Rooted in Reason: Nurturing the Seeds of Liberty

It’s Everyone’s Fault by grassroothawaii
July 15, 2010, 8:44 am
Filed under: Uncategorized

By Paul Lazaro

So much is wrong with Marshall Whitefield’s article, “More, not Less, job Stimulus, Needed for America’s recovery,” that it has me wondering if the Star-Advertiser printed his opinion just to take up space, while simultaneously hoping no one with a basic understanding of economics would read the article and notice (you can read the entire piece here). In the article, Whitefield’s contention that more taxpayer dollars are needed to jump start the economy, and his argument that the Republicans should take the brunt of the blame for the recent financial collapse is not only off base, but historically inaccurate.

First, Whitefield argues that Republicans are “stingy, and uncaring,” for blocking new legislation that would extend unemployment and widen our deficit. What’s more, Whitefield blames Republicans for creating the current unemployment in the first place. In his first paragraph, Whitefield states that “It was Republican anti-regulatory policies which allowed Wall Street to spin out of control and crash, causing the Great Bush Recession and its ongoing suffering.” This contention is laughable for two reasons: (1) It implies that Republicans are the only politicians to blame for the current recession, and (2) It calls the Bush administration anti-regulatory, which contrary to popular belief, is factually inaccurate.

First, to argue that Republicans should bear most of the blame for the recent financial crises ignores the very real part Democrats played in the recession. For starters, it was Democratic President Bill Clinton which signed the community reinvestment act, a measure which encouraged banks to take unnecessary risk by providing risky loans to low income buyers.

Further, it was Democrats who called on the continued taxpayer support for government-sponsored enterprises Fannie Mae and Freddy Mac, two entities that had a lot to do with those dubious mortgage backed securities. What’s more, when the Bush Administration attempted to reign in Fannie and Freddy Mac through regulation, current chairmen of the Banking and Finance Committee Democrat Sen. Chris Dodd “successfully threatened a filibuster“. While Sen. Dodd was busy threatening filibusters, the current  chairmen of the House Financial Services Barney Frank was busy calling Fannie and Freddy, “Financially sound,” even going as far as arguing for more risk to be taken on in the subsidized housing market.

Next, Whitefield states that the $789 billion was never enough to stimulate the economy. The problem with this statement is basic economics. For every one dollar taken out of the economy through taxation to pay for this stimulus, that’s one less dollar people have to spend, or save in a bank which converts that savings into investment.

I am no apologist for Republicans. A lot of wasteful spending went on while they were in control including the war in Iraq. But to lay all of the blame on them alone for our current economic woes neglects history and is off base, and spending more won’t make it any better. “How hard is that to understand?”


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