The political timing for Debacle is not coincidental, and Grover Norquist and John Lott’s book may well become the most important arrow striking President Obama’s economic policy. They have written an eminently accessible book that lays out clearly and concisely why Obama’s economic policies have failed and why more of the same won’t reset the U.S. economy. The book adds little that is original to the public debate — virtually all the material in it can be found in online and print versions of the leading free-market publications — but Norquist and Lott have done something important: They have pulled the most important arguments and data together in one place, providing a well-organized polemic against Obama’s economic policies, and they have laid out a cogent and detailed set of alternative proposals.
The story of the Obama administration’s failed policies doesn’t start with the stimulus package. Rather, the seeds of the debacle were sown nearly two decades earlier, in the Clinton administration. Back then, many of the people who were to devise Obama’s economic policies were working with Congress to fundamentally shift economic policy to promote homeownership — by relaxing lending standards and pressuring private financial companies to lend to a broader range of households that also presented higher risks of default. A key component of this strategy was using the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to guarantee the mortgage-backed securities that included these riskier mortgages, so they could be sold on the secondary mortgage market.
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