How we got here begins with massive home building and home-price appreciation in 2001. By 2005 the real estate market had begun to cool, and it ultimately slowed to the point of implosion. When the U.S. housing sector collapsed, it brought down other pillars of our economy to the point of triggering our deep 2008 recession.
The systemic housing problem aggravated by the quasi-government agencies Fannie Mae and Freddie Mac is now widely acknowledged. According to a column by J.C. Watts, the Washington-based Heritage Foundation put this Fannie Mae-Freddie Mac debacle in perspective: ” ‘In addition to fundamental miscalculations about the risk to and posed by (them), their management engaged in scandalous accounting practices, including manipulation of earnings to reach earnings targets to maximize bonuses to company executives.’ “
Let’s also not forget that the excessive monetary accommodation by the Federal Reserve and other central banks in Europe distorted the global credit market and fueled the recession.
All of these are systemic problems that still need a long-term fix. So the idea that the private sector or any sector of our economy is doing fine expresses a certain naiveté about the depths of this recession and the challenges we must still address to end it. But for now, let’s focus on what can be done in the short term to get out of this “fine” mess.
While the president, in his recent campaign speech in Cleveland, sought to frame the November election as less a referendum on his policies than a choice between two “fundamentally different” views on how to create jobs and grow the economy, he essentially delivered a glorified stump speech. Still wallowing in the old idea that he could have done more if it weren’t for the policies he inherited or the “stalemate” in the Congress, the president missed an opportunity to be bold and to act in a way that would have avoided the excuses and put an intransigent Congress back on its heels.
First, the president could immediately make things a lot easier on employers and on hiring by ordering his federal-department heads to stop issuing expensive new rules that hamper business. This president has always had within his grasp the steps necessary for sustained long-term private-sector job creation, whether they involved tempering the aggressive efforts of his Environmental Protection Agency or approving the massive Keystone Pipeline project; pushing through significant reductions in the excessive spending and massive accumulation of federal debt, including the reform of Medicare and Social Security; or just adopting his own bipartisan commission’s tax and spending recommendations (Simpson-Bowles).
The problem is that the president hasn’t implemented such solutions for the private sector because he seems to think everything is just fine.
Michael Steele is the former chairman of the Republican National Committee and served as lieutenant governor of Maryland from 2003 to 2007. He is currently a political analyst for MSNBC.