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Billionaire businessman Donald Trump blamed former Florida Gov. Jeb Bush for the Sunshine State’s recession woes, saying Bush’s policies were the catalyst for financial disaster.
"Jeb’s policies in Florida helped lead to its almost total collapse," Trump tweeted on Sept. 8, 2015. "Right after he left he went to work for Lehman Brothers — wow!"
For this fact-check, we wanted to look at Trump’s claim that Bush’s policies as governor led to financial ruin in the Sunshine State. (For more on Bush's work after he left office, read this Tampa Bay Times story.) Let’s see if Trump truly can blame Florida’s experience of the Great Recession on his GOP rival.
Boom and bust
There’s no question that Bush oversaw a booming economic climate in Florida while he was governor. Between January 1999 and January 2007, the state’s population grew by 3.5 million people, a legacy that is now a cornerstone of Bush’s presidential campaign.
He has made repeated boasts about spikes in job growth and cuts in taxation and spending. But he also was fortunate to leave office just as the economy was starting to falter.
The state’s housing market, which had skyrocketed even more than the rest of the nation, cratered in the aftermath. Florida eventually lost 1 million of the 1.33 million new jobs that were created during Bush’s tenure. Many critics, like Trump, have said Bush can’t take credit for the party without accepting the blame for the hangover.
So what caused the financial crisis? It was a mix of factors, leading to a perfect storm as home sales peaked in 2005 and 2006. The combination included untested financial regulations, lax lending, overzealous bankers and traders, poor risk assessment, greedy investors, compliant governments on all levels and a global economy looking for easy money. When the bubble burst, Florida was among the hardest-hit because it had gained so much during the boom.
But observers told us that it is foolhardy to pin the meltdown on any single state official, let alone Bush. The downturn was a nationwide phenomenon, not just a problem in Florida.
"During a time when the global financial system was pumping cheap money into housing, mortgage credit rationally flowed to the fastest growing states," said Kwame Donaldson, an economist at Moody’s Analytics. "This system inflated prices in these states to unsustainable levels, and created the boom-and-bust cycle that seems so obvious in retrospect. None of this is Jeb Bush’s fault."
That’s not to say Bush escapes all culpability. Some economists and experts told us that Bush’s actions surely encouraged overbuilding during the boom, and state officials became addicted to the increase in tax revenue it brought, especially for schools. Many of those results were based on Florida’s growth management policies, however, which had been in place long before Bush took office.
Under Bush, the state did loosen construction regulations by weakening the Department of Community Affairs, said University of Florida Bureau of Economic and Business Research economist David Denslow, but easing rules on building happened at all levels of government.
It also was a combination of what Bush didn’t do that helped fuel the bubble.
"With hindsight, Bush could have discouraged excessive development through more regulation of the mortgage industry, … with speeches saying house prices were too high, and by strongly fighting for higher impact fees," Denslow wrote in an email. "That said, there were similar housing booms in other places that had pretty much avoided them since the early 1970s."
Some states managed to avoid the worst of the recession with policies that controlled growth and borrowing. Texas, for example, did not suffer as badly because the state restricted how much equity homeowners could pull out of their homes.
But other states like Arizona and Nevada joined Florida in disproportionately enjoying the boom and suffering more during the bust. Florida State University economics professor Randall Holcombe added that Florida had the double whammy of losing tourists during the recession, weakening another cornerstone of the state economy.
But none of this nuance is apparent in Trump’s accusation, Holcombe said, because the billionaire doesn’t give any specifics. (We asked Trump's campaign for evidence but didn't hear back.)
"Only somebody who is very uninformed would blame that downturn on Jeb, or on economic policy at the state level in Florida," Holcombe said.
Trump said, "Jeb's policies in Florida helped lead to its almost total collapse."
Economists told us the Great Recession was precipitated by a housing bubble that grew out of multiple factors, including policies on all levels of government. While Bush’s actions as governor may not have done anything to prevent the financial crisis — some experts said he could have worked to throttle down the overbuilding — all agreed he did not cause the recession.
We rate Trump’s statement Mostly False.
Twitter, Donald Trump tweet, Sept. 8, 2015
PolitiFact, "What caused crisis? No one thing," Nov. 30, 2008
Tampa Bay Times, "Florida stands to lose $1 billion because of Lehman Brothers' bankruptcy," June 4, 2009
Vox, "Jeb Bush rode the housing bubble and got out at just the right time," March 3, 2015
PolitiFact Florida, "The saga of state spending enforcer Jeb Bush's one-time alias, Veto Corleone," May 26, 2015
PolitiFact Florida, "Dissecting the Republican theme ‘Crist crash, Scott surge’ in the governor’s race," May 31, 2014
Washington Post, "A housing bubble made Jeb Bush look great — and then it tanked Florida’s economy," June 16, 2015
Yahoo Finance, "How Jeb Bush escaped the Florida housing meltdown," June 18, 2015
Daily Beast, "Jeb Bush’s Big Lehman Brothers Problem," July 2, 2015
Wall Street Journal, "Florida’s Economic Leap Under Jeb Bush Helped By Housing Bubble, Economists Say," July 7, 2015
Fox Business, "Exclusive: Why Doesn't Jeb Want to Talk About Lehman Bros?," July 10, 2015
Washington Post, "Under Jeb Bush, housing prices fueled Florida’s boom. Then it all went bust.," July 27, 2015
International Business Times, "Election 2016: Jeb Bush Got $1.3M Job At Lehman After Florida Shifted Pension Cash To Bank," Aug. 19, 2015
Center on Budget and Policy Priorities, "Chart Book: The Legacy of the Great Recession," Sept. 9, 2015
PolitiFact Florida, "Bush says Florida created more jobs than any other state while he was governor," Sept. 10, 2015
PolitiFact Florida, "Bush’s boasting about Florida only tells half the story," Sept. 11, 2015
Interview with Allie Brandenburger, Bush spokeswoman, Sept. 11, 2015
Interview with Randall Holcomb, Florida State University economics professor, Sept. 11, 2015
Interview with Mark Vitner, Wells Fargo senior economist, Sept. 11, 2015
Interview with Bill Seyfried, Rollins College economics professor, Sept. 14, 2015
Interview with Kwame Donaldson, Moody’s Analytics economist, Sept. 14, 2015
Interview with David Denslow, University of Florida Bureau of Economic and Business Research economist, Sept. 14, 2015
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