Answering critics who are gleefully calling him the the Etch A Sketch candidate, Mitt Romney stood fast on one of his long-held positions Wednesday, defending George W. Bush's financial bailout of Wall Street in 2008. That might be considered a rather gutsy stand, considering that Bush has been persona non grata among Republicans in this campaign, the conservative base despises the policy and Romney's chief rival for the presidential nomination, Rick Santorum, has condemned the bailout as unnecessary and "injurious to capitalism."
And what Romney said is at least partly true: almost every mainstream economist agrees that had there not been a bailout, the entire U.S. financial system would have collapsed and the nation would very likely be in the middle of a second Great Depression right now.
But in his remarks in Maryland, Romney also ignored--or etched out--much of the financial history that led to the bailout. "I keep hearing the president say that he's responsible for keeping America from going into a Great Depression," Romney said. "No, no, no. That was President George W. Bush and [then Treasury Secretary] Hank Paulson that stepped in and kept that from happening."
Umm, yeah, they did, but only after Paulson, as head of Goldman Sachs, lobbied to raise leverage limits that fueled Wall Street's untrammeled risk-taking machine and after Bush, for eight years, sponsored low-income housing and deregulatory policies that promoted the illusory idea of a self-stabilizing Wall Street, gutted the financial regulatory system and set the stage for the disaster.
It is little remembered today that President Bush was so completely flummoxed by the financial collapse that, according to his own former speechwriter, Matt Latimer, he didn't seem to comprehend at first what had happened, nor that the Treasury was planning to pay more for Wall Street's toxic securities than they were really worth in order to sustain the reckless banks. "Why did I sign on to this proposal if I don't understand what it does?" he told Latimer plaintively. Just before the crash, Bush had hoped to deliver a series of "legacy speeches" touting his accomplishments, including a robust economy.
Romney, in his remarks, may have been just sketching out how he plans to run in the fall--as well as conveniently reminding voters of the story he hoped would dominate the news yesterday, that George W. Bush's prominent brother, Jeb, had just endorsed him. But that's no excuse for etching out the real story of what happened.