A recurring theme in President Barack Obama’s attacks on Republican presidential candidate Mitt Romney and his tax policies is: “We can’t go back to the same policies that got us into this mess.”
President George W. Bush’s tax cuts did not cause the fiscal crisis of 2008. Our economic calamity came in a housing meltdown — the result of years of administrations of both parties encouraging variable-interest, no-interest, little or no down payment, and no-document or liar loans that flooded people into homes they couldn’t afford under traditional mortgage lending practices.
To its credit, the Bush administration twice advanced reforms to rein in Fannie Mae and Freddie Mac, major players in pushing bad loans. Each time it was blocked by powerful Democrats, Rep. Barney Frank of Massachusetts and Sen. Chris Dodd of Connecticut. Frank famously said he wanted the two quasi-governmental agencies “to roll the dice a little bit more in this situation towards subsidizing housing.” Even after the home-ownership explosion was starting to be revealed to be a house of cards, Dodd declared, “These two institutions are fundamentally, fundamentally strong.”