Rubio's big lie: Government created the housing crisis

Marco Rubio demonstrating truthiness. There was very little actual response in Sen. Marco Rubio's state of the union response, since nothing he "rebutted" was actually said by President Obama. But there was plenty of Republican-style truthiness in Rubio's response. Most egregious to economists was this lie: "This idea'that our problems were caused by a government that was too small'it's just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies." That's a favorite of Republicans, described by Paul Krugman as the "Barney Frank did it" lie.

Mike Konczal has the definitive summary of the extensive actual data that's been collected on the issue. You know, facts. Like the fact that the subprime mortgage boom was in the private market, not in loans from Fannie Mae and Freddie Mac. And that Fannie and Freddie didn't originate enough subprime loans or hold enough high-risk mortgage-backed securities to have possibly caused the entire market to meltdown.

What caused the crisis was deregulation and greed. It was the cozy relationship between Washington and Wall Street that led Congress and regulators to "let the market decide" and have free rein. As Krugman says, this is the big deal in Rubio's speech. Not just the commitment to the lie, but the reality that given the opportunity, Republicans will "[give] the bankers a chance to do it all over again."