For months now, the liberal leaders in the press have blamed Wall Street, the housing industry and capitalism for the financial crisis that has thrown the United States into a deepening recession.
The facts show, however, that it is big government socialism that is really to blame.
In 1977 the Jimmy Carter administration passed the Community Redevelopment Act (CRA) that began to push the housing industry to give low-cost home loans to low-income people, especially minorities.
Then, in the early 1990s, the Clinton administration created new rules for the housing industry through the CRA that relaxed the standards even further, not only for low-income people but for other potential homeowners. Also in the 1990s, the Clinton administration forced the government-created mortgage lenders Fannie Mae and Freddie Mac to relax their standards as well.
Contributing to this housing regulation debacle were finance laws in many states that allow homeowners to walk away from their homes without penalty, tax laws that only let homeowners deduct just their mortgage interest and not their consumer loan interest for cars and other physical necessities, and government banking policies that allow banks to hold only a minimal amount of capital to back up their mortgage risks.
All this big government socialism in the housing and banking industry was compounded by socialist laws that prevent oil companies from drilling offshore and in Alaska (thus increasing the price of gas), socialist laws against nuclear power plants, high taxes on American businesses and manufacturers, socialist regulations on the U.S. auto industry, and socialist leaders in America’s labor unions who force workers, employers and the government to enact even more socialist policies throughout society.
And, all this big government socialism can be traced to those in the government who have trashed the Constitution and kept giving the federal government more and more power, despite the clear intent of the original founders.
Only by reducing this big government socialism, slashing government spending and drastically reducing taxes will the U.S. economy fully recover from this wasteful mismanagement of the nation’s resources, including its people.
- Sources: Various.