“Easily in fiscal year 2009 it’s not out of the realm of possibility to have a $2 trillion deficit,” Mary Ann Hurley, vice president of fixed-income trading in Seattle at D.A. Davidson & Co, told Bloomberg News on February 3. “That’s a huge number, and it has to be financed by debt issuance and the taxpayer.”
President Barack Obama blamed the current economic recession on “a binge of risk taking” by bankers in a Today Show interview that aired February 2. Specifically, here’s how Obama explained how the nation has found itself in a deepening economic crisis:
Barack Obama appointed Nancy Killefer as his "chief performance officer." It will be her job to find government waste to cut. Obama hopes to cut much of an expected $1.2 trillion federal deficit. (Most of this deficit takes the form of new bailouts and stimulus packages and can be cut anytime — but that's not "waste" in the mindset of the incoming Obama administration, which is pushing for both more bailouts and stimulus.) Killifer's problem, as aptly described by David Greising in the Chicago Tribune: "Name a government function, and there is likely a critic who sees nothing but waste, countered by an advocate who will defend every penny spent."
First Wall Street bankers. Then government lending agencies known as Fannie and Freddie. Next in line for federal handouts was the international insurance company A.I.G. It begins to look as though the recipients of the hundreds of billions in bailouts will include virtually everyone. While the federal gravy train is still dispensing its favors, state governments are now looking to Washington to cover their huge deficits.
Anger is on the rise all across the country concerning the proposed government bailout of the mortgage industry. The $700 billion dollar price tag, at a time when Americans are already suffering from ionospheric fuel and food prices and are awaiting winter heating bills with trepidation, has stirred resentment among those whose taxes will have to foot the bill for such extravagance.
Treasury Secretary Henry Paulson is on the verge of becoming the most influential man to hold that post since Alexander Hamilton, and the most powerful Secretary of the Treasury in U.S. history, if the massive bailout legislation being contemplated in Congress is passed. In the words of the Christian Science Monitor, the legislation "would transform Paulson's office into that of temporary overseer of America's entire financial system" with "the power to buy virtually any financial instrument from any institution, as a means to relieve it of bad assets and pump credit back into the economy." It is hard to imagine that even Alexander Hamilton, who was something of a supporter of big government relative to most of the other Founding Fathers, would support such a revolutionary change.
Adding to the woes of Americans reeling from the fallout stemming from the national housing and mortgage crises, recent Wall Street events such as the bankruptcy of Lehman Brothers, the sale of an ailing Merrill Lynch to Bank of America, and the government’s $85 billion bailout of American International Group have had ripple effects extending throughout the entirety of the nation’s credit market.
Speaking in Green Bay, Wisconsin, on September 19, Republican presidential candidate John McCain said he would create a new federal agency, called the Mortgage and Financial Institutions Trust (MFI), that would work to head off the financial crisis.