Is it Really Bush’s Fault? What Are the Facts?

08.16.2012 original publish date
09.05.2012 update, minor revisions for improved clarity
10.16.2012 address repair (Note: all Likes, tweets, other shares reset to zero on update)
 

Is it Really Bush’s Fault? What Are the Facts?

original article written by Net Advisor™

Excerpt:
We have been hearing for the last 3 years President Obama has repeatedly charged that most (if not all) America’s problems was simply all President George W. Bush’s fault. This article addresses the facts about the Bush and Obama Administrations with policies from Jimmy Carter and Ronald Reagan. Loaded with facts, 3rd party links to sources and videos. We’ve all heard the political rhetoric, now let’s hear the facts. Written by NetAdvisor™.

Best and Worst Presidents?

Even though Mr. Obama has not officially completed his term as President, U.S. News has already published the ‘best and worst presidents’ (in history) (PDF). With 5 months to go to the end of his term, Mr. Obama already ranks among the top of the list?

Apparently, the thinking here is that there is nothing that could ever happen in the U.S. economy, politics, domestically or internationally, etc., that could ever change his ranking? Fiscal Cliff, Iran, the deficit, higher unemployment; rising oil prices, soaring agricultural prices, all of this is not factored as a potential political liability. It is assumed that Obama can do no wrong, and his political policies equate him to be amongst the top Presidents in U.S. history?

The data in this presidential ranking was based on a single source – the Siena Research Institute. The college, founded in 1980, conducts surveys in the (democratic controlled) state of New York (Source: Internet Archive, audio @18:00).

The founders of our Constitution (Washington, Jefferson, Madison, Adams, etc. ) who together did more to break free from England and help establish America’s independence, ranked lower than “#1” FDR who created the biggest social welfare programs in U.S. history which today account for half our our national deficit spending (Graphic Below. Article). Obviously the survey seems to suggest government welfare was more important than independence from big government.

Reagan Ranked Lower than Obama?
The funny part about this arguably skewed survey, is that Mr. Obama is ranked 15th “best presidents” despite all-time record deficits and an all time record low job participation rate. Ronald Regan, who “inherited” an economy worse under Jimmy Carter, ranked lower than Obama at #18.

One would really have to ignore all the actual results of policies to suggest that history will look back and say Obama was a better present than Reagan?

President Reagan’s polices actually led to:

• 20 Million new jobs.
  
• Lower unemployment from 7.6% to 5.5%.
• Inflation reduced by 69.63% (13.5% to 4.1%).
  
• Real U.S. GDP up 26%.
• Interest rates went down by over 50% from 21.5% to 10%.
• Taxes went down, and government revenue went up.
• Government spending plunged from 10% in 1982, to just over 1% in 1987.
• Net worth of families earning between $20K and $50K/ yr.  grew by +27%.
  

• All of this occurred WITHOUT a single war in Reagan’s 8 year term.

— Source: ReganFoundation.org

Since President Obama has spent the last three years of his air-time Blaming Bush for everything that is wrong in America, I did some further fact checking.

Fact Check: Was it Really All Bush’s Fault?

[1] 1998-2000: The FED’s Role

Despite the liberal fantasy, George Bush did not “inherit” a booming economy. The Federal Reserve Bank (The FED), not Bush raised interest rates (the Fed Funds Rate) by 36.84% (4.75% to 6.5%) from November 17, 1998 to May 16, 2000 (Source: New York FED) [Math: 6.5% divided by 4.75% = 1.75%; then, 1.75% divided into 4.75% = 36.84%]. At the time the FED was concerned about inflation risks (Source: Baltimore Sun). That inflation never happened.

What did happen is the higher interest rates killed the booming dot com market. Stocks were already overvalued (PDF) and it wasn’t going to take much to poke this dot com bubble.

At the time I was working at a top Wall Street firm and closely watching the events that could affect a dot com bust. By the third week of March 2000, I advised clients to exit their dot com, and high-tech stocks and raise up to 80% cash.

Wikipedia puts the peak March 10, 1999 when the NASDAQ hits its all time high of 5,048.62 (Source: ABC News PDF).

The tech heavy NASDAQ has never recovered to a new high to date of this article – 13 years later. In fact, NASDAQ is still down -39% from its 1999 high to August 16, 2012. This was the biggest Bear Market since the 1970’s.

At the time President Bush was not in office during the 1999-2000 dot com bust. Bill Clinton was President until January 2001.

[2] The 2000-2002 Dot com Collapse & Economic Recession.

The FED’s aggressive interest rate hikes set the stage for an economic recession as the stock market trended lower until about October 2002. The economy was already in recession, but many Clinton supporters didn’t want to say that a recession was handed to the next president.

President Bush did not cause the dot com bust which led to the recession of 2000-2002. Arguably the FED played a big role in this event.

[3] 9-11-2001 Terrorists Attacks.

Just as the economy was showing a small sign of a turn-around in August 2001, and just nine months into the Bush Presidency, came 9/11. This event also killed the economic recovery and sent the economy back into recession. President Bush did not cause terrorists to hijack American planes that killed around 3,000 people.

By July 2002, stocks reversed all their dot com gains back to 1997 levels (Source: New York Times). The FED continued to drop rates for three-and-a-half years from January 3, 2000 to June 25, 2003 (Source: New York FED).

All of America focused on payback for the 9/11 attacks. At the time President Bush had the highest Presidential approval ratings (as high as 90%), and ranked #2 only to LBJ in history (Source: Gallup Poll (PDF), 11-07-2001).

[4] October 2001 Operation Enduring Freedom.

The People of the United States demanded payback for 9/11. With bipartisan support in Congress and support from 40+ countries of the international community launched Operation Enduring Freedom on October 7, 2001. The goal, to seek out the al-Qaeda terrorist organization in Afghanistan. By October 2002, Congress also passed Public Law #107-243, authorizing military action against Iraq. Without getting into the war debate, these are the events that happened.

The key here is that 9/11 impacted the U.S. economy to a second recession from roughly 9-11-2001 to October 2002. This was not Bush’s fault. It was al-Qaeda.

[5] August 2005 Hurricane Katrina.

As the economy began rebounding two years after 9/11, Hurricane Katrina hit the Gulf Coast. This was one of the biggest natural disaster storms over the last 100 years (Source: NOAA). The storm’s impact covered 90,000 square miles in the USA and some 1,800 people where killed.

Katrina, not Bush reportedly caused some $108 Billion in damage. Before the storm, the area apparently supported one million non-farm jobs.

[6] January 2006 The Sub-Prime Melt Down.

As if two recessions, the biggest terrorist attacks on U.S. soil in history, and a historical natural disaster was not enough, by January 2006, the sub-prime mortgage business peaked and began showing signs of weakness in the housing market (Source: Federal Reserve Bank, San Francisco, 2007 Report).

Millions of people, not President Bush took out loans to buy homes from the FED’s record low interest rates that helped fuel the housing bubble. What people did not count on is two things:

1. That interest rates will never go up, and

2. That home prices will never go down.

Millions of people took out adjustable rate mortgages who were not considering that “adjustable rate” means it can move higher if interest rates go up.

In 2008, the Washington Post said:

“The timing reflects the height of subprime lending in the summers of 2005 and 2006, when many borrowers secured loans scheduled to adjust in two or three years. For many, an adjustment means their interest rate will go up two to three percentage points. “

— Source: Washington Post, 07-01-2008 (PDF)

[7] 2004-2006 The FED Strikes Again.

Just like the FED contributed to help bust the dot com market by aggressively raising interest rates from alleged inflation fears, the FED did it again to help bust the Housing Bubble.

The FED (not Bush) blundered again and raised interest rates (the Fed Funds Rate) from 1% to 5.25% – a 425% increase in short-term rates from June 30, 2004 to June 29, 2006 (Source: New York Fed).

Anyone with an adjustable mortgage or any adjustable loan was going to get whacked who didn’t see this coming, and most people did not see the writing on the wall. The focus was on how much their home or new home might be worth next year, and in a short time they would be millionaires, and cash out with a profit.

Those who recalled what cased the dot com market to crash, should have seen the exact same issues that helped caused the real estate market to crash. Granted, most people don’t pay that close attention to markets, stocks, or interest rates, but this is where a good advisor should be able to help.

[8] Government Helped Cause the Housing Crash.

Now the FED was part to blame in the Housing Crash. The Housing Crash can be traced back to the Community Reinvestment Act of 1977 (CRA). This government housing policy was about forcing banks to lower credit standards so people with little or no money could buy a home. This policy started under President Carter, got worse under Clinton, and was allowed to continue under Bush.

Under the CRA, the U.S. government would guarantee a conforming mortgage loan, especially for those who would not ordinarily quality for a loan. That obviously makes sense, right? Loan money to people who can’t pay it back?

All Presidents and various political interests had an influence over low credit standards in the housing market over the decades. It was government continually lowering the credit standards that helped create the housing crash (Housing Crash Report).

Bush did not cause the Housing Crash, however his Administration allowed policies to continue from Jimmy Carter who launched the problem, to Clinton who expanded the problem.

The U.S. government magnified the Housing Crash by not having any risk management controls in place for the last 75 years. This would be pretty much everyone’s fault in government or at least by those who should have known better and did not implement a risk management policy that was overseeing and guaranteeing Trillions of dollars in mortgages. (Read more in NetAdvisor’s FHA Report).

[9] 2008 – Recession.

So we have the FED quickly pushing up interests rates from 1998-2000 and 2004-2006. Coincidentally a stock market bust occurred in 2000. A housing bust and a stock market bust both followed the FED’s aggressive rate hikes by late 2007. The economy fell into recession both times. How is this Bush’s fault again?

[10] The Deficit.

In 2008, Candidate Obama called President Bush adding $4 Trillion to the deficit (over 8 years despite the events of above) “unpatriotic.”

Video:

On or about February 23, 2009, President Obama pledged to solve this problem by cutting the deficit in half by his first term:

Video @ 0:17

What Did Obama Actually Do?
Obama will add (an estimated) $5 Trillion+ to the Deficit in just four years [Article: Obama’s Deficit to Exceed 8 Years of Bush in Half the Time].

So if adding $4 Trillion to the deficit in 8 years given points [#1-9] above was “unpatriotic,” what would one call adding $5 Trillion to the deficit in just 4 years?

[11] Obama Wins the Gold?

The result of Obama’s “gold medal” victory (Olympic humor) for his all-time record deficit spending, pushed Standard & Poors to Downgrade the United States Debt Rating for the 1st time in U.S. History. The Obama Administration has deficit numbers that pails all the past presidents from Washington to Clinton combined (Source: CNS).

[12] Taxes.

To help all U.S. tax payers during the last recession, President Bush signed into law to reduce taxes for EVERYONE. I discussed the facts about the “Bush Tax Cuts” in articles here and here. I pointed out under Public Law 107-16 that the “Bush Tax Cuts” benefited everyone, not just the “Wealthiest Americans.” In fact, President Bush LOWERED taxes for the poorest Americans by 33%. I also discussed who really pays the most in taxes here.

[13] Under Current Law, Obama Created Largest Tax Increase in History

Unless Congress acts otherwise, beginning January 2013, Obama will be known to have created the largest tax increase in world history – a $2 Trillion tax increase. Actually ObamaCare would be the single largest tax increase – $4 Trillion over 23 years.

AP argued that the $2 Trillion tax increase in 2013 is not that big if you factor population growth. That is really a red herring argument. When you factor in that half of the country doesn’t owe or pay taxes, population growth is irrelevant.

When you do 1st grade math, 2+4 = 6. Thus, we could be looking at Obama raising taxes by $6 Trillion over 23 years; $2 Trillion beginning immediately in January 2013 and $4 Trillion more through ObamaCare over 23 years.

I also noted a 2009 Wall Street Journal Article of how more Middle-Class Americas will also be hit with Obama tax increases if ObamaCare stands as is, starting after 2014 (Read More).

[14] Obama’s Tax Increases to Create Bigger Government, NOT Reduce Deficits.

None of Obama’s tax increases will be used to reduce the deficit. Instead the money is intended to be used for more government spending programs – aka create a bigger government.

“…the (Obama) spending plan shows the president has no intention of using tax increases to cut the accumulated deficit, and would use them instead to fund the $42.6 trillion spending plan.”

— Sen. Jeff Sessions on the Obama Budget (Source: Daily Caller, 07-27-2012)

[15] NO Elected Person in Federal Gov Supports Obama’s 2013 Budget (Deficit)

Obama’s 2013 “Budget” (Deficit) has tremendous support from… just President Obama.

In May 2012, the Democrat Controlled Senate and the Republican Controlled House both voted on the Obama 2013 Budget. Democrats, Republicans and Independent(s) were in agreement on Obama’s “Budget”. The congressional voting results were the same as Obama’s 2012 “Budget.”

Results:
# of Democrats in Favor of Obama’s Budget = ZERO
# of Independents in Favor of Obama’s Budget = ZERO
# of Republicans in Favor of Obama’s Budget = ZERO

The official vote was 99-0 in the Senate (against the Obama budget); and 414-0 in the House (against the Obama budget) (Source: TownHall.com). It appears for the last two years, no one supports Obama’s economic polices except Mr. Obama and his political campaign people. Fortunately none of these people can vote on Obama’s budgets or any other idea.

Under the laws of the U.S. Constitution, ONLY elected representatives in the U.S. House and U.S. Senate can vote on any proposed bill. The President can ONLY sign a bill AFTER it has passed both the House and Senate. The President can also effect a Veto on a bill. The President can NEVER cast a vote for or against a bill. Congress can overrule a President’s veto with 2/3rds majority vote (Source: Cornell Law School). This is why we have checks and balances under the Constitution, to avoid creating a monarch, a dictator, a King (or Queen) or other supreme leader like we had in England before we left that totalitarian rule over 236 years ago.

[16] Still Think Bush is the Worst President?

After looking at the above data, and the events that occurred during the Bush Presidency, it seems very hard to argue how President Bush somehow caused all the problems as Mr. Obama claims.

The reality is that Obama’s policies have done nothing but to create record government deficits, higher unemployment, seeks record tax increases, and plans to create bigger government. That model is obviously working in countries such as Greece, Italy, France, and Spain {sarcasm}.

Video: Obama’s Statements, Beliefs and Associations
https://www.youtube.com/watch?v=noOyu_2oxWQ&feature=related

Given the facts herein, it’s difficult to argue how Mr. Bush ranked as the ‘5th worst president’ ever. Jimmy Carter ranked higher than Bush, Ronald Reagan, and Obama who ranked at #18, (according to the said survey). There is no explanation, proposed logic, a proposed theory, or economic bases for the ranking. It’s that way because we say it is. I’m not sure how the other 49 states might view this or how independent historians might analyze this if they actually used factual data and not personal political bias to develop a presidential ranking.

The scary part is a that there are many people from the “Hope and Change” crowd who still seem to buy into contrived sound bites, instead of the facts. We all make mistakes. The key is to correct mistakes when they are known, not support vague and failed ideas that just say, “we have a lot more work to do” (at dividing the country, and destroying the U.S. economy).

Video: Are you better off than you were four years ago?

national debt

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Cartoon image credit: Baloo’s political cartoon blog.
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Gross National Debt Clock courtesy zfacts.com

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