:
Political analyst Mona Charen is former White House staffer who served as Nancy Reagan’s speechwriter. Her syndicated column, launched in 1987, is featured in more than 200 newspapers.
Mona Charen Mona Charen– Fri Jun 24, 3:00 am ET
Creators Syndicate – History will be kind to me for I intend to write it. — Winston Churchill

There is history — a chronicle of human events — and then there is perceived history. So often, the two are wildly at odds.
In 1963, a popular Democratic president was assassinated by a Marxist named Oswald, who had actually defected to the Soviet Union and returned to the U.S. with a Soviet wife, was an active member of the Fair Play for Cuba Committee, and had attempted to assassinate a right-wing general named Edwin Walker earlier in the year.

Yet those who write history found these facts inconvenient. They created a different history in which the “atmosphere of hate” in the southern city of Dallas, Texas, led to the terrible political violence. In other words, it was political conservatism that led to John F. Kennedy’s assassination. This perceived history was recycled as recently as the shooting of Rep. Gabrielle Giffords. ABC’s Christiane Amanpour, interviewing Jean Kennedy Smith, noted that the Kennedy assassination was “eerily relevant” and asked Kennedy to evaluate the “political atmosphere” in the country today.

Starting just a few years after the Kennedy assassination, American liberals began to consider anti-communism a kind of mental disorder. Hostility to communism was akin to racism, sexism and other character flaws. Reagan’s description of the Soviet Union as an “evil empire” cemented liberal suspicions that Reagan was a dangerous buffoon. Yet starting in 1989, when the Berlin Wall fell, liberals began to find their anti-anti-communism embarrassing. And so they created a perceived history — one in which the Cold War was a time of consensus, a time when, as former Sen. Bill Bradley put it, “We knew where we stood on foreign policy.”

More recently we’ve witnessed the creation of new historical narrative about the financial crisis of 2008. The perceived history, eagerly peddled by liberals and Democrats, is that the crash of 2008 was the result of Wall Street greed. It was unregulated capitalism that brought us to the brink of financial meltdown, the Democrats insisted. And they codified their manufactured history in a law, the Dodd-Frank Act, that completely avoided the true problem.
It’s both surprising and gratifying, therefore, to report that a great revisionist history has just been published by none other than a New York Times reporter, Gretchen Morgenson, and a financial analyst, Joshua Rosner.
In “Reckless Endangerment,” Morgenson and Rosner offer considerable censure for reckless bankers, lax rating agencies, captured regulators and unscrupulous businessmen. But the greatest responsibility for the collapse of the housing market and the near “Armageddon” of the American economy belongs to Fannie Mae and Freddie Mac and to the politicians who created and protected them. With a couple of prominent exceptions, the politicians were Democrats claiming to do good for the poor. Along the way, they enriched themselves and their friends, stuffed their campaign coffers, and resisted all attempts to enforce market discipline. When the inevitable collapse arrived, the entire economy suffered, but no one more than the poor.

Jim Johnson, adviser to Walter Mondale and John Kerry, amassed a personal fortune estimated at $100 million during his nine years as CEO of Fannie Mae. “Under Johnson,” Morgenson and Rosner write, “Fannie Mae led the way in encouraging loose lending practices among the banks whose loans the company bought. A Pied Piper of the financial sector, Johnson led both the private and public sectors down a path that led directly to the credit crisis of 2008.”
Fannie Mae lied about its profits, intimidated adversaries, bought off members of Congress with lavish contributions, hired (and thereby co-opted) academics, purchased political ads (through its foundation) and stacked congressional hearings with friendly bankers, community activists and advocacy groups (including ACORN). Fannie Mae also hired the friends and relations of key members of Congress (including Rep. Barney Frank’s partner).

“Reckless Endangerment” includes the Clinton administration’s contribution to the home-ownership catastrophe. Clinton had claimed that dramatically increasing homeownership would boost the economy, instead “in just a few short years, all of the venerable rules governing the relationship between borrower and lender went out the window, starting with … the requirement that a borrower put down a substantial amount of cash in a property, verify his income, and demonstrate an ability to service his debts.”

“Reckless Endangerment” utterly deflates the perceived history of the 2008 crash. Yes, there was greed — when is there not? But it was government distortions of markets — not “unregulated capitalism” — that led the economy to disaster.

To find out more about Mona Charen and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2011 CREATORS.COM

Dear Abby,
My husband has a long record of money problems. He runs up huge credit-card bills and at the end of the month, if I try to pay them off, he shouts at me, saying I am stealing his money. He says, pay the minimum and lets our kids worry about the rest, but already we can hardly keep up with the interest.

Also he has been so arrogant and abusive toward our neighbors that most of them no longer speak to us. The few that do are an odd bunch, to whom he has been giving a lot of expensive gifts, running up our bills even more. Also, he has gotten religious. One week he hangs out with Catholics and the next with people who say the Pope is the Anti-Christ, and the next he’s with Muslims. Finally,the last straw. He’s demanding that before anyone can be in the same room with him, they must sign a loyalty oath. It’s just so horribly creepy! Can you help?

Signed, Lost in DC
—————————————————

Dear Lost:
Stop whining, Michelle. You’re getting to live in the White House for free, travel the world, and have others pay for everything for you. You can divorce the jerk any time you want. The rest of us are stuck with the son-of-a-bitch for two more years!
Signed, Abby

Why Obama Is Likely to Lose in 2012
Even a small drop in the share of black voters would wipe out his winning margin in North Carolina.
President Barack Obama is likely to be defeated in 2012. The reason is that he faces four serious threats. The economy is very weak and unlikely to experience a robust recovery by Election Day. Key voter groups have soured on him. He’s defending unpopular policies. And he’s made bad strategic decisions.

Let’s start with the economy. Unemployment is at 9.1%, with almost 14 million Americans out of work. Nearly half the jobless have been without work for more than six months. Mr. Obama promised much better, declaring that his February 2009 stimulus would cause unemployment to peak at 8% by the end of summer 2009 and drop to roughly 6.8% today.

After boasting in June 2010 that “Our economy . . . is now growing at a good clip,” he laughingly admitted last week, “Shovel-ready was not as shovel-ready as we expected.” The humor will be lost on most. In Wednesday’s Bloomberg poll, Americans believe they are worse off than when Mr. Obama took office by a 44% to 34% margin.

The last president re-elected with unemployment over 7.2% was FDR in 1936. Ronald Reagan overcame 7.2% unemployment because the rate was dropping dramatically (it had been over 10%) as the economy grew very rapidly in 1983 and 1984. Today, in contrast, the Federal Reserve says growth will be less than 3% this year and less than 3.8% next year, with unemployment between 7.8% and 8.2% by Election Day.

Mr. Obama also has problems with his base. For example, Jewish voters are upset with his policy toward Israel, and left-wing bloggers at last week’s NetRoots conference were angry over Mr. Obama’s failure to deliver a leftist utopia. Weak Jewish support could significantly narrow Mr. Obama’s margin in states like Florida, while a disappointed left could deprive him of the volunteers so critical to his success in 2008.

Mr. Obama’s standing has declined among other, larger groups. Gallup reported his job approval rating Tuesday at 45%, down from 67% at his inaugural. Among the groups showing a larger-than-average decline since 2009 are whites (down 25 points); older voters (down 24); independents and college graduates (both down 23), those with a high-school education or less, men, and Southerners (all down 22); women (down 21 points); married couples and those making $2,000-$4,000 a month (down 20). This all points to severe trouble in suburbs and midsized cities in states likes Colorado, Indiana, Ohio, Pennsylvania and Nevada.

There’s more. Approval among younger voters has dropped 22 points, and it’s dropped 20 points among Latinos. Even African-American voters are less excited about Mr. Obama than they were—and than he needs them to be. For example, if their share of the turnout drops just one point in North Carolina, Mr. Obama’s 2008 winning margin there is wiped out two and a half times over.

While many voters still personally like Mr. Obama, they deeply oppose his policies, and he tends to be weakest on issues voters consider most important. In the June 13 NBC News/Wall Street Journal poll, 56% disapprove of Mr. Obama’s handling of the economy. Fifty-nine percent in the Economist/YouGov poll of June 14 disapprove of how he’s dealt with the deficit.

And his health-care reform still holds its unique place as the only major piece of social legislation that became less popular after it was passed. According to yesterday’s Pollster.com average of recent surveys, 38% approve of ObamaCare, while its survey average when the bill was passed in March 2010 showed that 41% approved.

Finally, Mr. Obama has made a strategic blunder. While he needs to raise money and organize, he decided to be a candidate this year rather than president. He has thus unnecessarily abandoned one of incumbency’s great strengths, which is the opportunity to govern and distance himself from partisan politics until next spring. Instead, Team Obama has attacked potential GOP opponents and slandered Republican proposals with abandon. This is not what the public is looking for from the former apostle of hope and change.

In politics, 17 months can constitute several geological ages. Political fortunes can wax and wane. And weak incumbents can defeat even weaker challengers.

At the same time, objective circumstances like an anemic economy and bad decisions not only matter; they become very nearly dispositive. Mr. Obama is now at the mercy of policies and events he has set in motion. He can’t escape accountability, especially on the economy. He’s not done yet, but it will be tough to recover. More in a future column.

This article originally appeared on WSJ.com on Wednesday, June 23, 2011.