Bush: I’d Do The Bailouts Again
Speaking in Pennsylvania, President Bush said that the bailouts approved at the end of his term in office were necessary to defend against “economic hell” and that, despite advisers telling him after the fact that they wouldn’t work, he’d do it all over again.
HERSHEY — Former President George W. Bush on Monday praised the power of individuals and businesses to direct economic activity even as he defended massive bailouts of the banks and automobile manufacturers.
The keynote speaker at the annual dinner of the Pennsylvania Chamber of Business and Industry, an organization that advocates on behalf of businesses in the state, Bush said the bailouts were a necessity as the nation faced “economic hell” in the final two years of his administration. Without the bailouts, the country would have faced an economic reality worse than the Great Depression, Bush said he was told by then-Treasury Secretary Henry Paulson.
He said the programs, which directed more than $700 billion to financial institutions and auto manufacturers in 2008, were recommended to him by Paulson and Ben Bernanke, chairman of the Federal Reserve, whom Bush called a trusted adviser.
Paulson later told him the bailouts would not work, Bush said. But, if the situation were the same, he would make the same decision, the former chief executive said.
“I didn’t want to be a president who could have done something about it and didn’t,” Bush said. “I think it saved the country from a depression, and I can’t prove it, but I think it did.”
The President went on to suggest that the country still needed limited government policies:
At the same time, the former president stressed the need for limited government regulation of business affairs and fiscal responsibility, saying government should not take money from the “coffers of the job creators” and let people make their own economic decisions.
“I believe you spend your own money better than the government can, and you don’t need a Ph.D in economics to know that,” Bush said, drawing cheers from the pro-business crowd assembled in Hershey.
I’m not sure how you can both be supportive of government bailouts and also say that people should make their own economic decisions.
What guides free markets, in which people make their own decisions, is consequences. Adam Smith’s “invisible hand” works when good economic decisions are rewarded with prosperity and bad economic decisions are rewarded with failure. Bailouts are the opposite of that. Bailouts say that companies can make bad decisions and they’ll be rewarded. Or, at least, protected from the consequences of those decisions.
Would we have faced “economic hell” if the federal government hadn’t gone to extraordinary lengths to bailout the banks and other companies? Maybe, but in the long term it may have been better if we’d let those banks fail because what we’re doing know is more of the same things which lead us to the failure of the banks in the first place.Tags: bailouts, Economy, george w bush, jobs