For the Bush Administration, the political and policy implications of the framing contest regarding the financial crisis were disastrous. The administration’s handling of the crisis was widely depicted as failing to grasp the nature and severity of the problems in time. President Bush’s rhetoric failed to stem this tide, perhaps owing as much to his pre-existing credibility deficit as to his words and deeds in the current crisis. Bush, Paulson and Bernanke all took a type-1 stance at the early stage of the crisis, denying that the economic woes were more than incidental and self-correcting. Even after they switched to a type-2 posture, which implied acknowledgment of the crisis, they never regained control of the discourse.

Because the administration had initially insisted that there was no crisis, it did not see the need for a wholesale policy paradigm shift. Rather, it focused on ad-hoc, reactive measures such as the invocation of the Great Depression-style law that allowed the Federal Reserve to lend to non-banks and the bailout of one bank after another. These moves were aimed at aiding the process of market stabilisation. As we saw, this proved unpopular in the media and among the American public.

Until September 2008, Bush’s rhetoric focused on talking up the economy and talking down the crisis. This stood in marked contrast with the pattern in his economic rhetoric during most of his first term, when he systematically talked down the economy in order to mobilise support for a series of unprecedented tax cuts, which he defended as a much-needed economic stimulus (Wood 2007). Bush’s consistent stance during this period was one of ‘it ain’t broke, so why fix it’. For example, in his March 2008 address to the Economic Club of New York, the President said he disagreed with the idea of massive government intervention in the event of periodic instances of market ‘stress’ (Bush 2008a). When later in the year he bowed to the inevitable and started acknowledging the severity of the crisis, Bush’s preference for minimal government intervention in the economy had to give way. The limited extent of his stimulus policy, however, betrayed his continued aversion to a more interventionist stance.

The administration came closer than ever to making a deeper policy change after shifting posture to type-2 when it pushed for the enactment of the Emergency Economic Stabilization Act (an economic stimulus package), which authorised Treasury to spend $700 billion to undertake a system-wide rescue of the American financial markets—to buy toxic assets, especially the mortgage-backed securities (Paulson 2008b). The scope of the stimulus plan, which covered mainly the private sector, especially the financial markets, signalled the administration’s willingness to relax its beliefs in government non-interference in, and deregulation of, the financial markets. It also demonstrated, however, its unwillingness to make a real policy paradigm shift—for example, by adopting a new regulatory regime for financial markets. This was especially true for Bush and Paulson, as both strongly believed in market discipline and freedom and were anti-regulation (PBS Frontline 2009).

Obama’s economic policy philosophy departed from Bush’s. In his State of the Nation Address to a Joint Session of Congress in February 2009, Obama rejected the neo-classical economic doctrine concerning the need for small government (Obama 2009b). Before his election, Obama had already emphasised his belief that a radical shift in policy was called for—one that featured stronger government regulation and oversight of key financial and economic institutions, as well as more direct public investment (Obama 2008). Once president, Obama ironically followed in Bush’s rhetorical footsteps by talking down the economy (more specifically, talking up the magnitude and institutional depth of the crisis) in order to mobilise support for his economic reform agenda—only the American Recovery and Reinvestment Plan, which became law in February 2009, was a quite different reform agenda from the one pursued by Bush during 2001–05. Combining economic stimulus with policy innovation, the plan’s scope was broad based and far reaching, including major investments in the areas of energy, health care, education and infrastructure and heightening government regulation of the economy.

The extent to which Obama succeeded, as measured by the public opinion surveyed in the earlier part of the chapter, should not be overstated. First, President Bush was totally beleaguered as he prepared to exit office, whereas Obama had come to office with the energy of a new leader, not least on the promise of change in areas such as health care, education and energy, which large segments of the electorate had wanted ‘fixed’. To some degree, the escalation of the financial crisis during the campaign was a political windfall for Obama, as it enabled him to develop an additional rationale for policy claims that had already struck a positive chord in the public anyway. Taking the offensive type-3 stance on the financial crisis from the outset, President Obama’s crisis rhetoric acknowledged not just the role of unscrupulous financial trading on Wall Street, it put the emphasis on his predecessor’s economic philosophies. Bush’s attempt at defending his administration’s record came late and was fatally flawed because of his declining popularity and the relentless avalanche of bad tidings about the economy.

There was a significant level of consistency between Obama’s and Geithner’s framing efforts during the early months of 2009. The two appeared to talk in unison in order to ‘sell’ the Obama Administration’s change agenda. The differences were only of degree, not of kind. Once in office, Obama refrained from direct attacks on his predecessor’s record, yet Geithner’s framing directed blame squarely on the Bush Administration—not only for causing the crisis, but for failing to act early and decisively. His claims were blunt: the crisis accumulated over time through government policies that encouraged a global credit boom; and when the crisis began, the government response had been reactive, slow and incomprehensive.

The only one among the three office-holders to hold his position throughout, Bernanke charted his own rhetorical course during the crisis. His speeches did not betray any attempt to explicitly align his rhetoric with that of the Bush and later the Obama Administrations. Nor should such attempts be expected, given Bernanke’s statutory independence. As observed earlier, Bernanke changed stance only once, from type-1 to type-2, nearly halfway through the unfolding of the global financial crisis in the period under study. Thereafter, the Federal Reserve chief consistently maintained the type-2 frame. After he had convinced himself that the current crisis was real and bigger than he had originally imagined, Bernanke, the scholar of the Great Depression, brought to bear his knowledge of its (mis-)management on his ideas about the unfolding financial crisis. It provided him with a wry opportunity: to test his hitherto untested academic belief that financial crises of this magnitude were manageable by capital injections from central banks.

Overall, this study lends some support to the notion that when major disruptive events such as the global financial crisis occur, public leaders are presented with an opportunity to reconsider their policy stances, and with a ‘framing contest’ that has potentially far-reaching political consequences. In the case of the United States in 2008 and 2009, the unfolding economic crisis significantly changed the economic policy and political landscapes, which started with the campaign rhetoric of John McCain and Barack Obama, graduated to partisan politicking between the Democrats and the Republicans and ended with the United States adopting major policy reforms that broke completely with the past.

The path to reform was paved by Obama and Geithner’s crisis rhetoric, but not just theirs: there was an avalanche of media diagnosis of this crisis that was supporting their dire characterisations of the crisis and its causes. When it came to selling the idea that one—and only one—set of policies was best suited to combat the crisis, however, opinion was much more divided, and the public pronouncements of the new administration went only so far in carrying the day. In the end, it was probably the pressure-cooker effect of the escalating crisis itself that contributed as much as any other factor to the relatively quick success of Obama’s arm-twisting of Congress to get his stimulus plan passed.