President Obama, in his new “Economic Patriotism” ad:
Now, Governor Romney believes that with that even bigger tax cuts for the wealthy and fewer regulations on Wall Street all of us will prosper. In other words he’d double down on the same trickle down policies that led to the crisis in the first place.
Obama cannot possibly believe this.
1. There is no possible causal relationship between the Bush tax cuts and the recession. I know of no theory suggesting this. And if Obama did, somehow, actually believe this, how come he wants to keep most of them?
2. Did fewer Wall Street regulations under Bush cause the Great Recession? I addressed this recently:
A few problems with this theory, though. For starters, the law that ended Glass-Steagall was signed by President Bill Clinton in 1999. Second, few analysts think the end of Glass-Steagall directly contributed to the financial crisis.
Another candidate — and you hear this one a lot — was a 2004 rule change by the Securities and Exchange Commission — the Bush SEC! – that supposedly allowed broker-dealers to greatly increase their leverage, contributing to the ﬁnancial crisis. But as Prof. Andrew Lo of MIT notes in a 2011 paper, “… it turns out that the 2004 SEC amendment to Rule 15c3–1 did nothing to change the leverage restrictions of these ﬁnancial institutions.”
And besides, there’s a strong case to be made that it was the economic downturn — begun by negative wealth effects from the collapse in the housing market and then greatly exacerbated by the Fed — which caused the financial crisis rather than the crisis causing the severe downturn.