Gerson: Bush Is the Hero of the Banking Crisis

"The Leader Who Stood The Tallest." Words fail me, so I'll let Gerson speak for himself.

One advantage of a crisis is the illumination it sheds on the main figures of American politics -- like a strobe light on a dark dance floor, catching all involved in characteristic, sometimes embarrassing poses.

True dat.

[T]he largest figure revealed in the light of the financial crisis has been President Bush. Americans may be tired of strategic boldness, but Bush clearly is not. When Paulson and Bernanke came to the president in mid-September, warning of an imminent financial meltdown, Bush's reaction was typical. He told Paulson not to worry about the politics and to propose whatever was economically necessary. It would have been easier for the administration to produce symbolic, easily passable legislation. Bush chose to go to the root of the problem -- toxic debt in the financial system. The plan was not perfect and was later improved. But charges that it is somehow timid or irrelevant are absurd. Seven hundred billion dollars amounts to about 5 percent of all mortgage debt in America -- about one-third of all subprime debt.

Three things:

1) Just because it's big, doesn't mean it will accomplish its intended purpose. Ever hear of "throwing money at a problem," Mike?
2) "Bush" didn't choose anything. Bush has no idea what's going on here. All he's doing is trusting that what Paulson and Bernanke tell him is true.
3) All Bush has left is the hope that someday, history will evaluate him more kindly than the vast majority of people would do now. If the credit markets freeze up on his watch, despite Congress having passed whatever legislation he sent them, that would be one disaster too many: his reputation would never recover. Bush has little choice here but to do what the grownups tell him to do.

Bush's ambition, bias toward action and indifference to political pressure are sometimes criticized. But his greatest failures -- such as the Katrina response and the initial strategy of the Iraq counterinsurgency campaign -- have come when he ignored those instincts. The troop surge resulted when he followed them. And Bush's economic ideology -- a belief in markets, combined with a recognition that intervention is sometimes necessary to make markets work -- seems well suited to the current crisis.

Please. Bush's economic ideology - regulation is bad - got us into this. It wasn't all his fault - Phil Gramm laid most of the groundwork before Bush was inaugurated - but Bush has been President for nearly eight years. His crew didn't see this coming, didn't do anything to make this moment less likely, and did their best to cut regulation of the financial markets beyond the extent that it had already been done.

With months remaining in his term, Bush's influence is not what it once was. But if his rescue plan eventually passes, there will be reason for thanks that Bush, rather than McCain or Obama, is president at this moment -- even if few offer that thanks.

The bill that Paulson proposed was probably the worst possible bill that had a decent chance of at least being a temporary Band-Aid for our credit crisis. (Which is all I expect it to be, even in its final form.) Obama's economic team could have come up with something better in about five minutes - and that's got nothing to do with Obama personally. The same would be true of any credible Democrat's economic team, had they been President at this moment - Gore, Kerry, Edwards, Biden, either Clinton, Richardson, Dodd, you name it.

Maybe they could have even kept a crisis from happening in the first place, if they'd been President for the past few years. How you perform in a crisis is really quite secondary, if you were in a position to keep things from getting to a crisis stage to begin with, but didn't.