Revisionist history that denies Obama credit for w

Revisionist history that denies Obama credit for what any Republican president would have been revered for. Shit, we'd be looking for funds to add McCain's mug to Mt. Rushmore.....IF.

The bridge loan to the car companies did not have to be extended to the much larger bailout that Obama pushed through. And of course the Stimulus was thrashed to include more tax cuts than spending on infrastructure.

Quote:

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It Could Have Been So Much Worse

A new analysis proves the stimulus, TARP and other measures prevented a deeper catastrophe.

http://www.usnews.com/opinion/economic-intell...mulus-tarp

By Chad Stone | Opinion Contributor Oct. 23, 2015, at 11:05 a.m.




Vice President Joe Biden stands behind President Barack Obama as he signs the $787 billion economic stimulus bill at the Museum of Nature and Science in central Denver Tuesday, Feb. 17, 2009.
The stimulus worked. (AP Photo/Darin McGregor, Pool)


Policymakers' actions in late 2008 and early 2009 prevented the Great Recession from becoming another Great Depression, according to a recent analysis by former Federal Reserve Vice Chairman Alan Blinder and Moody's Analytics Chief Economist Mark Zandi.

That probably surprises anyone who's only heard that President Barack Obama's stimulus program was a "failure" and financial stabilization measures like the Troubled Asset Relief Program were just "bailouts" for those who caused the problem in the first place.

In a nutshell, Blinder and Zandi estimate that without the full set of federal responses, the recession would have been more than three times deeper and lasted twice as long; we would have lost twice as many jobs and unemployment would have peaked at 16 percent rather than 10 percent; the budget deficit would have grown to 20 percent of GDP, reaching $2.8 trillion in fiscal 2011; and unemployment today would be 7.6 percent, not 5.1 percent.

Those federal responses included: substantial fiscal stimulus (debt-financed tax cuts and spending increases), most notably the 2009 economic recovery act; extraordinary actions by the Federal Reserve, Federal Deposit Insurance Corporation and Treasury Department, together with TARP, to re-establish a stable financial system and get credit flowing again; and the Fed's aggressive monetary stimulus, first using standard monetary policy to cut short-term interest rates to zero, then making large-scale purchases of longer-term assets (so-called quantitative easing or QE) to lower longer-term rates to encourage more economic activity.

To be sure, these extraordinary measures didn't prevent a severe recession. But as the chart below from this chart book shows, the massive job losses of late 2008 and early 2009 were soon reversed and, by early 2010, a sustained jobs recovery had begun.



In Blinder and Zandi's no-policy scenario, the job losses would have been larger and continued longer, substantially delaying the jobs recovery.


"It could have been worse" isn't a great political bumper sticker, but it's a legitimate way to judge whether policy measures produced more economic activity and jobs than we would have seen without them.

The measures taken to combat the financial crisis and Great Recession were extraordinary compared to what policymakers used in the past, but it was an extraordinary crisis. Though they didn't prevent a deep recession, they were nevertheless very effective at preventing it from growing worse.

The Center on Budget and Policy Priorities' Policy Futures initiative commissioned the Blinder-Zandi analysis, and it provides important lessons for the future about the importance of active financial, monetary, and fiscal policies in combatting financial crises and recessions to come.

That's particularly true for fiscal (tax and spending) policy, which fell out of favor as an instrument of economic stabilization policy in the two decades before the crisis. Recessions were mild and many viewed monetary policy (changes in interest rates) as the only policy needed to avoid deep recessions and and keep the economy reasonably close to full employment without excessive inflation.

Fiscal policy was important only through the "automatic stabilizers" – increases or decreases in tax revenues and spending for things like unemployment insurance arising from changes in economic activity, which automatically bolstered the economy during downturns and restrained it during booms.

Blinder and Zandi show that policymakers can't rely on monetary policy and automatic stabilizers alone. The Economic Recovery Act provided a powerful and necessary stimulus in 2009 and 2010 (see chart). Allowing it to wind down while the economy was still weak, in contrast, proved a drag on the recovery.



Policymakers fought the financial crisis and Great Recession effectively when it hit, but they stepped backward when they turned toward deficit reduction after the 2010 election, before the economy was fully healed.

Blinder and Zandi provide a lesson for the future: Policymakers should put longer-term policies like deficit reduction on hold until a self-sustaining expansion is underway.

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