By Kim Lewandowski
In 2007, the Democratic Party controlled a majority in both chambers for the first time since the end of the 103rd Congress in 1995.
For those who are listening to the fallacy that everything is “Bush’s Fault”, think about this: On January 3, 2007, the day the Democrats took control of Congress, the DOW Jones Industrial Average value was, at closing January 5, 2007: 12,398.01. Since then, from June 20, 2008 to January 28, 2011 it went well below 12,000 (as far down as 6,626.94 on March 6, 2009). It is finally showing some signs of recovery, but even the current Dow is inflated by virtually free money and the cash-printing of the Fed.
The Unemployment rate: Was 4.6% in January of 2007, and at 8.1% currently. Please note that an undetermined number of unemployed people that have used up all unemployment benefits and continue to be unemployed IS NOT counted in this percentage as it only counts those on the unemployment compensation rolls.
Debt: Is shown in the table below for each President and who controls Congress. And ahead of predictions, total national debt reached 100% of the GDP by the third quarter of 2011. If counted using the total public debt outstanding over the annual GDP in chained 2005 dollars, the ratio reached 115% on Feb. 2012.
People complain about exploding deficits under George W. Bush, and some of this consternation is well-founded with his increased spending every year, often at a greater pace than his predecessor. However, his economic policies led to even greater increases in tax revenue per economic dollar created. President Bush demonstrated that letting people keep more of their own money leads to economic growth. In 2001, America was experiencing the unprecedented triple shock of a recession following the dot-com bust, economic disruption due to the terrorist attacks of September 11, and corporate accounting scandals. Fortunately, the country was able to overcome these challenges, in part because President Bush’s tax relief put more money in families’ pockets and encouraged businesses to grow and invest. Following the President’s 2003 tax relief, the United States had 52 months of uninterrupted job growth, the longest run on record” per the White House.gov archives site.
As another example: Based on that historical record from the National Bureau of Economic Research, we should be in the third year of an economic recovery boom right now. That is what we experienced under Reagan, which was the last time we recovered from a recession of similar magnitude. In September 1983, the Reagan recovery, less than a year after it began, created 1.1 million jobs in that one month alone compared to Obama’s 230,000. In the second year of the Reagan recovery, real economic growth boomed by 6.8%, the highest in 50 years.
But back to our current issues: Clinton shares at least some of the blame for the current financial chaos. He beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans. In 1999 Clinton repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks. The move prompted the era of the superbank and primed the sub-prime pump. The year before the repeal sub-prime loans were just 5% of all mortgage lending. By the time the credit crunch blew up it was approaching 30%. In 2003, the Bush administration tried to stop the runaway train of Fannie Mae and Freddie Mac, and Republicans controlled both chambers of Congress. Democrats alone didn’t stop this. No one filibustered the Bush administration’s bill in the Senate; it didn’t have the votes to pass. Likewise in 2006, when Chuck Hagel, John McCain, John Sununu, and Elizabeth Dole attempted to fix Fannie and Freddie, Republicans controlled Congress and did nothing to pass this bill. Democrats blocked it, but had there been some help from Republicans, both efforts would have passed easily. This is not just a Democratic or a Republican party problem at this point.
January 3rd, 2007 was the day Barney Frank took over the House Financial Services Committee and Chris Dodd took over the Senate Banking Committee. The economic meltdown that happened 15 months later was in those same areas of the economy…BANKING AND FINANCIAL SERVICES which were weakened by Clinton’s actions mentioned above and mismanaged.
THANK YOU for dumping 5-6 TRILLION Dollars of toxic loans on the economy from YOUR Fannie Mae and Freddie Mac FIASCOES! BTW: Bush attempted to control and reign in Fannie & because it was financially risky for the US economy. Barney blocked it and called it a “Chicken Little Philosophy” (but…the sky did fall!) and the Republicans in congress followed his lead. Why? Because both parties were getting money from Freddie and Fannie. You can look at this table at this site to see the total contributions made to each member….which, strangely enough, Obama had the second largest contributions (just under C. Dodd)….
The last balanced budget was in 2001 in the 106th congress controlled by Republicans. In that first year of Bush’s administration, Congress had to contend with George Bush, which caused them to compromise on spending when he, somewhat belatedly, got tough on spending increases. Furthermore, the Democrats controlled the budget process for 2008 & 2009, as well as 2010 & 2011. Obama has now gone 1,000 days without a budget, and is still blaming it on the minority Party for most of the last 6 years.
For FY 2009 though, Nancy Pelosi & Harry Reid bypassed Lame Duck President George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to complete the 2009 budget.
And where was Barack Obama during this time? He was a member of that very Congress that passed all of those massive spending bills, and he signed the omnibus bill as President to complete 2009. Let’s remember what the deficits looked like during that period:
If the Democrats inherited any deficit, it was the 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets.
If Obama inherited anything, he inherited it from himself and a Democratic Congress.
In a nutshell, what Obama is saying is: “I inherited a deficit that I voted for, and then I expanded that deficit four-fold since January 20th 2009.”
“The problems we face today exist because the people who work for a living are outnumbered by those who vote for a living.”
To remind you: All financial matters are initiated by the House. Here is the breakdown of who controlled which areas of Congress and for what years for each President.
A BALANCED BUDGET AMENDMENT is the most sensical, most accountable method of reining in runaway spending. While the Founders never included such a provision, they didn’t think it was necessary with the limitations on revenue channels and the foundation of Federalism. Since the 16th and 17th Amendments, the Constitutional system we had has been perverted enough to create an almost insurmountable imbalance that can only be corrected with Constitutional limitations on borrowing and spending on the federal level. The first attempt at a BBA was in 1936, in the midst of a massive socialistic transformation in our Federal Government. On May 4, 1936, Representative Harold Knutson (R–Minnesota) introduced House Joint Resolution 579, resolution in support of a Constitutional Amendment that would have placed a per capita ceiling on the federal debt in peacetime. Clearly, it never saw the light of day. Two Democrats, Thomas Perriello (D-WV) and Sen. Udall (D-CO) have both proposed their own versions, along with a more recent initiative by Sen. Orrin Hatch (R-UT). We need grassroots help to make this a major initiative in the coming years, or our children may literally not have an American Dream of which to pursue, let alone achieve.