Who caused the American financial panic and the wild swings in our
financial system - and what are we going to do about it in the long
term after the markets settle down?
Republicans point to Fannie Mae and Freddie Mac.
Politically wired executives at Fannie and Freddie cooked the books.
They received mega-bonuses and took cover through campaign gifts to
their Democratic supporters in Congress. Then almost everyone involved
justified their scams by claiming that, as good liberals, they only
wanted to help the poor buy homes.
Democrats counter that Republicans always pushed for more
deregulation and, as good conservatives, kept quiet about
multimillion-dollar CEO bonuses paid out from shaky Wall Street firms and passed off as good for business - rather than symptoms of suicidal greed.
Those in the present Bush administration blame the Clintonites for
seeding the disaster; those in the last administration blame the
present one for harvesting it.
Long ago, John McCain warned about the antics of Freddie and Fannie, and later charged that Barack Obama
and some of his advisers received too much money from these agencies
for looking the other way. Mr. Obama has countered that Mr. McCain was
a reckless deregulator and that some on his staff were lobbyists for
Wall Street firms.
The blame game goes on and on. But so far no one seems willing to
tell the American people the truth: It is not just "they," but we, the
people, who have recklessly borrowed to spend what we haven't yet
(1) Take energy. In recent years, we've borrowed trillions of
dollars overseas to buy oil from foreign producers. Wind and solar may
sound like neat and easy solutions. But for decades to come, Americans
must drill more oil and natural gas of our own for transportation and
heating; we must build more coal and nuclear power plants to power the
electric grid; and we must conserve. Otherwise, we'll go broke before
clean alternate fuels become accessible and affordable.
Our energy challenges do not just concern independence, natural
security and global warming. They involve basic financial solvency as
well. Yet so far, none of our public officials have warned us that the
energy crisis is largely a money matter: We're borrowing too much to
buy what we won't or can't produce at home.
(2) As a nation of debtors, we are renting money from Asia to buy
its exports with our credit cards. Given our talents and natural
wealth, we could easily consume more than others in the world and still
balance the books. But Americans cannot charge all we desire on
unlimited credit. Surely one of our presidential candidates can warn
the American people to save a little more, use our credit cards a
little less and pay off what we already owe.
(3) The government can only hand out more entitlements by borrowing
even more to pay for them. Raising taxes on anyone in a recession is
insane. But even crazier is cutting them further at a time of
skyrocketing national debt without commensurate reductions in spending.
So who will tell the people that we can't raise - or reduce - taxes
and can't borrow for any more new programs until we first cut expenses
and begin paying off the trillions we've already borrowed?
In a hugely productive economy that creates each year some $13
trillion of goods and services, the government has the resources to
make real headway in paying down our $10 trillion national debt in
relatively short order - if we have leaders brave enough to quit
promising to spend a few more hundred billion here and there that we
simply don't have.
(4) Will some candidate explain to the wheeler-dealer public that
most real estate is not going to double or triple in value every few
years? Instead, houses should once again be seen as homes to live in,
rather than investments to get rich from.
If 70 percent of the American people scrimp to buy a home, we can't
endanger their financial solvency by waiving the rules for others, who
can't or won't pay the mortgage debts they freely incurred. It's time
to tell the public that you must budget to buy a house, see it as a
place to raise a family and pay the mortgage you took on. And if that's
not possible, then keep renting.
The problems on Wall Street, our energy woes, the election-year
fight over taxes versus more programs, and the housing crash have one
common denominator: massive debt. They are simply the collective
reflections of our own spendthrift habits of buying things with
borrowed money that we now either can't or don't want to pay back.
In this year's presidential race, the honest candidate who stops
promising endless bailouts and has the guts to lead us out of debt
could well end up winning.