President Clinton likely will be silent this evening during his speech nominating President Obama for a second term about the role he played in setting the stage for the economic collapse that ensued a decade later.
He will likely pin the blame for the current economic mess on his successor, George W. Bush, and claim that Mitt Romney and Paul Ryan want to take Americans back to the failed policies of the past, while dodging his personal role.
The former President currently appears in an ad that the Obama campaign has running in Virginia and other battleground states. In it, he states that the GOP ticket wants to “cut taxes and go back to deregulation, which is what got us into trouble in the first place.”
Clinton perhaps is the worst of all Democrats for the Obama team to have deliver those lines because his administration set the stage for the subprime mortgage crisis and the banking crisis that ultimately collapsed the economy in 2008.
Not to mention, the economic boom of the second Clinton administration was created in part by a cut in capital gains taxes that overwhelmingly benefitted entrepreneurs and the wealthy, many of whom collect their earnings in stock options rather than salaries.
And that includes Romney.
Responsibility for the economic crisis falls more squarely on Clinton’s shoulders than it does on Bush’s because he signed the repeal of the Depression-era Glass-Steagall Act in 1999, which many analysts say precipitated the banking crisis. The old law barred banks from combining their investment and commercial banking activities.
“What happened over the next eight years was an almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and once again they sold them to their customers in the form of securities,” US News wrote in an Aug. 27, 2012 editorial .“The bubble peaked in 2007 and collapsed in 2008. The hard-earned knowledge of 1933 had been lost in the arrogance of 1999.”
As if that was not enough, the Clinton administration eased Fannie Mae lending requirements among minorities and low-income consumers in Sept. 1999 – a move that when combined with the Glass Steagle repeal resulted in the bank bailouts and the elevated unemployment of the Obama era.
Conservatives railed against Clinton, warning the banks would have to be bailed out eventually.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” Peter Wallison a resident fellow at the American Enterprise Institute, told the New York Times in Sept. 1999. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
Clinton is the most popular of all living former presidents, and Chicago Mayor Rahm Emanuel told CBS’s Charlie Rose this morning that Clinton and Obama have the “same values, same policies and the same goals.”
But this means that by hitching himself to Clinton’s wagon, Obama loses any credibility he might have in being able to blame the Republicans for creating the economic conditions he inherited.