The White House vs the NYT, Economic Meltdown Edition

In what Mike Allen calls "an unusual double-header", the White House has issued both a 100-word statement and a longer 900-word rebuttal of Sunday’s big NYT feature on how George W Bush contributed to the housing crisis.

What’s interesting to me is the narrowness of the rebuttal: it basically says "you can’t blame us, because the Democrats in Congress were crap too". But the article never lets the Democrats in Congress off the hook; it’s just not about them. It’s about the White House, which was so gung-ho when it came to the economy in general and the housing market in particular that it even overruled its own Treasury Department.

For me, the Treasury vs White House parts of the story are its most interesting bits:

Both Mr. Paulson and his predecessor, John W. Snow, say the housing push went too far.

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Mr. Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.” …

By the spring of 2005 a deal with Congress [on a bill to regulate Fannie and Freddie] seemed within reach, Mr. Snow, the former Treasury secretary, said in an interview.

Michael G. Oxley, an Ohio Republican and then-chairman of the House Financial Services Committee, had produced what Mr. Snow viewed as “a pretty darned good bill,” a watered-down version of what the president sought. But at the urging of Mr. Card and the White House economics team, the president decided to hold out for a tougher bill in the Senate.

Mr. Card said he feared that Mr. Snow was “more interested in the deal than the result.” When the bill passed the House, the president issued a statement opposing it, effectively killing any chance of compromise. Mr. Oxley was furious…

Mr. Snow, for one, calls Mr. Oxley “a hero,” adding, “He saw the need to move. It didn’t get done. And it’s too bad, because I think if it had, I think we could well have avoided a big contributor to the current crisis.”

Here’s how the White House responds to this:

Over the past six years, the President and his Administration have not only warned of the systemic consequences of failure to reform GSEs but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform at least 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems. Many prominent Democrats, including House Finance Chairman Barney Frank, opposed any legislation correcting the risks posed by GSEs.

The net effect, after reading both the article and the rebuttal, is not only of a win for the NYT but also of a lose for the White House. The NYT did a lot of work and got the likes of John Snow on the record about exactly what happened; the White House, in contrast, gives us nothing but finger-pointing at Democrats.

It seems that this White House still thinks that stewardship of the economy is a party-political issue, even after most of the opposition to its recent initiatives has come from the Republican side of the aisle. Clearly this is a group of people who will never learn from their mistakes; I hope and believe that the incoming administration will be much quicker to admit when it is wrong.

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