The Bush presidency had its failures too, of course. Perhaps the saddest – and most ironic – is reflected in the hyper-partisan shrillness of America’s national politics.

It is hard to remember now, but Bush originally ran for president on an agenda of restoring courtesy and goodwill to the political sphere. He promised to end the “arms race of anger” in Washington, and pointed to his record of bipartisanship in Texas. “I have no stake in the bitter arguments of the last few years,” Bush told the 2000 Republican convention. “I want to change the tone of Washington to one of civility and respect.”

Needless to say, things didn’t work out that way….

But it’s also true that many of Bush’s bitterest foes, including some in the media, never gave him a chance. It became commonplace to describe the 2000 election as “stolen” and the Bush presidency as illegitimate. Democratic candidates vied to outdo each other in anti-Bush invective. For many, “Bush hater” became a label to wear with pride.

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President Bush is leaving office amid the worst recession in 25 years, and naturally his economic policies are getting the blame. But before we move on to the era of Obamanomics, it’s important to understand what really happened during the Bush years — not least so we don’t repeat the same mistakes….

By pushing all of this excess credit into the economy, the Fed created a housing and mortgage mania that Wall Street was only too happy to be part of. Yes, many on the Street abandoned their normal risk standards. But they were goaded by an enormous subsidy for debt. Wall Street did get “drunk” but Washington had set up the open bar.

For that matter, most everyone else was also drinking the free booze: from homebuyers who put nothing down for a loan, to a White House that bragged about record home ownership, to the Democrats who promoted and protected Fannie Mae and Freddie Mac. (Those two companies helped turbocharge the mania by using a taxpayer subsidy to attract trillions of dollars of foreign capital into U.S. housing.) No one wanted the party to end, though sooner or later it had to….

This history is crucial to understand, both for the Democrats who now assume the levers of power and for Republicans who will want to return to power some day. Mr. Bush and his team did many things right after inheriting one bubble. They were ruined by monetary excess that created a second, more dangerous credit mania. They forgot one of the main lessons of Reaganomics, which is the importance of stable money.

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