For the University of Mobile’s Center for Leadership, I review some economic history that Barack Obama won’t tell you about. The record shows that low taxes, regulatory relief, and lower spending all coincide with strong economies, while their opposites coincide with weak economies. This is no surprise, of course, but it’s amazing how many people don’t recognize these realities. Again, the column has all the details.
A small proviso when it comes to regulations: Some regulations actually help, but they tend to be those that support other traditional, limited goals, such as sound money. Some examples:
That said, there were two areas where regulations were needed, but were blocked or rolled back – not blocked by conservatives, but by liberals themselves. The first came when President Bill Clinton signed a bill overturning the longstanding “Glass-Steagall Act” that kept banks out of insurance and extravagant investment trading. Bad idea. The second occurred when Clinton’s Treasury Secretary, Robert Rubin, led the charge to block new regulations on derivatives and credit default swaps – the exotic financial instruments that, when abused, did so much to cause the crisis.
On the flip side, the Bush administration was correct to try to reform regulations that gave the quasi-governmental Fannie Mae and Freddie Mac free hands to push lending institutions into multitudinous risky mortgages. Liberals blocked the Bush reform efforts as Clinton’s appointees raked in multiple millions of dollars in bonuses – and the nation suffered when millions of families couldn’t pay for those risky mortgages Fannie and Freddie should never have allowed in the first place. Mortgage defaults did more than anything else to bring down the whole house of cards.
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