This article is in response to a recent letter to the editor in my local paper. In this letter entitled, ” GOP debt”, the writer makes his point that the U.S. debt is the Republican’s fault – that most of the debt incurred has happened under their watch, as a result of their programs. He blames the current problems of America and its economy on thirty years of their dominance over Washington DC. This article is not intended to challenge any of his assertions, or to attack the credibility of any of his arguments. Fundamentally, it will not make any difference whether or not, he is correct as to who was actually controlling our government during the past 30 years. The end point would have been the same.
Instead, I think it is time for all of us to take a hard look at a timeline for the past 76 years. I have assembled a brief one here. This is not meant to be inclusive of every single event, nor could it, as many would debate the events themselves. I also have not intended this to try, by the volume or magnitude of events for either side, to lead anyone to the conclusion that one side is more at fault than the other – although I am sure some who read this will still complain of bias and that intent.
WE is us – We the People. Not Republican, Not Democrat – neither liberal nor conservative. It is simply WE. Unless, or until, WE again congregate as one in purpose, we all will lose!
I have simply taken my own personal stroll through history and picked the particular events I felt were important, pivotal, in our long and involved – often entangled process – to arrive at the door of what may be America’s economic collapse. We are at this doorway as a result of numerous decisions and actions. We have made many many decisions in this period. Most of the decisions were originally contemplated to fix contemporaneous problems of the day. In this time we have developed a nasty habit of enacting short term programs with an intention to replace the programs with other solutions later, only to have the replacement step get lost along the way as we allowed the growth of a professional political class and the virtual elimination of the citizen politician on which the country was founded.
I don’t know if a professional politician is better for us in the long run than a citizen politician. I can see advantages on either side. History and the electorate soon will make that determination. I do believe that at each step, for the most part, the politicians were attempting to fix the problem in a way they thought was best both for the country as a whole, their constituency, and their own re-electability. While I can idealize a desire for so much more in the decisions of my representative, I must concede and accept the nature of humanity after all in this process. It becomes my responsibility to elect the best person in support of the best solution. In effect to be a Mugwump.
In the end, it makes little difference. Until we truly understand the mechanisms and fundamentals of our current situation – and correct them, we will continue to glide through the open door of disaster – slipping at some point into the empty maw of the economic abyss.
A Time-Line of Key Events
- 1935: Social Security Act – Franklin Roosevelt (D)
- 1965: Extension to Social Security Act (Medicare & Medicaid) – Lyndon Johnson (D)
- 1972: Elimination of the Gold Standard – Richard Nixon (R)
- 1974: Equal Credit Opportunity Act – Stimulates credit purchases – Gerald Ford (R)
- 1977: Community Reinvestment Act – Jimmy Carter (D)
- 1980: Depository Institutions Deregulation and Monetary Control Act – Jimmy Carter (D)
- 1981: Initial Application of the Mark to Market Rule – Ronald Regan (R)
- 1985: Home State Savings Bank begins to fail – Ronald Regan (R)
- 1986: Tax Reform Act – Ronald Regan (R)
- 1995: End of S&L Collapse – Assets sold to Banks – RTC cost $87.9 Billion – Bill Clinton (D)
- 1995: National Homeownership Strategy Announced – Bill Clinton (D)
- 1999: Fannie Mae eases the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans.
The Gramm-Leach-Bliley Act repeals the Glass-Steagall Act of 1933 – Bill Clinton (D)
- 2000: Lenders originating $160 billion worth of subprime, up from $40 billion in 1994. Fannie Mae buys $600 million of subprime mortgages, primarily on a flow basis. Freddie Mac, in that same year, purchases $18.6 billion worth of subprime loans, mostly Alt A and A- mortgages. Freddie Mac guarantees another $7.7 billion worth of subprime mortgages in structured transactions.
Credit Suisse develops the first mortgage-backed Derivative (CDO).
Commodity Futures Modernization Act of 2000 declares credit default swaps (and other derivatives) to be unregulated, banning the SEC, Fed, CTFC, state insurance companies, and others from meaningful oversight. – Bill Clinton (D)
- 2003: Federal Reserve Chair Alan Greenspan lowers Federal Reserve’s key interest rate to 1%, the lowest in 45 years – George W. Bush (R)
- 2008: Global Financial Crisis Begins – Feds Take over Fannie Mae Freddie Mac and guarantee $6trillion of mortgages, Fed Reserve Lends $85 Billion to AIG, $700 Billion TARP Program goes into effect, Fed lends $1.3 Trillion to companies outside financial sector – $900 Billion loans to banks and buys $540 billion in short term mutual find debt – Fed Loans 133 Billion to foreign banks, Fed pledges $800 Billion more to buy mortgage bonds from Fannie and Freddie – George W. Bush (R)
- 2009: Fed increases support of AIG by $182.5 Billion, U.S. Government supports various Auto Manufacturers with $34 billion bailout package, Fed Injects approximately $2 trillion into the economy in new currency under term Quantitative Easing. – Barack Obama (D)
- 2010: Federal Reserve continues injecting money into market under quantitative easing of $1.5 trillion, Banks begin to repay Govt. Loans, Patient Protection and Affordable Care Act is passed – Barack Obama (D)
Whats The Point
When I was contemplating writing this article, I had thought I would explain the relevance of each of the events I have listed. In the end, I decided it is not up to me to tell you what to think. It is your right, your privilege, and your obligation to find that out for yourself. Should any of you wish to ask my opinion, or to tell me what you think, you may feel free to post in the comment section. I will tell you my thoughts and conclusions and of course listen to your point of view. Perhaps along with the others who read here we can continue to refine and get closer to a solution – get closer to WE.
The aforementioned timeline is by no means each and every issue that has drawn us into the potential collapse of our economy that we face today. What is evident from even this brief review, is that the bad decisions were all short term fixes to solve contemporaneous imminent problems of the day – they span all parties and administrations.
Our economic problems are neither Republican nor Democrat, they are only American. We have done this to ourselves. Only if we are united in this purpose, can truly fix them!
My Request of You
I ask each of you, who are kind enough to read my writings, to please circulate this to others if you feel it is valuable. I believe we can all make a difference if we come together. I know I can’t do it alone. I ask you, my readers, to help at least get others to consider that there is something here bigger than ourselves and our politics.
Seems to me you’ve left off a few crucial items. The Marshall Plan, rebuilding all those industries into a form more modern than our own, The general relaxation of protective trade barriers, and the overall concept of balance of trade, NAAFTA and the general movement of all production and manufacturing from the US to geographies with friendlier labor and environmental settings, assuring nothing manufactured here could compete with foreign products.
As I said in the piece, there were many many things I left out. You are correct, particularly relating to the problem of the 12 trillion cumulative trade deficit since 1972 as well. I did not even touch on the decisions that made us more and more uncompetitive like FDR’s push to grow the power of unions, then his reversal and entreats to congress to pass legislation to control unions, or the various environmental, or labor laws that have driven up costs or driven us out of industries… The list goes on and on. In the end the effect is the same. We stand, toes over the threshold, starring into a one world economic abyss, where WE cost to much, create too little, and buy to much.