If Geithner and Obama knew in 2010 that the economy was too damaged by Bush to repair, why didn't they say so then? The answer is obvious. They truly believed that a huge Keynesian spending program would work to stimulate the private economy. That misplaced faith was the reason Obama could confidently assure Matt Lauer that if the economy weren't fixed in three years, he'd be held "accountable."
Bill Clinton, true to his nature, misrepresented nearly every relevant fact about the economy for the past 30 years, and particularly for the past four. How else to cite "arithmetic" when praising a president who has rung up $5 trillion in new debt in one term? How else to count as "savings" $848 billion in money not spent on wars in Afghanistan and Iraq -- as if those wars were projected to continue another decade?
But back to the financial crisis. That crisis was caused by the collapse of the housing bubble. If the severity of that crisis explains the struggling American economy under Obama, one would expect that those states most affected by the housing implosion would be in the most trouble. But as James Pethokoukis of the American Enterprise Institute has pointed out, the states that suffered the greatest losses in home values did not do noticeably worse during the recovery than those in which the housing crisis was milder.
A report by the San Francisco Federal Reserve found: "There's almost no systematic relationship between employment growth and home price declines." These findings, the report concludes, "indicate that the economy faces obstacles that are national in scope. The slow pace of expansion has affected all regions of the country. During the recovery, states where house price declines have been relatively mild have not done noticeably better than states where housing got hammered."
The Democrats are hoping they can turn George W. Bush into Herbert Hoover and Barack Obama into Franklin Roosevelt. But as Bill Clinton once said about another Obama claim, it's a "fairy tale."
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