The last one concerned with the problems of the 20th century instead of the 21st, positive economic strategies like the rebate and making democracy a core principle again.

Question: What will the legacy of the Bush Administration be? 

David Frum: First, I think the [George W.] Bush administration is going to be the last administration of a set that began with [Richard] Nixon, and continued through the '60s, '70s, '80s and '90s. It's going to be the last concerned with the problems of the late 20th century, and I can elaborate.

The first legacy of George [W.] Bush, probably the single most important thing that George Bush did was--there was a mirage at the end of the '90s and the beginning of the 2000s, where we had this huge fiscal surplus left over from the 1990's boom and before the baby boomer retirement began to arrive. So there was this temporary mirage that gave Americans the false impression that they could afford to build an even bigger government than the one they already had.

Now, by 2010 it is going to be obvious that that is not true, because the government is going to get bigger even if you add no single new program, the government is fated to get a lot bigger as the boomers retire and make their demands on Medicare and Social Security. But in 1998 and 1999 and 2000, there looked like there was some possibility. So George [W.] Bush's first and probably most important domestic achievement was, by putting that tax cut in place, by sending the money back out to the country, that forestalled a whole series of ambitious projects that otherwise might well have happened and the country would have discovered were unaffordable.

Now if he had been consistent about that, I think he could have made a great claim to a certain kind of domestic policy success. The problem was, this then goes to a second characteristic of his presidency, because of the extraordinary weakness of his presidential mandate, few presidents have come into office in a weaker way. The president, lacking that popular vote legitimacy, had to go out and re-earn and re-earn and re-earn his majority every day.

Presidents often say things like, "And that's the job the American people elected me to do." George [W.] Bush could never say that. And so he found himself carrying out a lot of ideas that had been tossed out in the 2000 campaign that sounded popular but didn't meet scrutiny, that weren't affordable to the country. The prescription drug program being the classic example. And he went ahead with them anyway because he felt his political situation desperately needed him to.

And so having put a cap on the revenues on the government, having returned all of those surpluses to the country in 2001, which is a good thing to do, he then added levels of domestic fiscal obligation that are completely unmanageable--and that's going to be the negative part of his legacy. I think he will be remembered for presiding over a period of great prosperity, but a prosperity that was not shared as widely as prosperities [sic] of the past have been. Still prosperity is better than nonprosperity [sic]. And if we're heading into an extended period of nonprosperity, then the Bush economy may look a little bit better from the vantage point of 2013, or 2014, than it does from the vantage point of 2008.

Internationally, and this will be remembered as an international presidency, President [George W.] Bush will be remembered for enunciating a powerful set of new ideas about the causes of global terrorism, the importance of global terrorism, putting it near the top of American's foreign policy concerns, and yet I think maybe we'll blame him for not being consistent in application of his own very strong rhetoric. You cannot deliver a speech like that which the president gave in his second inaugural address, making democracy a core principle of American foreign policy, and then conduct the foreign policy that actually was conducted without looking like there's a great divergence between your words and your actions.

Question: Is the state of the economy a rebuke of laissez faire policies?

David Frum: I think it's just impossible to accurately describe the policies of any American administration since Calvin Coolidge as laissez faire. This is a highly regulated economy, and finance in particular remains quite heavily regulated.

And the driving force of the immediate problems is, in fact, one of the most regulated sectors of the economy, and that is housing. Because remember the mortgage market in the United States is a government run market. The repackagers [sic] and often holders of mortgages are two gigantic federal corporations, and the idea that we should drive the home ownership rate up, from its historical norm of about 60 percent, to a rate of over 65 percent, as happened in the lasted [Bill] Clinton and Bush years, that was an important goal of public policy.

I think when people look back on what happened with the mortgage market in our time, the fundamental cause is going to be this public decision that if 60 percent home ownership was good, 65 percent was better, 66 was better than that, 66 and a half, still better, without attention to the fact that as you push your home ownership rate higher and higher and higher, you are bringing in more and more people who maybe shouldn't be homeowners. They move too often, their incomes aren't steady enough, they don't have the sophistication to handle the heavy load of debt that comes with a mortgage, and that is, I think, the beginning of the mortgage crisis; it started with the extension of mortgages to people who never would have been eligible for them in the past.

Recorded on: May 5 2008