The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Friday, October 16, 2015

Why Were Obama Administration Policies So Critical To Killing The Bush Great Recession?

The Center for Budget and Policy Priorities (CBPP) has a data based opinion.

Quantitative Easing Lowered Rates, Supported Growth  Auto Bailout Saved Thousands of Jobs

Impact of Bank Bailout

We Americans are probably the most short-sighted and memory-deficient people on Earth. As we move towards the 2016 General Election, we simply have to stretch our paradigm behavior and recall the state of the US economy towards the end of the Bush years (e.g., of Bush Trickle-down/supply side economic policy). Moreover, we should tie those years of artificial greed (Sub-prime lending et al) to 1980s Reaganomics as the catalyst and foundation of the dire consequences we suffered in 2007/08.

Many of us lost 20 years of accumulated wealth during the Bush Great Recession. A recession that was denied by the Bush Admistrtiaobn for one full year (from December 17, 2007 through December 5, 2008) until after the 2008 General Elections. 

The Washington Times - Friday, December 5, 2008
President Bush on Friday said for the first time that the U.S. economy is in a recession, four days after a key body announced that the country has been in recession for a year. 

“Today’s job data reflects the fact that our economy is in a recession,” Mr. Bush said, during a statement to reporters on the South Lawn.
Not only did the Republicans via their trickle-down take the nation to the precipice of an abyss marked "DEAD NATION", the Bush Administration denied the recession until a political expedient time.

As Bush opened up to the state of the US economy towards the end of 2008, he caught major flak from his party for supporting measures to combat the nation economic state of one foot in economic hell. Specific examples included Federal Reserve initiatives, the bailout of the auto industry's and the Troubled Asset Relief Program (TARP).

As was the case with GOP flak against Bush and Obama initiatives to 'right' the then sinking US economy, it is important to look back at fail GOP policy and resistance to policy that led to effective practice. The US economy is improving, but the state of the economy may not withstand the next GOP Trickle-down SNAFU. 

The Center on Budget and Policy Priorities (CBPP) has published a major look back at what might have been had the GOP won out over Obama's economic measures. The CBPP Acknowledges that some measure fell shy of yielding desired results, their opinion seems to orbit around...Better to try than allow what could have taken place with the US economy.



The Financial Crisis: Lessons for the Next One
OCTOBER 15, 2015
The massive and multifaceted policy responses to the financial crisis and Great Recession -- ranging from traditional fiscal stimulus to tools that policymakers invented on the fly -- dramatically reduced the severity and length of the meltdown that began in 2008; its effects on jobs, unemployment, and budget deficits; and its lasting impact on today's economy.

Without the policy responses of late 2008 and early 2009, we estimate that:
  • The peak-to-trough decline in real gross domestic product (GDP), which was barely over 4%, would have been close to a stunning 14%; 
  • The economy would have contracted for more than three years, more than twice as long as it did; 
  • More than 17 million jobs would have been lost, about twice the actual number. 
  • Unemployment would have peaked at just under 16%, rather than the actual 10%; 
  • The budget deficit would have grown to more than 20 percent of GDP, about double its actual peak of 10 percent, topping off at $2.8 trillion in fiscal 2011. 
  • Today's economy might be far weaker than it is -- with real GDP in the second quarter of 2015 about $800 billion lower than its actual level, 3.6 million fewer jobs, and unemployment at a still-dizzying 7.6%.
We estimate that, due to the fiscal and financial responses of policymakers (the latter of which includes the Federal Reserve), real GDP was 16.3% higher in 2011 than it would have been. Unemployment was almost seven percentage points lower that year than it would have been, with about 10 million more jobs.

To be sure, while some aspects of the policy responses worked splendidly, others fell far short of hopes. Many policy responses were controversial at the time and remain so in retrospect. Indeed, certain financial responses were deeply unpopular, like the bank bailouts in the Troubled Asset Relief Program (TARP). Nevertheless, these unpopular responses had a larger combined impact on growth and jobs than the fiscal interventions. All told, the policy responses -- the 2009 Recovery Act, financial interventions, Federal Reserve initiatives, auto rescue, and more -- were a resounding success.

Read much more, here. (long but critical read)

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