Score one for the Obama administration; zero for Republicans, Tea Baggers, and FOX News. A newly released study by two esteemed economists (yes, I know that’s an oxymoron) shows that Obama’s fiscal policies did indeed pull the country back from the brink of a depression brought about by Bush-Cheney mismanagement.
…the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.
In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.
The authors of the work, reported in the New York Times, are former Federal Reserve vice chair Alan S. Blinder and Moody’s Analytics chief economist Mark Zandi.
The study makes clear that Obama’s use of multiple strategies to bolster the economy was essential.
If the fiscal stimulus alone had been enacted, and not the financial measures, they concluded, real G.D.P. would have fallen 5 percent last year, with 12 million jobs lost. But if only the financial measures had been enacted, and not the stimulus, real G.D.P. would have fallen nearly 4 percent, with 10 million jobs lost.
The combined effects of both sets of policies cannot be directly compared with the sum of each in isolation, they found, “because the policies tend to reinforce each other.”
In contrast, history shows the approach by critics, which was never clearly articulated beyond, “No!” and “Cut taxes!” was a failure. Today’s Republican party leaders, Tea Party and Tea Bag members, and FOX News personalities seem to advocate a return to the tactics of Pres. Herbert Hoover. Hoover also took office just as the economy was tanking, in 1929. But unlike Obama, Hoover clung to a policy of limiting financial regulations, and ignored calls for government assistance even after the initial stock market crash. And in one of the most striking preludes to tea baggism, Hoover’s answer to unemployment was the Mexican Repatriation program, which forced a half-million Mexicans to leave the country.
We all know how Hoover’s policies worked out for economic recovery. Blinder and Zandi show that the GOP/Tea/FOX versions would work no better today.
“When all is said and done, the financial and fiscal policies will have cost taxpayers a substantial sum, but not nearly as much as most had feared and not nearly as much as if policy makers had not acted at all,” they write.
