Frequently you’ll hear someone giving President Obama credit for “saving the economy”. That puzzles me for a couple of reasons.
- Barack Obama took office in January of 2009.
- The recovery began in June of 2009.
- In June of 2009 not one penny of the money appropriated under the American Recovery and Reinvestment Act of 2009 (“the stimulus package”) had actually been disbursed.
That makes the claim that the ARRA ended the recession a bit of a stretch. You’d need to believe in a sort of immaculate conception—that the prospect of the stimulus was enough to end the recession.
I think there are reasonable arguments that
- President Obama’s stimulus package prevented the economy from going into a double dip.
- The Economic Stimulus Act of 2008 ended the recession.
- The ARRA was irrelevant to the recovery. It was just too late, too small, and improperly targeted.
- The ARRA actually made the recovery more phlegmatic than it might otherwise have been.
I lean towards either A or C. Could someone flesh out the idea that President Obama saved the economy?
I lean toward C, but A is possible. The fact is that we really have no way to conclude. Too many variables.
A better case could be made that neither the tone adopted nor the policies pursued have been conducive to more than meager growth over the ensuing 7 years. It has reduced some to defending 1% growth and a misleading unemployment rate as satisfactory, even good. Some notion that you can’t fall hard if you don’t rise hard. Now THATS entertainment.
Look at both historical data and concurrent data. As R&R so nicely documented, the recovery from an international banking crisis is slow, like 8 years slow. The fact that the recovery has been slow should not be surprising. Then, if you compare it with the prior 8 years, you realize how much better job growth has been. If you look at things over the last 40-50 years, you realize that a lot of what we are seeing is just a continuation of prior trends, including but not limited to the labor force participation rate.
Next, if you compare our approach with what other countries did you find that we engaged in much more fiscal stimulus. We also have had, by and large, a much faster recovery. Cause or correlation? Not sure, but the fact remains that we did engage in stimulus and are doing better.
To answer your question I think it was A, B and the confidence fairy. It is a shame that we had a conservative approach to our debt before the crisis. We had started to reduce debt, as a percentage of GDP, in the 90s, but as soon as the GOP had total control again they cut taxes and pass the largest unfunded spending bill in our history, pushing debt back up again. We went into this recession with historically high levels of both public and private debt and made things bad.
Steve
My point was that the fiscal stimulus applied before the end of the recession was by the bush admin
Obama picked up on TARP where Bush left off. Much as conservatives dis it, the measure did help save our financial system.