It is too close to Christmas, with too much holiday stuff undone, to write a detailed assessment as to how President Bush performed in 2008. A short one will thus have to suffice. It goes without saying that 2008 ws a momentous year, one that presented a series of daunting challenges that would have tested the mettle of any administration to the utmost. Any assessment of how President Bush's team handled these challenges must take into account that answers were hard to find. Most of the major crisis developments came after June 4, when Barack Obama's nomination path was cleared, and the identity of both major party candidates was known; that moment signaled the formal endgame phase of the departing administration. And the administration had to deal with a Democratic Congress salivating at the certain prospect that the next Congress was going to be more Democratic--likely significantly so--than the current one.
Then came a series of political tsunamis: an energy crisis symbolized by $4 per gallon oil in June and $147 per barrel oil; a Russian surprise attack on Georgia, based upon manufactured pretext, in August; the collapse of Lehman Brothers in September. The first wave made energy reform possible, by raising the prospect that trillions would flood the coffers of petrostates with interests profoundly antithetical to our own; the second exposed the weakness of the NATO alliance and the danger posed by a Russia with enough petrodollars to fund partial restoration; the third nearly destroyed the world financial system, caused a collapse in oil prices that undid an emerging national consensus to reduce dependency on foreign oil, and accelerated the collapse of America's two biggest auto manufacturers, GM & Chrysler.
The administration was making progress on the energy front, with public attitudes shifting decisively towards drilling for more oil, and showing receptivity to pushing nuclear power for the first time in a generation. But with gas prices long well below $2 and oil selling below $35 a barrel, a vertiginous 76 percent fall in 6 months, energy is a middle-burner issue again. The oil price collapse has, on the plus side, virtually crippled Russia, thus perhaps curtailing ambitions of Tsar Vladimir, that had been kindled by the Bush administration's flunking the 3 AM phone call test in August, settling for talk at the UN when faced with Russian tanks rolling onto an ally's territory (albeit, one not yet in NATO, thanks to West European opposition). The oil collapse has thus put Russia as well on, if not the back burner, no longer on the front burner, until Team Obama enters Stage Left come January 20, 2009.
It is the final tsunami of the tumultuous Bush 43 Years that will, along with 9/11 + Iraq, define the departing president for the history books. While a small number of prescient analysts anticipated the massive de-leveraging and bubble-bursting to come, the administration and its foes alike were caught by surprise, stunned by the speed, scope and violence with which financial markets unraveled worldwide in September. The initial response of Team Bush, in concert with other central banks, was broadly defensible: inject capital into troubled financial institutions, search for ways to purge balance sheets of toxic assets and flood the banking system with liquidity to unfreeze bank lending. The project has stalled, because the second step, unloading bad assets, has stalled.
In November, when GM and Chrysler showed up, hats in hands, in Washington, ISO federal funds, the administration was exhausted. Economically, the right thing to do was to force the firms into a Chapter 11 bankruptcy reorganization, forcing a restructuring that would enable drastic adjustments to be made to enable the two enterprises to possibly survive. Lost in all the caterwauling about pay cuts for employees and executive jets is that shareholders have been nearly wiped out, and bondholders face a 2/3 loss of monies due.
Yet politics here trumped economics: Put simply, President Bush did not wish to be the Grinch that stole Christmas for 250,000 workers, and Vice-President Cheney did not wish to see the GOP recast as the party, once again, of Herbert Hoover, in a thousand TV commercials over the next generation. So the administration, predictably, blinked, and punted (what in my youth was called a "quick-kick"--a third-down surprise punt, often by a running back).
Team Obama will surely decline to force concessions from union leaders who raised $19M for Democrats in the past election cycle, versus $12,500 for the GOP. Only in bankruptcy, with a life-tenured federal judge presiding as a trustee, is there any hope of forcing necessary changes. Had the meltdown come in January 2008, before financial markets tanked and sent the public into shock, perhaps Team Bush would have mustered the moxie to play the bankruptcy card, with the prospect of industry turnaround commencing before the holiday season. But to expect Team Bush to play the card weeks before Christmas, with potential positive results punted into 2009 and thus accruing to its successor, is to expect too much of politicians.
Least excusable was Team Bush using funds intended for financial firms to bail out industrial firms; it stands in the dock along with a Congress only too happy to go along. It is a terrible precedent for which both parties deserve much blame.
Bottom Line. President Bush dealt well with energy issues, until the price collapse of oil undermined his policy. He failed, abysmally, the 3 AM phone call, hanging around at the Olympics while Tsar Vladimir returned to his office. A small US military detachment placed on the ground inside Georgia in the first 48 hours would have rescued an ally from avoidable rape. His response to the financial meltdown was improvised on the run, but this was true of every major country's leaders as well. I see no reason to believe that Democrats would have done better. In thrall to militant Greens, they will pursue to a fetish alternative energy, while scorning nuclear power and fossil fuels that are part of any interim solution, pending arrival of the electric economy. Their top financial people might have done as well, if allowed to, by an ultra-liberal Congressional leadership, but the latter would have been unlikely.
It is painful to see a GOP administration, in full legacy mode, preside over a socialization of the economy that could be made permanent by an incoming administration whose leader is palpably eager to remake America's economic and social arrangements. One may be disappointed indeed. But the administration had few cards to play in the financial crisis, compounded by a stupefyingly irresponsible opposition.
I look at 2008 with disappointment, at an administration that, battered by serial tsunamis--the last one a monster tsunami on a Krakatoa 1883 scale--and remorseless critics, was faced down by the auto industry. But I look to 2009 with trepidation, as an inexperienced, untested President Obama comes to power with grandiose designs ill-suited to coping with the worst financial crisis since the 1930s, and with potential mega-catastrophe awaiting misdirection of government resources to meet a crisis only government can address.
