What I am about to show you is a brief economic history from the late 1960s to today. The reason I am doing this is because I want to keep this relevant to what is taking place now.
I will try and keep these descriptions brief. My goal is for you to get a feeling of each President and what took place during his Presidency. I am leaving out a lot because each one of our Presidents succeeded, and failed in many areas of his Presidency.
From our perspective, the story begins with President Richard Milhous Nixon.
On January 20, 1969 Republican President Richard M. Nixon became President of the United States and inherited the Vietnam war and a ballooning Federal bureaucracy from the Democrats (John Fitzgerald Kennedy / Lyndon Baines Johnson administrations). Because of the excessive borrowing that the government was doing to run an unpopular war and finance an overweight Federal bureaucracy, inflation had increased and jobs decreased. In 1974 inflation climbed to 12.1% after the onset of an Arab Oil boycott. In an effort to stop inflation and recover from a recession, President Nixon attempted to curb the problems with wage and price controls. This worked for a little while but proved to be unworkable in the long run.
In the end, President Nixon's economic policies did not work at all. Not only were President Nixon's economic policies futile, but he did two things that really hurt the United States as a respected world power, and our economy during that era. First, was the issue of the Watergate break-in scandal which showed the American people, and the rest of the world how corrupt our Politicians can be. If you are too young to remember Watergate you should look it up. The other big mistake Richard Nixon made was that he purposefully prolonged the Vietnam war in an effort to play the Chinese against the Russians. Our war debt increased and so did our economic woes.
President Gerald Rudolph Ford
President Gerald R. Ford became President on September 08, 1974 after President Nixon resigned due to the Watergate scandal. President Ford inherited one of the worst US economies since World War II and although some of his first attempts at stemming the tide of Stagflation (rapid inflation, high unemployment, and slow economic growth) did not work, and in fact were laughable, much of his efforts later in his Presidency were working when he left office. In March 1975 President Ford signed into law a bill that provided individuals with a 10 percent rebate on their 1974 tax liability, enacted a flattened standard tax deduction, and gave a temporary $30.00 tax credit for each taxpayer and dependent. For companies, the investment tax credit was temporarily increased to 10 percent. This doesn't sound like much now, but back then it was a big change and the result was a big shot in the arm for the economy.
Because the Democratic Party controlled both the House and Senate, President Ford had to sign some spending increases that he did not agree with in order to get some of the economic stimulus signed into law. But the tax decreases and incentives to business were beginning to work and by 1976, unemployment had dipped to about 7 percent, and inflation had reduced to 4.8 percent. The Gross National Product (GDP) was also moving along at a robust rate.
Unfortunately, in order to put the mess of Watergate behind us and concentrate on the economy, President Ford had to pardon former President Richard Nixon in regards to the Watergate scandal. The Nixon pardon cost Gerald Ford the Presidency and President Ford was never able to see his economic success as President. Because his Presidency was so short. The economic improvement that he began, went largely unnoticed. President Ford's successes were only recently recognized just before, and after his death on December 26, 2006.
President James Earl Carter, Jr.
In January 1977 President Jimmy Carter came into office and shortly thereafter an oil embargo by the Oil Producing Arab states again fueled rapid inflation. It wasn't until Federal Reserve Chairman, Paul Volker, increased interest rates that rapid inflation stopped. But the downside was that this response threw the economy into a recession and caused unemployment to skyrocket.
In my humble opinion, Jimmy Carter was a good man, with good intentions, but a poor President. Jimmy Carter believed that every American deserved the opportunity to have a decent home, and he felt that minorities were discriminated against as a result of unfair home loan lending institutions. Consequently, he came out with the Community Reinvestment Act (CRA) and the Democratically controlled House and Senate supported it. Along with the CRA law came the Community Organizations like ACORN (Association of Community Organizations for Reform Now), which have been in the news a lot during the 2008 election and well into 2009. I will come back to this later.
The CRA law is the beginning of the economic mess we are now in today.
The poor economy, the Iranian hostage crisis, and failed hostage rescue attempt, caused Jimmy Carter the Presidency.
President Ronald Wilson Reagan
In January 1981 Ronald Reagan became President. President Reagan was best known for his strong stance on defense and his supply side economic policies that became known as Reaganomics. President Reagan believed in reducing the size of Government. One of President Reagan's best known quotes is "Government is not a solution to our problem, government is the problem."
President Reagan had inherited double digit inflation 11.83%, and unemployment at 7.5%. During his Presidency, Reagan cut the Federal Income tax rate, Reagan also cut the budget for non-military government expenditures, and repealed the windfall profit tax which caused the price of oil to fall. President Reagan also deregulated the Savings and Loan industry which contributed to the Savings and Loan crisis of the 1980s and 1990s, and probably 2004 - 2009.
When President Reagan left office, over 16 Million new jobs had been created, inflation significantly decreased, the tax code was revised, but the down side was a $220 billion dollar budget deficit, and a $3 Trillion dollar national debt; up from a $700 Billion dollar national debt left by the Carter administration.
President George Herbert Walker Bush (1)
In 1989, former Vice President George H. W. Bush (1) became President. President Bush (1) faced the decision of what to do as a result of a $220 billion dollar budget deficit from the previous administration. The Democratic controlled Congress wanted a tax increase, and the Republican minority wanted a cut in government spending. Bush promised no new taxes during his campaign, but due to the Democratically controlled congress, and a rising budget deficit, President Bush felt compelled to increase taxes, which enraged the Republicans. President Bush (1) accepted the Democrats' proposal for higher taxes and more spending which not only alienated the Republicans in Washington but also outraged the nation. When the first gulf war came to an end, President Bush thought his re-election assured, but with 7.8% unemployment, and an increase in taxes, the American public rebelled and elected Bill Clinton. On December 17, 1992, just before President George H. W. Bush (1) left office, he signed the North American Free Trade Agreement (NAFTA) with Canadian Prime Minister Brian Mulroney and Mexico's President Carlos Salinas on. But all international agreements must be ratified by a two thirds (2/3) vote of the senate; so the NAFTA trade bill was left for the next president to deal with.
President William Jefferson Clinton
On January 20, 1993 William (Bill) Clinton became President. However, one of the items left over from the previous Bush (1) administration, was to ratify the North American Free Trade Agreement (NAFTA) which had been signed by President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexico's President Carlos Salinas on December 17, 1992; just before President Bush (1) left office. The agreement had to be approved by the Democratically controlled Congress and Senate. Congress finally approved the agreement by a vote of 234 to 200. 132 Republicans and 102 Democratic Congressmen supported the bill. The Democratically controlled Senate also had to vote on the NAFTA bill and it was finally ratified by the Senate and signed into law on January 01, 1994 by President Bill Clinton; well over a year after George H. W. Bush (1) signed the original agreement.
President Bill Clinton inherited the benefits of the jobs created under the Reagan administration and the very tough decision made by President George H. W. Bush (1) in regards to the tax increase. Clinton inherited an economy that was still growing but had slowed slightly because of the Bush tax increase. The increased revenue brought the budget deficit down.
With a stable economy inherited from the two previous Republican administrations, President Clinton concentrated on social issues. In that regard President Clinton did several things that really set the stage for the economic disaster that we have now.
1: President Clinton persuaded the Democratically controlled Congress and Senate into ratifying the North American Free Trade Agreement (NAFTA) signed by President George H. W. Bush just before he left office.
- Ratifying NAFTA allowed United States companies to move U.S. manufacturing labor to Mexico in favor of much cheaper wage payment, and lower cost benefits for their workers. Companies doing business in the United States found it more difficult to be competitive as more and more competitors moved good paying jobs to Mexico. Consequently, more businesses were forced to move to countries where the labor is cheaper, causing more Americans to become unemployed, or have to accept jobs with lower wages.
2: President Clinton also gave China favored nation status.
- China's favored nation status allowed U.S. and foreign companies to move the manufacturing jobs to China by contracting with Chinese owned companies. Since the Chinese do not have all the taxes, environmental laws, and labor laws to deal with, products made in China cost much less than here in the United States. Favored nation status allows products made by Chinese manufacturers to be taxed at a lower rate than other imports. Consequently millions of jobs were lost to China as well.
3. President Clinton and then HUD Secretary Henry Cisneros developed the National Homeowner Strategy, and persuaded congress to sign into law the means where sub prime housing loans could be given to people who would normally not be able to purchase a home given their ability to pay.
- Through the initial Community Reinvestment Act signed by President Carter, the banking loan regulations were relaxed so that Banks can give loans to minorities. Noble cause right?
- However, President Clinton set the stage for the coming financial crisis by changing the Community Reinvestment Act (CRA) in a way that allowed community organizations like ACORN to be able to "Blackmail" financial institutions in giving loans to those who COULD NOT AFFORD THEM.
- Community organizations like ACORN, coerced banks, and continue to coerce banks to give loans to people that can not afford those loans. The CRA law requires banks to give a certain number of loans to low income families, and President Clinton made the "Community Organizations" the watch dog who reported these numbers to Congress. If the banks didn't bend over and give into the "Community Organizations", the banks would be penalized. In many cases the banks would give $Millions of dollars to these "Community Organizations" like ACORN so that they would not report bad numbers. Because of the way these laws were changed and written, many banks would be "blackmailed" into giving loans to people they knew had no way of meeting the loan requirements.
It is a vicious circle of corruption and Bank fraud. The "community organizations" like ACORN, would use their "Blackmail" money to organize, increase employee to organize and blackmail, and in many cases harass banks into giving more money to those people that couldn't afford the loans. The banks, would then sell these bad sub-prime loans to Fannie Mae and Freddie Mac. Bad loans in the $Billions that caused these companies to fail the borrowers defaulted on these loans.
In addition, ACORN's blackmail funding has often gone to stuff ballot boxes with bogus "Citizens" during elections, or to support corrupt politicians, or politicians that promise to give these "Community Organizations" more money through Federal funding. The result, more bad loans, more money for ACORN, and a debt all will pay. or worse yet, a bankrupt economy.
As the financial industry fails, so too does the money flow, and as the money flow stops, companies draw down and the economy falters even more. This is a vicious self feeding downward spiral and it all came to a head in September 2008.
President George Walker Bush (2)
President George W. Bush (2) came next, and shortly after becoming President, the United States was attacked by radical extremists. On September 11, 2001 the United States felt the results of a coordinated attacked by radical Muslim terrorists and the economy took an immediate down turn as the United States took measures to assure that this type of attack didn't take place again.
President Bush (2) persuaded congress and the American people to attack terrorists in Afghanistan and eventually attack the regime of Sodom Hussein in Iraq. We have been bogged down in Iraq since 2003. The cost of the war in Iraq as of February 24, 2009 is estimated to be $599,764,147,484. That is nearly $600 Billion dollars.
$4,681 per household.
$1,721 per person.
$341.4 million per day.
On September 18, 2008, or there about's, the economic financial crisis comes to the forefront, and with the help of the crisis, and the liberal news media, the American people elect Barack Obama as President.
Before moving on to President Barack Hussein Obama, I need to mention something that has only recently (February 2009) come to light. On or about September 17, 2009 an electronic bank run occurred here in the United States, and brought this country and the entire world economy to within three hours of complete and systemic financial collapse.
September 18, 2008 - Two months before the Presidential Elections - According to Congressman Paul E. Kanjorski, Democrat from Pennsylvania, during a televised interview on C-Span (video available on You Tube through this link: http://caps.fool.com/blogs/viewpost.aspx?bpid=143295&t=01006124249416869148), the move to guarantee money market funds up to $250,000 was an emergency measure to stave off a massive run on the banks that removed $550 billion from the Money Market system in a matter of just a couple of hours. Treasury then injected $105 billion, but to no avail, and the Fed shut the system down to prevent a panic and continuation of this electronic bank run. By "their" [read Treasury's] estimation, had they not shut it down and issued the guarantee, money market withdrawals would have reached $5.5 trillion by two 'o'clock that afternoon!
Congressman Paul E. Kanjorski then indicated that Treasury's assessment that the run not only would have destroyed the U.S. economy immediately, but would have collapsed the world economy within 24 hours.
Dire warnings were issued to members of Congress by Paulson and Bernanke behind closed doors on Thursday, September 18, 2008. As the debates lingered on over the week that followed, several members voiced their sense of shock over the severity of the warnings, while refusing to divulge the details to a public that deserves to know. Representative Sherman later revealed that members were warned that Martial Law would result if the $700 Billion bailout plan was not passed.
The New York Times (NYT) quoted Senator Dodd as jumping in when Senator Charles Schumer described the meeting as 'somber': Somber doesn't begin to justify the words, "he said. We have never heard language like this. "Also from NYT: Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson. They said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.
Think about this, and then reflect on who benefited from the crisis.
Isn't it interesting that the "Bank Run" took place just two months before the Presidential elections to be held in the United States. To date, no one has indicated who, what countries, or what organizations were trying to withdrawal $550 Billion dollars from the Money Market funds.
No matter who orchestrated the "Bank Run", the fact of the matter is, it helped Barack Obama become President.
President Barack Hussein Obama
Just before Barack Obama became President, the Democratic controlled Congress, the Democratic controlled Senate, and Republican President George W. Bush allocate $750 Billion to help the very companies that got us into this financial mess. Companies that on their own would otherwise fail or declare bankruptcy and have to reorganize. We are now in the business of rewarding companies and their executives, for poor business practices.
This blog was meant to try and tell you how we got into the mess we are in. I tried not to be too negative toward any one party because frankly both the Democrats and Republicans got us into this mess. However, I will say that both President Bush and John McCain did go to congress in 2005 to tell them that this banking crisis was going to come to a head and try to get congress to reform the finance laws, and monitor our Financial Institutions closer than before.
This warning was shot down by the Democratically controlled congress, and senate. Mainly it was shot down by people like Congressman Barney Frank who was having a sexual relationship with a senior Vice President at Fannie Mae. It was also shot down by Senators Christopher Dodd, and Charles Schumer, who receive substantial contributions from both Fannie Mae and Freddie Mac.
The Democratic controlled Congress, Democratic controlled Senate and Democratic President Barack Obama have recently signed into law a bill to give more people "Ice Cream" in the nature of the largest single spending bill in US history. A $787 Billion dollar spending spree they call a "Stimulus" bill.
Guess who is going to be funded from this bill?
Community organization like ACORN will get $5.2 Billion dollars in a package called "Neighborhood Stabilization Programs". If you think you saw corrupt elections in 2008, wait till 2010.
The "Stimulus" bill that President Obama signed has so much pork in it that is is sickening. The saddest thing about what is taking place is that while President Obama was campaigning, he promised to get the pork out of government, and make government transparent.
Well, not only is he promoting pork, but the bill was written by the Democrats behind closed doors, and then shoved onto the floor for vote with less than 24 hours to review an 1100 page bill and vote with little or no debate. So much for the transparency. In my opinion a bill of this magnitude should have been posted on the Internet for at least 7 days, so that all members of both the Congress, the Senate and the American People could see what our elected officials were working on.
Just prior to passing this bill, Congress voted to enact a rule to give the members of Congress at least 24 hours to review all bills, yet Democrat Nancy Pelosi and the Democratic controlled congress shoved this bill through in less than 12 hours. Can you imagine? A bill more expensive than the Iraq war costs since 2003 - February 2009, and they shove it down our throats in less than 12 hours.
In my opinion the $787 Billion dollar bill will help very few people, and the ones that it will help will be the people that helped us get into this mess. All Americans will have to pay for this in more ways than one. We are borrowing money from the Chinese, the Saudis and other foreign countries to finance our ballooning debt and our appetite for "Ice Cream". Who will own America when all this plays out?.
Two more items. There WAS a provision in the original draft bill that any jobs produced by this "Stimulus" bill would only go to American born citizens; this was taken out by the Democrats behind closed doors before the bill came to a vote. By the time the bill had been sent back to the Senate for final vote, the American people were outraged at all the pork (earmarks), and made their displeasure with this bill well known (including me) to members of the Senate and the President. Democratic Senator Charles Schumer (he was mentioned previously) arrogantly got on the floor of the Senate and told everyone that the American people don't mind pork.