Treasury Secretary Timothy Geithner:
“Over the past two decades, Washington ran an experiment,” he said. “In the 1990s, the government put an end to budget deficits, and America enjoyed a period of growth led by the private sector where prosperity was widely shared and job creation was robust. Over the next decade, Washington tried a new path, running up huge debts, while incomes for most Americans stagnated and job creation was anemic. We are living today with the damage that misguided policy caused.”
The economic growth during the 1990’s was driven by the initial build-out of the Internet and cell phone infrastructure, and as we recently learned, artificially boosting demand for housing. The problems we are confronting now are the result of the policies that artificially boosted demand for housing. That is why Fannie Mae and Freddie Mac had to be nationalized and are costing taxpayers right now $160 billion with $1 trillion as the worst case.