Wednesday, October 15, 2008

McCain Tries To Blame Financial Crisis On Democratic Takeover Of Congress In 2007

In an interview with right-wing radio host Michael Medved this past Friday, John McCain agreed with Medved’s assertion that “the economy was really progressing pretty well under most of President Bush’s term” before Democrats took control of Congress in January 2007:

MEDVED: Let me ask you one other thing senator, which again, I think is on the minds of lots and lots of our listeners. The economy was really progressing pretty well under most of President Bush’s term. Then the Democrats took over in Congress in 2007 and now we’re in this horrible crisis. Coincidence?

MCCAIN: No, it isn’t.

McCain went on to place the blame for the financial crisis on Fannie Mae and Freddie Mac, claiming that Democrats “were willing co-conspirators with this game of three-card monty that went on and then it collapsed.”

This claim that “the economy was progressing really well” before Democrats took control of Congress is a joke.

As Center for American Progress Senior Fellow Christian Weller’s economic snapshot from December 2006 shows, the economy was already in rough shape:

Famly Debt Was Rising: By September 2006, household debt rose to an unprecedented 130.9% of disposable income. From March 2001 to September 2006, personal debt relative to disposable income grew each quarter by 1.6 percentage points—almost five times faster than in the 1990s. In the second quarter of 2006, families had to spend 14.4% of their disposable income to service their debt—the largest share since 1980.

The Housing Market Had Slowed: The supply of homes for sale each month averaged 6.9 months of supply for the six months ending in October 2006—the largest supply since 1991.

Savings Had Plummeted: The personal saving rate of -1.3% in the third quarter of 2006 marked the sixth quarter in a row with a negative personal saving rate.

As for John McCain’s claim that Fannie Mae and Freddie Mac are the central cause of the current economic crisis is a total fabrication. McClatchy Newspaper thoroughly debunked this conservative talking point over the weekend, writing that “private sector loans, not Fannie or Freddie, triggered crisis.” McClatchy Newspaper notes that the “weakening of underwriting standards for U.S. subprime mortgages” began in late 2004 while Republicans controlled both the House and the Senate.


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