2004 was one of the closest elections where the President was re-elected. George W. Bush was re-elected by only 286 electoral votes. Had Ohio gone for John Kerry, Bush would have lost. The 2004 campaign was mostly focused on foreign policy, but as we know Bush's second term became overwhelmed by the 2008 financial crisis. Had a Democrat (either Kerry or someone else) won in 2004, would that have effected the onset of the Great Recession? I wonder if, in this scenario, Bush might run again in 2008 arguing that he would have managed Iraq and the economy better than the Democrat who defeated him.
Would a Democratic Victory in 2004 Have Affected the Great Recession?
- Thread starter Amadeus
- Start date
Unlikely. The bad mortgages and the real estate bubble were already in place. The Democrats took Congress in 2007, but didn't avert anything because Senator Dodd, who was supposed to be providing oversight, took a bribe from Countrywide. Barney Frank, Dodd's House counterpart, was in a relationship with a Freddie Mac executive.
Bush raised the leverage ratio for banks in 2004, but even if Kerry undid that in 2005 it would most likely have a minimal effect. Everything else was a ticking time bomb.
2008 is more likely to be JEB! as a proxy for his brother. Kerry would own not only the financial meltdown but also the Katrina response (which is slightly better without Heckuva Job Brownie but is still going to be ugly even with a competent federal response). Iraq is still going to have problems with insurgents as there's no good way out.
Bush raised the leverage ratio for banks in 2004, but even if Kerry undid that in 2005 it would most likely have a minimal effect. Everything else was a ticking time bomb.
2008 is more likely to be JEB! as a proxy for his brother. Kerry would own not only the financial meltdown but also the Katrina response (which is slightly better without Heckuva Job Brownie but is still going to be ugly even with a competent federal response). Iraq is still going to have problems with insurgents as there's no good way out.
Probably not the onset, but hopefully the clean-up and response.
The American public wanted the Hammer of God brought down upon Wall Street.
I agree that Kerry would be blamed for the crisis because it would happen under his watch. OTOH how would a GOP President elected in 2008 handle the crisis? Would the American Recovery and Reinvestment Act in this TL be centered on tax cuts? Would there even be an ARRA or would the president and GOP double down on a small-government "Government isn't the solution to the problem, government is the problem" approach?
Obama was President for almost all the crises and he did nothing to punish Wall Street, even with a filibuster proof majority in Congress.
I don;t see the Great Recession being any different under a democratic President. The policies which led to them were popular and implemented bipartisanly.
Roughly the same.
Only opposition to the bailout was a faction of the GOP. That faction might be smaller if any of its members had a chance of stopping it and getting blamed for the weak recovery.
Yes, for all intents and purposes.
Now, we could both probably come up with small examples of President Obama and Congress putting the reins on Wall Street, maybe even punishing them. But as we all know, perception in politics is reality, and/or what counts is a tricky mix of both.
President Obama’s other big mistake,
for his Spring 2009 tax cut of $400 for most individuals and $800 for most couples, he should have sent out checks.
Instead, he let economists convince him that a reduction on withholding would lead to more of the money being spent. Too much of a purist position. Too much of a Boy Scout position.
If it was at all reasonably close, he should have gone with the more politically advantageous option of sending checks. And he probably should have gone bigger than $400 and $800.
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I think it would largely depend on who the GOP nominates. If its someone more fiscally responsible like Jeb or Romney then they might pass some form of comprehensive legislation and be able to weather out the storm, but if its someone like Ron Paul then they'll be kicked out of office faster than you could say "second great depression."
AIG Bailout Means Drastic About-Face for Feds
The federal government announced that it would pump $85 billion loans into the ailing insurance giant American International Group, or AIG, in exchange for an 80 percent stake in the company.
abcnews.go.com
“ . . The company's downfall comes from a decision to insure investments in the subprime market. As subprime mortgages started to default, AIG was on the hook . . ”
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Treasury Secretary Hank Paulson led the team which bailed out AIG on Tuesday afternoon, Sept. 16, 2008.
And this was the key save.
* so, when Congress passed a bailout early Oct. ’08 and President Bush signed it, the greatest danger was already over
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Only Nixon can go to China.
And therefore, I like the idea of a Republican elected in 2008. He (or, maybe She?) can go further in regulating the big banks. He won’t get the knee-jerk opposition from the other party.
So, maybe a President Mitt Romney passes legislative with only 2/3’s of Republican votes in Congress, but also with 2/3’s of Democratic votes. And this could be effective, streamlined legislation. Not the gobbled-up, watered-down stuff we normally get.
For example . . .
25 Nov. 2016 —
Should US banks do more to prevent a banking crisis? - BBC News
One US Federal Reserve bank official, Neel Kashkari, wants his country's banks to keep much higher cash reserves, to reduce the chances of another major financial crisis.
www.bbc.com
‘Currently, US banks need to keep 6% of what are known as their risk-weighted assets, a formula that values their their loan book, in cash. Under the so-called "Minneapolis Plan", Mr Kashkari wants banks to significantly increase this ratio to up to 38%.’
.
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‘Chris Lowe of FTN Financial says it's not necessarily a bad idea, but the key to success would be the plan for transition. “If it were done in one fell swoop it would have massive implications…” . ’
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Okay, so you do it gradually.
And maybe the end goal required is based on the size of the bank. <— you see, maybe I’ll already made it too complicated
The point being, Increased Reserves is exactly the kind of clear and understandable legislation you might be able to pass— if you have a President who is able to “play against type.”
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