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Context of 'February 2009: Economists Trace Economic Crisis to Bush Re-Election Policies, Lack of Regulation'

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Yale economist Robert Schiller reflects on the genesis of the economic recession, tracing it back in part to policies pursued by the Bush administration for the 2004 presidential election effort. At that time, Schiller warned of a “housing bubble” caused by a plethora of bad loans and toxic debt, and called for re-regulation of the housing markets. His warnings were ignored. Schiller says: “The Bush strategists were aware of the public enthusiasm for housing, and they dealt with it brilliantly in the 2004 election by making the theme of the campaign the ownership society. Part of the ownership society seemed to be that the government would encourage home ownership and, therefore, boost the market. And so Bush was playing along with the bubble in some subtle sense. I don’t mean to accuse him of any—I think it probably sounded right to him, and the political strategists knew what was a good winning combination. I don’t think that he was in any mode to entertain the possibility that this was a bubble. Why should he do that? Attention wasn’t even focused on this. If you go back to 2004, most people were just—they thought that we had discovered a law of nature: that housing, because of the fixity of land and the growing economy and the greater prosperity, that it’s inevitable that this would be a great investment. It was taken for granted.” John C. Dugan, the comptroller of the currency since 2005, says he believes a lack of regulation caused the “housing bubble.” Dugan says: “A lot of mortgages got made to people who could not afford them and on terms that would get progressively worse over time, and that created the seeds of an even bigger problem. As the whole market became even more dependent on house-price appreciation, when house prices flattened and then started to decline the whole situation began to unravel. The question you have to ask yourself: Why did credit become so easy? Why would lenders make mortgages that became increasingly less likely to be repaid? Part of the answer is that there was a huge chunk of the mortgage market that was not regulated to any significant extent. The overwhelming proportion of subprime loans were being done in entities that were not banks and not regulated as banks—I’m talking here about mortgage brokers and non-bank mortgage lenders that could originate these mortgages and then sell them to Wall Street firms that could package them into new kinds of mortgage securities, which arguably could take into account the lower credit risks and still be salable to investors worldwide. Unfortunately, the theory was not in accord with the reality. Although they thought they had accurately gauged that risk, they too were in fact depending—when you get to the bottom of it—on house prices continuing to go up and up and up. And they did not.” [Vanity Fair, 2/2009]

Entity Tags: Robert Schiller, Bush administration (43), John C. Dugan

Timeline Tags: Global Economic Crises

The US Department of Justice’s Office of Professional Responsibility refuses to refer two former Bush administration officials to authorities for criminal or civil charges regarding their authorizations of the torture of suspected terrorists (see Before April 22, 2009). John C. Yoo and Jay S. Bybee, two senior officials in the DOJ’s Office of Legal Counsel, provided the legal groundwork that allowed American interrogators to use sleep deprivation, waterboarding, and other torture methods against terror suspects (see Late September 2001, January 9, 2002, and August 1, 2002). The report finds that Yoo and Bybee, along with former OLC head Steven Bradbury, exhibited “poor judgment” in their actions. The OPR refuses to make the report’s conclusions public. It is known that senior Justice Department official David Margolis made the decision not to refer Yoo and Bybee for legal sanctions. [Office of Professional Responsibility, US Department of Justice, 7/29/2009 pdf file; Washington Post, 1/31/2010]

Entity Tags: John C. Yoo, Bush administration (43), David Margolis, Jay S. Bybee, Office of Professional Responsibility, US Department of Justice, Steven Bradbury, Office of Legal Counsel (DOJ)

Timeline Tags: Torture of US Captives

Some sources believe Romney may consider John Bolton for Secretary of State if elected president.Some sources believe Romney may consider John Bolton for Secretary of State if elected president. [Source: Getty Images / CNN]Journalist Ari Berman, of the liberal magazine The Nation, writes that presumptive Republican presidential Mitt Romney (R-MA) seems to be relying on a large number of neoconservatives to help him formulate his foreign policy stance for the election. Berman believes it is safe to assume that Romney will appoint many of his neoconservative advisors to powerful positions in his administration should he win the November election. Berman writes: “Given Romney’s well-established penchant for flip-flopping and opportunism, it’s difficult to know what he really believes on any issue, including foreign affairs (the campaign did not respond to a request for comment). But a comprehensive review of his statements during the primary and his choice of advisers suggests a return to the hawkish, unilateral interventionism of the George W. Bush administration should he win the White House in November.” Conservative Christian leader Richard Land has said that Romney could shore up his sagging credibility with conservatives by “pre-naming” some key Cabinet selections: former Senator Rick Santorum (R-PA) as Attorney General, former House Speaker Newt Gingrich (R-GA) as US ambassador to the United Nations, and former State Department official John Bolton as Secretary of State. Berman calls the prospect of those appointments “terrifying” and “more plausible than one might think.” Neoconservative blogger Jennifer Rubin recently wrote for the Washington Post that “[m]any conservatives hope” Bolton will accept “a senior national security post in a Romney administration.” For his point, Bolton has endorsed Romney, and has campaigned on his behalf. Romney is not well versed in foreign policy affairs, Berman writes, noting that in 2008 the presidential campaign of John McCain (R-AZ) found that at the time “Romney’s foreign affairs resume is extremely thin, leading to credibility problems.” Romney suffered the criticism of being “too liberal” in 2008, and in 2011-12 attempted to refute that criticism by publicly aligning himself with Bolton and other neoconservatives. Brian Katulis of the liberal Center for American Progress has said, “When you read the op-eds and listen to the speeches, it sounds like Romney’s listening to the John Bolton types more than anyone else.” [Washington Post, 3/13/2012; Nation, 5/21/2012]
The Project for the New American Century - Bolton and seven other Romney advisors are signers of a letter drafted by the Project for the New American Century (PNAC), an influential neoconservative advocacy group (see June 3, 1997 and September 2000) that urged both the Clinton and Bush administrations to attack Iraq (see January 26, 1998, February 19, 1998 and May 29, 1998). (The PNAC is defunct, but was replaced by a similar advocacy group, the Foreign Policy Initiative, or FPI—see Before March 25, 2009). PNAC co-founder Eliot Cohen, who served as counsel for Secretary of State Condoleezza Rice from 2007-2009, wrote the foreward to Romney’s foreign policy white paper, entitled “An American Century.” Cohen has called the war on terror “World War IV” (see November 20, 2001), and helped push the Bush administration into going to war with Iraq after the 9/11 bombings. In 2009, Cohen reiterated his 2001 call for the US to overthrow the government of Iran (see November 20, 2001). Another PNAC co-founder, FPI’s Robert Kagan, a longtime advocate for widespread war in the Middle East (see October 29, 2001), helped Romney formulate his foreign policy. Romney’s foreign policy stance is based largely on negative attacks on the Obama administration, which it accuses of kowtowing to foreign governments, and a massive military buildup. [Washington Post, 10/9/2011; Nation, 5/21/2012]
Bush Administration Officials' Involvement - Many former Bush administration officials are involved with Romney’s foreign policy. Robert G. Joseph, a former National Security Council official who is primarily responsible for having then-President Bush claim that Iraq had tried to buy enriched uranium from Niger (see January 26 or 27, 2003), former Bush administration spokesman and FPI founder Dan Senor (see October 2, 2005), and former Defense Department official Eric Edelman (see July 16-20, 2007) are prominent members of Romney’s advisory team. Preble says of Romney’s foreign policy advisors: “I can’t name a single Romney foreign policy adviser who believes the Iraq War was a mistake. Two-thirds of the American people do believe the Iraq War was a mistake. So he has willingly chosen to align himself with that one-third of the population right out of the gate.” Edelman, like others on the Romney team, believes that the US should attack Iran, a position Romney himself apparently holds. Senor serves as a conduit between the Romney campaign and Israel’s far right, including Prime Minister Benjamin Netanyahu. Recently, Senor posted the following on Twitter: “Mitt-Bibi will be the new Reagan-Thatcher.” Lawrence Wilkerson, the chief of staff for then-Secretary of State Colin Powell, has said the Republican Party “has not a clue” how to extricate the US from its “state of interminable war,” and apparently little appetite for such extrication. “In fact, they want to deepen it, widen it and go further, on Chinese and Japanese dollars.” The influence of far-right neoconservatives “astonishe[s]” Wilkerson. Christopher Preble, a foreign policy expert for the Cato Institute, says that neoconservatives have remained influential even after the Iraq debacle because they have rewritten history. “They’ve crafted this narrative around the surge (see January 10, 2007), claiming Iraq was, in fact, a success. They’ve ridden that ever since.”
Huge Spending Increases for Defense, Possible Recession - If Romney follows his current statements, a Romney administration under the tutelage of his neoconservative advisors would usher in a new era of massive defense spending increases. He advocates spending a minimum of 4 percent of the nation’s GDP (Gross Domestic Product) to increase spending on defense, which would increase the Pentagon’s budget by over $200 billion in 2016. That is 38% more than the Obama administration plans to spend on defense. Romney would pay for that increase with severe cuts in domestic spending. Fiscal Times columnist Merrill Goozner has written: “Romney’s proposal to embark on a second straight decade of escalating military spending would be the first time in American history that war preparation and defense spending had increased as a share of overall economic activity for such an extended period. When coupled with the 20 percent cut in taxes he promises, it would require shrinking domestic spending to levels not seen since the Great Depression—before programs like Social Security, Medicare and Medicaid began.” Goozner wrote that Romney’s spending plan “would likely throw the US economy back into recession.” The proposed huge spending increases are in part the product of the Defending Defense coalition, a joint project of the FPI, the American Enterprise Institute (AEI), and the Heritage Foundation. [Fiscal Times, 3/7/2012; Nation, 5/21/2012]
Cofer Black and Enhanced National Security - Romney’s counterterrorism advisor is J. Cofer Black, a former CIA operative and Bush-era security official. Black presented a plan to invade Afghanistan two days after the 9/11 attacks, and claimed that al-Qaeda could be defeated and the world made secure from terrorism in a matter of weeks (see September 13, 2001). Black was fired from the CIA in 2002 for publicly criticizing the Bush administration’s failure to capture or kill Osama bin Laden (see May 17, 2002). In 2005, Black became a senior official for the private mercenary firm Blackwater (see February 2005). He has been a Romney advisor since 2007 (see April 2007). Black advised Romney not to consider waterboarding as torture, and has touted his CIA experience with that agency’s illegal “extraordinary rendition” program, which sent prisoners to foreign countries for abuse and torture. Romney relies on Black for security assessments of security assessments of Afghanistan, Pakistan, Egypt and Iran, including Iran’s nuclear program. Preble says, “Romney’s likely to be in the mold of George W. Bush when it comes to foreign policy if he were elected.” Berman writes that “[o]n some key issues, like Iran, Romney and his team are to the right of Bush.” Berman goes on to write that if Romney adheres to his statements on the campaign trail, “a Romney presidency would move toward war against Iran; closely align Washington with the Israeli right; leave troops in Afghanistan at least until 2014 and refuse to negotiate with the Taliban; reset the Obama administration’s ‘reset’ with Russia; and pursue a Reagan-like military buildup at home.”
Moderates Sidelined - The moderates on Romney’s team have been shunted aside in favor of the hardliners. Mitchell Reiss, Romney’s principal foreign policy advisor in 2008 and a former State Department official under Powell, no longer enjoys favored access to the candidate. In December 2011 Romney publicly contradicted Reiss’s advocacy of US negotiations with the Taliban, instead advocating the total military defeat of the Taliban and criticizing the Obama administration’s plan to “draw down” US troops from Afghanistan. Vice President Joseph Biden has said that Romney and his neoconservative advisors “see the world through a cold war prism that is totally out of touch with the realities of the twenty-first century.” Romney began tacking to the right during the early days of the Republican primaries, aligning himself with candidates such as Gingrich, Herman Cain (R-GA), and Michele Bachmann (R-MN), and away from moderate candidate Jon Huntsman (R-UT) and isolationist candidate Ron Paul (R-TX). Heather Hurlburt of the centrist National Security Network says: “The foreign policy experts who represent old-school, small-c conservatism and internationalism have been pushed out of the party. Who in the Republican Party still listens to Brent Scowcroft?” (see October 2004). Wilkerson says moderate conservatives such as Powell and Scowcroft are “very worried about their ability to restore moderation and sobriety to the party’s foreign and domestic policies.” Berman writes, “In 2012 Obama is running as Bush 41 and Romney as Bush 43.” [Nation, 5/21/2012]

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