When Americans faced the 9/11 terror bombings, President Bush set a reckless laissez faire tone that has had a devastating effect on the American psyche. Rather than marshaling public sacrifice, Bush told the nation, "Go shopping."
Americans struck by the collapse of the national financial structure shouldn't be surprised that executives of the failed financial giant American International Group spent $500,000 (including $23,000 for spa services) at a cushy California resort even as it was being bailed out with $85 billion from the U.S. Treasury.
Free-spirited Americans with stacks of credit cards have run up a negative savings rate of minus 0.5 percent. They have spent more than they earned, then borrowed more—just as Washington has spent more than it took in and borrowed billions of dollars from foreign governments.
Only twice before have Americans had a negative savings rate—in 1932 and 1933 during the Great Depression.
No group can escape blame for our alarming state of financial affairs. Consumers ran up personal debt they couldn't repay and took out home mortgages they couldn't afford. Politicians wrote lax laws allowing Wall Street to do funny things with paper. Wall Street loaned to risky borrowers. The White House told banking and investment regulators to ease up on business. The $10 billion-per-month Iraq war has continued for 5 years.
When will Americans learn? Today's debacle is a virtual repeat of the 1980s savings and loan scandal and the $124 billion rescue by Washington of 747 institutions that went on wild lending sprees.
If Congress conducts a truly serious post mortem on this latest financial calamity, it must be merciless in singling out every factor and every decision that led to the raid on the Treasury. No one should be spared, no political party excused.
Even now, however, one conclusion is clear. Only a thorough change in the White House with a new presidential tone can provide a bracing improvement in public confidence and a new attitude about national resources.
The Bush administration is incapable at this low point in public approval of providing any more than temporary remedies. Sen. John McCain has disqualified himself with a 26-year Washington record of arguing for more deregulation and acting as surrogate for the rightwing economic philosophy of the Club for Growth.
If Sen. Barack Obama becomes president, he must confront Americans with painful truths about the necessity for fiscal responsibility at home as well as in the corridors of Washington. Americans must learn there is no free lunch.
