By John Boland, Special to the Herald
If I were allowed to plagiarize a bit and paraphrase the headline on assistant professor Mark Mansperger's recent Fast Focus column, mine would read, "Ideological economics took us down under Carter and took us up under Reagan."
With President Jimmy Carter's strong and steady hand on the tiller of the U.S. Ship of State, his term ended with the nation's economy firmly and disastrously on the rocks. The day Ronald Reagan took office, U.S. inflation was 13.5 percent and conventional mortgages were at 18.5 percent, and Federal Housing Administration and Veterans Affairs mortgages were 22 percent.
All lending was dead, along with the housing industry. This brought down the manufacturing sector -- carpenters, electricians, painters, lumber and timber industries, carpet mills, autoworkers et al, were out of work. The entire U.S. economy had ground to a halt.
President Carter had put in place the Community Reinvestment Act (CRA). This legislation forced banks and lending institutions to make loans to people who couldn't begin to qualify to purchase a home.
The CRA lay fallow until the third year of the Clinton presidency, who then put teeth into the rigid enforcement of the CRA. Clinton's action started the world down the road to the still extant depression.
The first and only real job Barack Obama ever had was as a Chicago community organizer, a job that brought him in close contact with the Chicago ACORN chapter and leftist radical Bill Ayers.
ACORN used bank protests and other tactics, along with the legal clout of the Clinton administration, to put enormous pressure on local banks to loan to unqualified home buyers.
Between 2003 and 2006, Barney Frank, the brilliant head of the House Finance Committee, was an ardent supporter of having Fannie and Freddie loosen their underwriting standards to provide mortgage funds to what Mr. Frank referred to as the underserved and disadvantaged segments of the housing markets.
Needless to say Fannie and Freddie followed his advice with a passion.
Aided and abetted by Sen. Chris Dodd, head of the Senate Finance Committee, Dodd and Frank placed their respective cronies as heads of the quasi-governmental agencies Freddie Mac and Fannie Mae. The toxic loans then were mixed in with good loans, and repackaged for sale to worldwide markets.
They disguised them such that conventional Wall Street firms bought them up as valid securities bearing the full faith and strength of the U.S. government. The Clinton administration greatly pressured Wall Street to purchase the toxic assets. The rest is very ugly history.
Within six months of the swearing-in of Ronald Reagan and Paul Volcker, the Federal Reserve chairman put in place a 10 percent across-the-board tax rate decrease. Inflation soon declined to 3.5 percent from 13.5 percent.
Though it took the results nearly three years to kickin, the tax reduction launched the longest expansion of the economy in the history of the U.S., if not the world.
History repeatedly illustrates that each and every time tax rates are decreased, especially across the board, more people go to work, industry and the stock market thrive and far more income comes into the U.S. Treasury as taxes.
Yet Mansperger and our present feckless president insist on more federal stimulus, now called "investment," which never has led to a major economic expansion, especially anywhere the size of the one Reagan and Volcker launched.
That expansion lasted through most of the Clinton administration. All Bill Clinton had to do to claim credit for the continuing economic success was to legislatively keep out of the economy's way.
The ideological economics sword cuts both ways, doesn't it?
In closing, I long have questioned how such an uber liberal as the good assistant professor Mark Mansperger could garner so much ink in the Tri-City Herald.
That said, I believe I just answered my own question.
* John Boland has lived in the Tri-Cities since 1972. He co-founded Sigma Research and was a real estate broker and developer before his retirement.