It's Obama's White House, but it's still Bush's world

It's Obama's White House, but it's still Bush's world

By Julian E. Zelizer - Washington Post 

Sunday, August 15, 2010; B01

When conservatives brand President Obama a socialist or a foreigner, his aides laugh it off. When critics disparage him as arrogant or aloof, they roll their eyes. But if liberals dare compare Obama to his predecessor in the Oval Office, the gloves come off.

"I hear these people saying he's like George Bush," White House press secretary Robert Gibbs told the Hill newspaper last week. "Those people ought to be drug-tested. I mean, it's crazy." Gibbs went on to deride such critics as the "professional left," who will be content only "when we have Canadian health care and we've eliminated the Pentagon."

Even though Gibbs later semi-apologized, saying he had spoken "inartfully," it's not hard to see why the comparison stings. As the midterm elections approach, Democrats have made George W. Bush a focus of their fall campaign. Speaking at a Texas fundraiser Monday, Obama asked: "The policies that crashed the economy, that undercut the middle class, that mortgaged our future -- do we really want to go back to that, or do we keep moving our country forward?" Their message is clear: Republicans still embody the Bush agenda, and only with a Democratic White House and Congress will the nation be able to truly break from the past.

The president is correct in part. Just look at the health-care overhaul, Wall Street reform and the new emphasis on diplomacy in American foreign policy to see the difference that one election can make. Yet the break between Bush and Obama should not be exaggerated. Dismantling the past is extraordinarily difficult. In a host of arenas, Obama is holding on to the Bush administration's policies and practices, even some that he decried during his presidential campaign and vowed to undo. From the wars we fight to the oil we drill for, we're still living in the Bush era -- like it or not.

First, consider the strengthening of presidential power. Every president since Richard Nixon has fought to restore the authority of the executive branch that was diminished as a result of Watergate. No chief executive was as successful as Bush, especially since he had the help of Vice President Dick Cheney, who had dedicated much of his career to criticizing the 1970s reforms that he thought had emasculated the White House. Bush relied on signing statements and executive orders to implement initiatives such as warrantless wiretapping without having to get approval from Congress.

Obama has not done much to reverse the trend. While he has worked harder to court Congress, allowing legislators to craft the details of the health-care legislation, for example, he has not stepped back from Bush's robust use of executive power. He has relied on it to strengthen environmental programs and agencies that had been weakened since the 1980s. On national security, the pattern is more striking. Obama's Justice Department has turned to Bush's sweeping interpretation of the "state secrets" privilege to battle lawsuits involving the rendition and torture of terrorism suspects, and the president has defended the right of the government to conduct intrusive domestic wiretapping programs.

The second enduring legacy of the Bush presidency is the sprawling counterterrorism infrastructure created after Sept. 11, 2001. The Bush administration vastly strengthened the government's ability to fight terrorist networks by collecting information, tracking and closing down financial and nonprofit organizations, and interrogating detainees. Although Obama was a critic of this program on the campaign trail, much of it remains in place -- most notably, the detention facility at Guantanamo Bay, Cuba.

Early in the Obama presidency, Jack Goldsmith, a former lawyer for the Bush administration who had become a vocal critic of its counterterrorism policies, criticized Cheney for exaggerating the differences between the two White Houses. "The new administration," Goldsmith wrote in the New Republic, "has copied most of the Bush program, has expanded some of it, and has narrowed only a bit."

And in a blistering report on the administration's national security record released last month, the American Civil Liberties Union warned of the "very real danger that the Obama administration will enshrine permanently within the law policies and practices that were widely considered extreme and unlawful during the Bush administration. There is a real danger, in other words, that the Obama administration will preside over the creation of a 'new normal.' "

The report praised Obama's decisions to release the Bush administration's "torture memos" and to outlaw secret CIA prisons overseas, as well as his prohibition of torture, but criticized the administration for, among other things, failing to eliminate military commission trials and targeted killings of terrorism suspects. ACLU Director Anthony Romero declared himself "disgusted" with the president's policies.

Nor, in a practical sense, has the Obama administration distanced itself from the Bush administration's third legacy, its wars for regime change. After the 2001 attacks, Bush defended a vision of foreign policy that sought to remove terrorist-friendly governments from power and rebuild their countries' civilian and security institutions. These principles underpinned the wars in Afghanistan and Iraq.

To the frustration of many liberals, Obama has not changed course. While following through with Bush's withdrawal schedule for Iraq, Obama has expanded Bush's mission in Afghanistan by sending 30,000 more troops into the conflict. He is now relying on Gen. David H. Petraeus, who Bush used to clean up the problems in Iraq, to strengthen the counterinsurgency effort in Afghanistan. And Obama's withdrawal dates remain fuzzy. At the end of this month, 50,000 U.S troops will still be in Iraq, while the July 2011 deadline for leaving Afghanistan remains far from solid (in fact, many administration officials backed off that date almost as soon as it was announced).

The Bush administration also rejected strong regulatory oversight of offshore oil drilling -- a fourth critical legacy. In keeping with their long-held position that oil companies should be free from government restrictions in order to help end American dependence on foreign oil, Bush officials allowed agencies responsible for oversight to be weakened, staffing them with administrators who were skeptical of climate change and other scientific arguments about the environment.

Although many Democrats initially decried Bush's deregulatory policies on offshore drilling after the BP oil spill in the gulf, it soon became clear that blame also rested with the Obama administration. In a series of penetrating articles for Rolling Stone, Tim Dickinson revealed how the Obama White House had not done much to repair the broken Minerals Management Service and had been willing to trade support for offshore drilling in exchange for votes on climate-change legislation. Ignoring the advice of scientific experts, the administration authorized an aggressive round of drilling in the gulf without adequate environmental review.

After the spill, the Obama administration did impose a moratorium on drilling and stuck with it despite enormous political fallout; when a federal judge struck down the first ban, Obama imposed another. Yet the moratorium has been far from airtight, with loopholes allowing several kinds of drilling to continue.

Fiscal policy is the final area where Bush's legacy still looms. The tax cuts of 2001 and 2003 provided substantial tax relief for middle- and upper-income Americans, with the benefits weighted toward the wealthiest citizens. Building on Ronald Reagan's supply-side economics, the Bush administration pushed for big cuts based on the notion that they would propel economic growth. Moreover, during the financial meltdown in the fall of 2008, the administration proposed the Troubled Assets Relief Program -- with Democratic support -- which offered a massive bailout to the nation's financial sector.

These policies remain intact. Obama, as a senator and presidential candidate, helped push the TARP through Congress, and as president he extended and defended the bailout. On the Bush tax cuts, which are set to expire this year, the verdict is still out. Here, Obama and the Democrats have made an aggressive push to overturn part of the Bush legacy: They have rallied support to allow the tax cuts for the wealthiest Americans to expire -- in order to reduce the deficits they helped create -- while extending the cuts for Americans earning less than $250,000 a year. It's not clear whether they will succeed; after all, many Democrats are nervous about being tagged as members of the party that raises taxes.

Almost since before he took office, Bush was written off by many as an intellectual and policy lightweight, an accidental commander in chief. Nonetheless, it soon became clear that his would be a very serious presidency -- one with long-term consequences for the nation and the world, far beyond his two terms in office.

Obama, who won the presidency on a platform of change, is now seeking to recycle that anti-Bush magic for the midterm vote. Yet, he is learning the hard way that it is easier to campaign against the Texan's legacy than to actually govern against it. It is Bush who, despite avoiding the post-presidential limelight (at least until his memoir is published in November), has continued setting the terms of the debate, so much so that his successor and opponents must adopt many of his ideas, however reluctantly.

We may live in the age of Obama, as many call it, but it's still Bush's world.

Julian E. Zelizer is a professor of history and public affairs at Princeton University. He is the editor of the essay collection "The Presidency of George W. Bush: A First Historical Assessment," forthcoming this fall, and the author of the forthcoming "Jimmy Carter."

It's Obama's White House, but it's still Bush's world

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NYTimes: Fannie Mae Seeks Another $8.4 Billion in Aid

Incredible how it just doesn't stop!

From The New York Times:
Fannie Mae Seeks Another $8.4 Billion in Aid
The mortgage finance giant reported a $13 billion loss in quarter and said it needed help to cover mounting losses.

May 10, 2010

For Administration, an Ill-Timed Request for Aid

By BINYAMIN APPELBAUM

WASHINGTON — Fannie Mae’s request on Monday for another $8.4 billion in federal aid comes at a politically inconvenient time for the Obama administration, which is pressing to pass sweeping financial legislation without resolving the company’s future.

The government has already transfused $137.5 billion into Fannie Mae and its cousin, Freddie Mac, since seizing the two mortgage financing giants in August 2008. The money covers losses on mortgages that the companies bought or guaranteed during the housing boom, allowing them to continue buying new loans.

Democrats want to defer an overhaul of federal housing policy until next year, after the midterm elections. But Republicans have seized on the continuing losses to argue that a plan for the two companies should be a priority of the current legislation.

It is an argument that Democrats have struggled to deflect. “I think it’s a fair claim to make to say we haven’t done enough to address Fannie and Freddie,” Senator Mark Warner, Democrat of Virginia, said in an interview on CNBC Monday. “It is the big elephant in the room.”

Mr. Warner then reiterated his party’s position that that it would be better to return to the issue next year “in a more thoughtful way.”

Republicans, meanwhile, tied up debate on the financial bill last week with speeches in favor of an amendment proposed by Senator John McCain of Arizona requiring the government to sever ties with the companies within five years. Fannie and Freddie would then be left to fend for themselves as private companies.

“The time has come to end Fannie Mae and Freddie Mac’s taxpayer-backed slush fund and require them to operate on a level playing field,” Mr. McCain said.

Fannie Mae and Freddie Mac were created by Congress to reduce the cost of home ownership. The companies buy mortgage loans from banks and other lenders, freeing up money for another round of loans. By providing a guaranteed return, the companies also allow lenders to charge lower interest rates.

During the housing boom, the companies used their profits to build portfolios of investments in high-risk mortgage loans, which are now losing value.

Fannie Mae said Monday that it lost $11.5 billion in the first quarter compared with a loss of $23.2 billion a year ago.

The company essentially became the world’s largest investor in mortgage loans, and its losses reflect the vast numbers of Americans who continue to default.

One consequence is that Fannie Mae now owns real estate worth $11.4 billion. The company said it acquired 61,929 single-family homes in the first quarter alone.

Freddie Mac said last week that it lost $8 billion in the first quarter. It asked for another $10.6 billion in federal assistance.

For now, the quarterly requests are a formality. The Obama administration committed late last year to cover all losses by the two companies through 2012, replacing an earlier promise to cover losses up to $400 billion over that same period.

The total losses are not expected to cross that threshold, but the companies’ prospects remain grim. Both said in first-quarter filings that they could not foresee any reasonable prospect of a return to profitability.

At the same time, the companies have become more important to the health of the housing market as private sources of mortgage funding evaporated almost completely during the financial crisis. Those sources have yet to make a significant comeback.

The government directly or indirectly provided financing for 96.5 percent of mortgage loans in the first quarter, according to the trade publication Inside Mortgage Finance.

Representative Barney Frank, Democrat of Massachusetts, argued in a memo to other leading Democrats last week that it was important to distinguish between the companies’ past mistakes and their present contributions to the health of the housing market.

While the losses that they are experiencing on old loans are unavoidable, Mr. Frank said the companies already had tightened lending standards to reduce future defaults.

“This is an important point that has to be repeated — as Fannie and Freddie operate today, going forward, there is no loss,” Mr. Frank wrote. “The losses are the losses that occurred before we took the first step towards reforming them — we the Democrats — and nothing we could do today will diminish those losses.”

Peter J. Wallison, a fellow in financial policy at the American Enterprise Institute, said it was true that the government could do nothing to stem the losses in the short term, but that it was a mistake not to decide the companies’ future as soon as possible.

“Right now we have a consensus that something needs to be done,” Mr. Wallison said. “The sensible thing to do is to put Congress in a position where they have to act within a certain period of time.”

Pushing the debate into the future, he said, created the risk that Congress would pass the present bill, congratulate itself on addressing the financial crisis, and lose its appetite for the difficult question of what do about Fannie and Freddie.

http://www.nytimes.com/2010/05/11/business/11fannie.html

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