The Bush-league economy

Does the president even know about the mortgage mess or the credit crunch?

Published August 8, 2007 5:57PM (EDT)

President Bush made some "remarks" on the economy after visiting the Treasury Department on Wednesday. He reiterated his belief that keeping taxes low is the best medicine for a strong America, and he pledged to use his veto powers to thwart Democrats who, he said, "want to increase taxes and turn them into additional government programs."

And that, really was it. The President defended his policy of tax cuts, bashed the Democrats a few times, and said "thank you very much."

OK, it's not as if we expected the President to come out all gloomy-doomy and lecture Americans on the dangers of growing income inequality and unregulated hedge funds. We are also prepared to concede that by many standard measures, the U.S. economy is far from crisis status: unemployment is low, GDP growth figures for the last quarter were decent, inflation isn't too bad, etc. It's the job of the opposition party to point out all the holes in those statistics; no one expects the sitting president to talk his own economy down.

But there are some things that are actually going on in the economy. Perhaps you've heard of the complete meltdown in the mortgage lending and home-building sectors? There's been some talk in the newspapers about it. Relatedly, I've noticed some buzz about something called a "credit crunch" on Wall Street. Seems that borrowing billions of dollars is a lot harder than it used to be. And some people are worried that the worst is yet to come.

President Bush did not mention the words "mortgage" or "credit" once. He did not indicate in any way that anything was going on in the U.S. economy right now that might merit concern by anyone.

Color me baffled. How does this serve the White House, in terms of tactics? It would be very easy to appear smart about these issues without making any concessions whatsoever to doom-mongering by political opponents. With respect to the credit crunch, he could note that there is some turmoil, but calmly express his faith in the workings of the free market by declaring that what are we seeing right now is a natural pendulum swing: a "repricing of risk" that is a normal and expected counter-reaction to years extraordinary liquidity. He could say something like, "In consultation with the Secretary of the Treasury and the Chairman of the Federal Reserve Bank, we are carefully monitoring the situation, but see no cause for aggressive government intervention at the current time."

As for the mortgage mess, would it be too hard to express compassion for the Americans who are facing foreclosure, while simultaneously noting that the mortgage lenders going bankrupt right now are paying a justifiable price for making too many risky loans?

Hillary Clinton's speech Tuesday addressing the mortgage lending mess was obviously motivated by a politically driven desire to capitalize on a perceived weakness in the U.S. economy. To hear her express support for helping citizens escape foreclosure was as unexceptional as hearing Bush support tax cuts. But her speech had the distinct advantage of actually demonstrating a clear connection to the here and now, by confronting a topic that is in the headlines every day and that millions and millions of Americans care about.

Listening to George Bush talk about "the economy" you could imagine he didn't even know there was a housing bust or a credit crunch. I'm almost prepared to believe that of him, but certainly not of his advisers or speech-writers. They made a strategic decision to pretend that there's nothing going on worth "remarking" on. They're wrong.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization Hillary Rodham Clinton How The World Works Mortgage Crisis U.s. Economy