Obama's Campaign Never Heard About the Housing Bubble

Those wondering why the Obama administration has not been more aggressive in pushing for stimulus got their answer today in a Washington Post article on the selection of Representative Paul Ryan as Mitt Romney's running mate. The article includes a statement by Jim Messina, the head of President Obama's re-election campaign:

"As a member of Congress, Ryan rubber-stamped the reckless Bush economic policies that exploded our deficit and crashed our economy. Now the Romney-Ryan ticket would take us back by repeating the same, catastrophic mistakes.”

Actually, the economic policies that "exploded our deficit" helped the economy to grow. The deficit had come to down to sustainable levels by 2007. The economy crashed in 2008 because the housing bubble, which had been left to grow unchecked, collapsed and brought the economy down with it. While Bush, along with the Greenspan-Bernanke Fed, can be blamed for ignoring the growth of the housing bubble, it is blatantly absurd to blame the economic collapse on the deficit.

Presumably Messina has some knowledge of this recent economic history. That means that he is fabricating a story to attack his political opponent. Alternatively, he is completely clueless about the economy and President Obama has given his top campaign position to a person astoundingly ignorant about the economy. Either way, the Post should have corrected Messina's statement for readers who may have been misled.

Messina didn't say the deficit caused the crash
written by RS, August 11, 2012 5:17

Read that statement again. Messina did not say the exploding deficit caused the crash.

Bush economic policies (read tax cuts) exploded our deficit. True or false?
Bush economic policies (read low interest rates) lead to the housing bubble, which crashed the economy. True or false? e.g. http://www.cbsnews.com/8301-50...03983.html

But bottom line: Messina did not say what you think he said.

Maybe the wrong article was referenced?
written by John Wright, August 11, 2012 7:44

http://blogs.desmoinesregister...se-budget/

Has the Messina quote:

“His plan also would end Medicare as we know it by turning it into a voucher system, shifting thousands of dollars in health care costs to seniors,” Messina said. “As a member of Congress, Ryan rubber-stamped the reckless Bush economic policies that exploded our deficit and crashed our economy. Now the Romney-Ryan ticket would take us back by repeating the same, catastrophic mistakes.”

...
written by urban legend, August 12, 2012 12:58

RS --

This is campaign talk to people who aren't terribly knowledgeable about economics. The immediate juxtaposition suggests causation -- what communications people sometimes call the "takeaway." It's all poll tested talk right now. It's a shame that the Obama communications effort has been so weak, lacking bumper sticker language that paints a different picture focused on jobs and pins the lack of them squarely on Republican philosophy -- that it has to resort to Republican talking points.

I believe most Americans would love to hear someone say that full employment must take priority right now, with a comprehensible (simple) explanation how we can deal better with the deficit when people are back to work, earning incomes and paying taxes. But Obama has not dealt with it that way, instead acting as if it's a dual mandate.

...
written by skeptonomist, August 12, 2012 10:58

At the peak of an economic cycle, as around 2006-2007, deficits should not just be "sustainable", that is in the $200-400B range, they should be non-existent. In fact, Keynesian theory says that government should run surpluses in good times, not just to balance the deficits which should be run in bad times, but to restrain excessive expansion. The size of the deficits in the later Bush years was excessive, because of wars and programs like Medicare Part D which were not paid for (facts which Dean sometimes points out) and the irresponsibly low tax rates.

Obama's Campaign Never Heard About the Housing Bubble

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