Bush still shows blind eye for financial crisis
By James Ledbetter
During his presidency, George W. Bush was not known as an overly reflective man, or as someone with a powerful thirst for economic knowledge (despite being the only president with a Harvard MBA). It is thus unsurprising that his memoir is not overly reflective about the causes of the financial meltdown that closed out his presidency, nor even very generous with details about what it was like to preside over. Anyone who opens his new memoir, “Decision Points,” intent on unearthing Bush’s heretofore buried financial insights will be disappointed.
Still, there is some value in glimpsing how Bush perceives the crisis, in part because his economic perspective is so widely shared in the newly resurgent Republican Party. In the chapter devoted to the financial crisis, Bush paints an economic picture using almost exclusively his favorite primary color: tax cuts. Tax cuts, in his view, got America out of the recession that began shortly after he took office. Tax cuts provided another critical boost in 2007. Tax cuts are beautiful because they take money out of the government’s hands and place it into citizens’ hands; that is all Bush knows, and all he thinks he needs to know, about the economy.
Just about everything else can be delegated, which is to say ignored until it explodes. As he recounts the reasons why the financial system fell apart — the complexity of Wall Street’s mechanics, the booming housing market, overleveraging — he says the system was “fated to collapse,” but admits that he didn’t see it at the time. (In another section, he claims he did see the problem of overleveraging at Fannie Mae and Freddie Mac, but that his reform efforts were blocked by Democrats.) His curiosity did not increase very quickly; Bush professes to have been “surprised by the sudden crisis” when Bear Stearns was sold at a forced bargain price in March 2008. He clearly had no idea what caused the problems at American International Group in September of that year.
More telling is his admission that when Federal Reserve Chairman Ben Bernanke told him the crisis could be the worst since the Great Depression his reaction was that he would rather be Franklin D. Roosevelt than Herbert C. Hoover. Yet his refusal to even consider that his administration’s, or the Fed’s, policies might have contributed to the crisis is distinctly Hooverian. About as close as Bush gets to anything approaching taking responsibility is an admission that “my administration and the regulators underestimated the extent of the risks taken by Wall Street.”
As for the height of the crisis, Bush is hardly the first official to say that government intervention — including the Troubled Asset Relief Program, the rescue of Bear Stearns and bailouts of Fannie Mae, Freddie Mac and AIG — offends his free market sensibility, but had to be done to prevent bigger disasters. Indeed it is striking, and perhaps a boon, that the former president who writes so repeatedly and weightily about the need to stand up for principles in places like Iraq and Afghanistan could so willingly toss them aside when it came to financial rescue. This only reinforces, however, the impression the book conveys that Bush has few economic principles aside from the belief in lower taxes.
There is one other section of the memoir with economic implications, in which Bush discusses his failed attempt to reform Social Security. It may surprise some that he calls this “one of the greatest disappointments of my presidency.” Bush deserves credit for calling attention to the looming insolvency of this entitlement program, as well as the unequal ways that it is administered. Yet he seems unwilling to accept that the bipartisan rejection of his plan stemmed not merely from political pandering — there was plenty of that — but from the fact that his proposed cure was quite possibly worse than the disease.
When, for example, the stock market lost about a third of its value in a matter of weeks toward the end of his presidency, Bush never bothers to think about how this would have affected tens of millions of near-retirees who, under his plan, would have invested their lifelong savings in the market.
It may be unrealistic to expect any former president to use a memoir as a place to connect the dots or ask, and answer, hard questions of his tenure with great candor. Yet Bush’s refusal to move away from heavily scripted positions not only makes him look superficial, but probably means far lower sales than Bill Clinton’s memoir.