The failed policies that got us into this mess

Photo source: Citizens Against Big Government

In an AP interview over the weekend, Barack Obama accused Mitt Romney and the GOP, for the bazillionth time, of “offering the same policies that got us into this mess in the first place.” I’d like to explore that accusation.

Gov. Romney’s economic policies are based on limiting the size of government, reducing regulation, and restraining monetary growth. The Bush administration, in the years leading up to the 2008 financial crisis, did none of these things.

According to the Office of Management and Budget, during the presidency of George W. Bush federal spending grew from $1,789B in fiscal year 2000 (18.0% of GDP) to $2,983B (20.9% of GDP) in 2008. Growth in government continued under the Obama administration, with spending hitting a record $3.603B in 2011 (23.9% of GDP).

The administration of George W. Bush added an average of 73,400 pages of regulations to the Federal Register, compared to 66,500 pages under Clinton, and 50,700 under Reagan. Obama continued regulating at a record-setting pace of 77,100 pages per year.

We don’t talk a lot about monetary policy in our political discourse, but according to both Austrian and Chicago economics, it’s the real driver of both the business cycle and of bubbles like the one that created the mortgage crisis. According to Federal Reserve data, the money supply (seasonally adjusted M2) grew at a restrained 3.3% annual rate from the beginning of Chairman Greenspan’s tenure in August 1987 through March 1995. At that point, policy shifted. During the balance of Greenspan’s stewardship, which saw both the dot com and the housing bubbles, M2 expanded an average of 8.50% per year. Ben Bernanke, who was appointed by Bush in 2006 and re-appointed by Obama in 2009, continued cranking the printing presses at a 7.6% clip through September 2011.

In each case – fiscal policy, regulatory policy, and monetary policy – we see that George W. Bush did the exact opposite of what Mitt Romney proposes to do. And in each case, Barack Obama continued and even accelerated the policies of George W. Bush. Sorry, Mr. President. The failed policies that got us into this mess are not Mitt Romney’s. They’re yours.

Michael Isenberg is the author of Full Asylum, a novel about politics, freedom, and hospital gowns. Check it out on Amazon.com.