Before the political views on how we get better as a nation, I think that it's important to realize where we rank world wide in the following areas:
2008 we ranked #1 in competitive rankings, today we rank #7. 2008 we ranked #66 in macroeconomic stability, today we rank #111. We rank #54 in politicians trustworthiness... in the land of the free???? Our government is ranked #76 in efficient spending of resources. We rank #140 of #144 in government deficit as percentage of GDP. 2008 we were #50 in government regulations of business, today #76. 2005 our infrastructure was ranked #1, today #16.
So what am I saying? We all know it isn't great in our economy right now. We're in a gradual fall from the top of the perch to the middle of the pack. So what started all of this? Well, the housing bubble was to blame, banks are to blame, President Bush is to blame... or is he? We have a lot of problems that all came together at once. So lets look one at a time at these problems.
THE HOUSING BUBBLE:
"The housing bubble that devastated the American economy and can be traced back to 1999, when Clinton was in office."
"At that time, the White House advocated a program in which Fannie Mae was encouraged to extend home mortgages to individuals whose credit was generally not good enough to qualify for conventional loans. Flash forward to 2007 and the term sub-prime mortgage had become part of the daily lexicon. “Fannie Mae and Freddie Mac were at the epicenter of the housing crisis,”
"Also critics argue that it was Clinton who repealed The Glass-Steagall Act, which for decades had separated commercial banking from investment banking. And they say Clinton signed the Commodity Futures Modernization Act — which exempted all derivatives, including the now notorious credit-default swaps, from federal regulation."
Bottom line, the government decided they needed to be involved in the mortgage business. They bailed out Fannie and Freddie because we're the reason they went bankrupt. It also transitions nicely because Glass-Steagall is the whole reason that some of these banks that we bailed out were "TOO BIG TO FAIL". Remember that terribly ominous statement?
What's Glass-Steagall? While I am a general fan of deregulation of business, this piece of legislature passed in the 1930's was a staple of our economy. It was one of the biggest mistakes, IMO, of all the things that Clinton did.
"In fact, the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades."
"From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the Panic of 2008. The law worked exactly as intended."
"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. The bubble peaked in 2007 and collapsed in 2008. The hard-earned knowledge of 1933 had been lost in the arrogance of 1999."
Our credit rating has been downgraded for the first time in history, and it is being threatened to be downgraded again. We've yet to pass a budget in the last three years. Our budget is bloated to the point that there are only 4 nations below us in debt to what we produce ratio.
So we have to become aggressive on our strategy to increase our funds, spend our funds wiser, and reduce unnecessary spending. The reality is that 1 in 6 Americans are on food stamps, and 1 in 3 are on some form of government assistance. THAT'S UNACCEPTABLE!!! I like Paul Ryan's moxy to actually release a budget to get the conversation started. His cuts make actual sense, his plans for the overhaul of medicare are a libertarians dream. At least his budget passed the house... President Obama's budget however...
"President Obama's budget suffered a second embarrassing defeat Wednesday, when senators voted 99-0 to reject it. Coupled with the House's rejection in March, 414-0, that means Mr. Obama's budget has failed to win a single vote in support this year."
"It calls for tax increases to begin to offset higher spending, and would begin to level off debt as a percentage of the economy by 2022. It would produce $6.4 trillion in new deficits over that time."
So, the president's plan would have us at 22.5 trillion dollars in debt by 2022. No wonder it didn't get any votes. Is this really the direction that we want to go for the next four years?