Recent news coverage may have left you with the impression that the most important issue affecting the American economy is government spending. Yet government spending isn't what got us into this mess, and cuts alone aren't going to get us out of it. We can't lose sight of the real role of government -- to protect Americans from unchecked greed -- if we want to build a recovery that is beneficial to all Americans.
It's worth revisiting the story of the subprime mortgage lenders, whose greed ignited the inferno that is now burning our economy down. These lenders, under previous administrations, were allowed to lure Americans with poor credit into attractive, but abusive, loans. Though the initial interest rates on these mortgages were low, they ballooned quickly. That meant most people were getting homes that they simply could not afford.
These loans were then bundled and resold to large financial firms as "mortgaged-backed securities" -- incredibly risky financial products. The bundling and reselling of these products was like a greedy game of hot potato. The mortgages were all right to hold, as long as you didn't keep them for too long. And so it went until the bubble burst and the American people had to bail these greedy folks out.
Making sure this never happens again is clearly a government responsibility. Indeed, thanks to President Obama, former senator Chris Dodd and current congressman Barney Frank, we now have laws in place that save taxpayers from bailing out big banks (Dodd-Frank Wall Street Reform and Consumer Protection Act). The big banks will now be forced to bear the consequences of their own risky behavior.
Greed reared its head again in the debt-ceiling debate. With America facing default and the middle- and working-class taxpayers facing huge cuts to programs and services that keep these people afloat, President Obama pushed for a deal that increased revenues from the richest Americans in order to make sure that the burden of austerity was equally shared.
What happened? Republicans in Congress threatened to plunge the nation into default to block any bill that contained new revenues. Even as tax rates for the richest Americans are at historic lows (and folks like Warren Buffett are begging the government to raise their taxes) other special interests put pressure on Republicans to hold the line. In the end, we ended up with a deal that asked nothing of the very rich, and placed the burden of cuts on the poorest Americans.
We can't forget that the government had a role to play in creating this stalled recovery. Before the last recession hit, America had spent a lot of time experimenting with deregulated banks, "trickle down" economics and a hands-off government. This combination led to a huge negative job growth during the Bush administration, a health care system that left millions uninsured, and the subprime fiasco.
As the American people continue to struggle to find jobs, to protect their homes, and to build a future for themselves, we can't afford to cut the legs out from under them, only to allow private greed to continue to go unchecked.
Americans voted for divided government in 2010 because they expected balanced solutions. They didn't vote for weaker government; they voted for more efficient government. It's time for those in Washington to realize this mandate and to do their jobs to check the greed that is keeping us from a full economic recovery.
Donna Brazile is a political commentator on CNN, ABC and NPR, and a contributing columnist to Roll Call, the newspaper of Capitol Hill.