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Too Much All At Once

The Seeds Of Democrats' Current Misery Were Arguably Sown In TARP

Obviously, a great deal has happened over the last year to affect the political situation for President Obama and congressional Democrats. Serious mistakes and miscalculations by Democrats on both ends of Pennsylvania Avenue created some of these problems, while others were problems that were not necessarily of Democrats' making.

Arguably, however, the series and sequence of events that laid the groundwork for many of the Democrats' problems began before Obama was elected. These problems started in the fall of 2008 when Lehman Brothers fell, the worldwide credit markets seized up and President George W. Bush, along with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, crafted and convinced Congress to pass the $700 billion Troubled Asset Relief Program that has come under so much scrutiny.


Major reform was too much for voters to handle when all they wanted was a focus on job creation and the economy.

While deficits soared over the previous eight years, with the national debt swelling, causing consternation among many, it was TARP that sent increasing numbers of Americans into apoplexy.

A flawed and insufficient economic stimulus package was followed by bailouts and takeovers of banks and auto companies. Finally, a move for significant health care reform and a cap-and-trade climate change bill occurred, and concerns about the size, scope, reach and cost of government skyrocketed, leading Obama and Democrats into their current predicament.


Arguably, TARP was one of the most important ingredients in this combination of events that created political nitroglycerin, resulting in the series of political explosions that have been taking place since last summer.

Paulson's new book, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System, came out this week, and it's already creating a stir. I had the chance to speak with Paulson twice, both times before the September 2008 financial crisis. He was one of the smartest and most impressive public officials I had ever met, which gave me comfort during those days 16 months ago when the economy began its downturn. While I only knew Bernanke by reputation, it was reassuring to know that two extremely bright people were tasked with cobbling up a solution, authorized by Bush, to do whatever it took to keep the worldwide financial system from collapsing.

To be sure, it was trial and error, and we ended up with a tough recession. But the system held up, and it was not the second Great Depression that it could have been.

While Bush can legitimately be blamed for much that occurred for eight years, in my mind he passed a major test of leadership by delegating the responsibility to these two men and supporting them no matter how ideologically offensive it might have been for him.


What Obama and Democrats failed to realize was that the escalation of spending under Bush, the bailouts and the implementation of TARP created a political environment that made significant climate change and health care reform ring up "no sale" in the minds of voters. It was too much for them to handle when all they wanted was a focus on job creation and the economy.

The jobs package being crafted appears to be a solid one, although it comes five months too late. One would have thought that in early August -- when the July jobless numbers were released showing a third straight month of 9 percent unemployment -- the news would have triggered a package that would have looked like this, along with a more robust renewal of homebuyer tax credits than the ones passed several months later.

Perhaps best summing up the sea change in public attitudes is the NBC News/Wall Street Journal poll. In Obama's first full month in office, February 2009, the poll asked respondents whether they thought "government should do more to solve problems and help meet the needs of people" or whether "government is doing too many things better left to businesses and individuals."

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Fifty-one percent thought government should do more, while 40 percent thought the government was doing too much. It was the sixth consecutive NBC/WSJ poll that showed either a majority or a plurality wanting government to do more. But by April, when it was asked again, the difference was within the poll's error margin, with 47 percent saying government should do more and 46 percent saying government was doing too much.

In early January of this year, government doing too much held a 5-point edge. That most recent poll of 1,002 adults was conducted Jan. 10-14 and had a 3-point error margin.

The point of all this is to say that while the health care reform effort certainly contributed to Democrats' problems, it is only part of a longer series of events that have caused a major shift in public attitudes. Americans want a focus on the economy and jobs, and the appetite for major systemic change that involves the expansion of government is very different from what it was just after the 2008 election. TARP was the effective beginning of the sequence, and health care was the straw that broke the camel's back.

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