With its heavy focus on foreign affairs, last night's vice presidential debate didn't break a whole lot of new ground on economic policy. But amid the retreads of arguments we've been hearing for much of the campaign, there was one truly strange nugget from Joe Biden. Apparently, Medicare Part D caused the financial crisis...or something:
And, by the way, they talk about this Great Recession [as] if it fell out of the sky, like, "Oh, my goodness, where did it come from?" It came from this man voting to put two wars on a credit card, to at the same time put a prescription drug benefit on the credit card, a trillion-dollar tax cut for the very wealthy. I was there. I voted against them. I said, no, we can't afford that.
As Biden himself might say, malarkey.
I'm not sure whether the vice president really thinks you can draw a straight line from the Bush deficits to the housing bubble and collapse, but that's what he appears to be doing. Perhaps he got a little ahead of himself and started combining talking points: you can criticize the last administration for being lax on regulation, and you can criticize its fiscal recklessness. You can even combine them into a grand narrative of economic mismanagement, and one can certainly argue that growing the national debt during the the good-ish years made it much harder to respond effectively when the crisis did come. Still, it's really odd to pin the recession on size of the government's credit card tab.
Throughout the campaign, the Obama campaign seems to have had surprising trouble articulating a clear, coherent argument for exactly how it believes the Bush administration brought on the meltdown. This isn't completely surprising because a) the financial crisis was complicated systemic failure on the government's end, and voters only have so much appetite for specifics and b) some of the guilty parties are fairly close to team Obama. Democratic Explainer-in-Chief Bill Clinton played a decisive role in deregulating the financial industry at the turn of the century, and, as president of the New York Federal Reserve during the aughts, Treasury Secretary Tim Geithner was supposed to be the central bank's ear on Wall Street. As we all know by now, he wasn't listening very closely.
Still, it's one thing to elide over bipartisan failures that led to our present troubles. It's another to claim, for instance, that the Bush tax cuts got us here, as Obama himself did in a recent television ad. Quoth the President: "Now Governor Romney believes that with even bigger tax cuts for the wealthy, and fewer regulations on Wall Street, all of us will prosper. In other words, he'd double down on the same trickle-down policies that led to the crisis in the first place."
When the Washington Post's Glenn Kessler asked the campaign to explain the role tax cuts played in bringing on 2008's economic calamity, a spokeswoman said:
The tax cuts contributed to the crisis in multiple ways, including by driving up the deficit, crowding out potential investments that could have promoted sustainable, shared economic growth and leaving the economy vulnerable to speculation-fueled bubbles and high middle-class indebtedness. And they made it more difficult for the federal government to respond to a crisis because it was already facing very high deficits.
There's some good, some bad here. Yes, Bush's legacy of deficits likely made stimulus spending a harder political sell. On the other hand, I'm not aware of any evidence that government borrowing actually led any slowdown in private investment in those years. In keeping with Biden's comments last night, it seems the President has embraced the theory that pretty much everything the last Republican administration did was somehow directly related to the financial crisis. That might be good politics, but it's dubious economics.