Commentary: The Third Bush Term
The Obama Administration is beginning to look more like the third George W. Bush term.
You think not? Well, look at the facts and forget the frenzied end-of-the world-as-we-know-it outbursts directed at Obama by people who just don’t like him or Democrats who aren’t influenced by what’s really going on.
Obama’s most important Bushian move occurred on Aug. 25 when he casually named Ben Bernanke to another four-year term as Federal Reserve Chairman, just as Bush would have done.
This was an opportunity for Obama to make a real difference in the nation’s economic future. The Federal Reserve chairman is arguably the most decisive influence on the economy, and he has only one constituent: the president of the United States.
Bernanke was first appointed by George W. Bush in 2006. He is a Republican, as are the other reserve board members. He is a disciple of the former chairman, Alan Greenspan, also a Republican, who was a follower of Ayn Rand.
At best, Bernanke, as Fed chair in 2006 and 2007, did nothing to head off the financial crisis that devastated the banking industry. At worst, his actions – or lack of actions – led to the crisis and in some ways made it worse.
Bernanke, along with former Bush Treasury Secretary Henry Paulson, designed the bailout plan for the large New York brokers, plus insurance giant AIG.
They forced Bank of America (BOA) to buy a nearly-bankrupt Merrill Lynch, and according to an investigation by the New York State attorney general, Bernanke threatened to fire the entire board of Bank of America if it tried to cancel the deal.
Bernanke opened the spigot of federal money to keep afloat the very firms that brought on the financial crisis, and allowed them to pay huge bonuses to executives who were responsible.
But Obama reappointed him, presumably feeling that markets would react badly to a change in the critical position.
But would they have welcomed a change? The market is about 50 percent below levels when Bernanke became chairman, and has been much lower. It has been propped up only by huge infusions of government loans and bailouts.
Much of what Obama is blamed for in regard to federal deficits could be more fairly blamed on Bernanke.
It was Bush and his treasury secretary that set in motion the current plan to save the financiers from the rotten assets they had accumulated over the years. Wouldn’t Bush have also reappointed Bernanke?
Bernanke is a Republican and a supply-sider; the real economic divide in the nation is between supply-siders and demand-siders, not liberals and conservatives.
After Bernanke, the two most important appointments the president has made are his secretary of treasury and secretary of defense. Obama kept on Robert Gates, another Bush appointee, as secretary of defense.
Tim Geithner, secretary of the treasury, has spent much of his time defending the payment of large salaries and bonuses to Wall Street brokers. He was a Republican until 1993 when he joined the Clinton Administration.
What about foreign affairs? There are now more U.S. troops in Afghanistan, and may soon be more in Iraq if the renewed violence doesn’t quiet down. That was also Bush’s policy.
Bush didn’t speak as often or as eloquently as Obama, but Obama is proving to be an example of the old Texas adage, “All hat, no cattle.”
The most obvious un-Bushian cabinet member is Attorney General Eric Holder, who wants to prosecute members of the Bush administration for vague misdeeds that conceivably saved the nation from another attack by terrorists. At best, his witch-hunt will weaken the U.S. intelligence service and further infuriate Republicans who oppose Obama’s healthcare initiative.
Their fury has already proven strong enough to delay and perhaps kill healthcare reform.
But in some ways the Federal Reserve chairman’s appointment was as vital an issue as the healthcare bill.
When the economy begins to strengthen, the Fed will decide if the recovery lifts all boats, or simply the largest ones. The big banks will benefit from higher interest rates while the millions of U.S. debtors will go further into debt.