Now that our world is awash in a newfound passion for facts, it will be useful to examine the claim that President Barack Obama saved the American economy and prevented another Great Depression.
Holman Jenkins addressed the issue in the Wall Street Journal. For those who believe in facts and especially who believe that facts might actually disprove some of the claims about the Obama presidency, it’s a sobering exercise.
Who is claiming that Obama saved the economy? For one, Jenkins writes, Harvard economist Kenneth Rogoff is, and Rogoff is not some political hack or media polemicist.
Jenkins quotes Rogoff:
Harvard economist Kenneth Rogoff claimed on NPR this week that Mr. Obama “pulled us out of a very deep abyss,” though Mr. Rogoff also allowed that President Bush deserves “a little credit here.”
How did the American government tackle the economic crisis?
One way was through TARP:
The Troubled Asset Relief Program may have been the least of the rescue measures, but it was the highest risk, because the people’s bipartisan representatives were required to put their imprimatur on unpopular bailouts. Nonetheless, TARP was enacted Oct. 3, 2008, almost four months before President Obama took office.
What about bailing out banks? Jenkins lists the actions taken:
On March 16, 2008, the Federal Reserve arranged a fire sale of Bear Stearns. Between Sept. 19 and Oct. 26, numerous other institutions were bailed out; the money-fund industry and commercial paper market were propped up; bank depositors were favored with a big extension of deposit insurance.
And saving the automobile industry:
On Dec. 19, as a final act, the Bush administration directed $17.4 billion in TARP funds to keep General Motors and Chrysler afloat so the Obama administration wouldn’t be confronted with their liquidation on its first day in office.
The Obama administration took over the narrative and granted itself credit for ending the crisis and precipitating the recovery. What exactly did it do?
When he finally arrived, his contribution consisted of fudgy bank “stress tests,” less to establish confidence in the banks than to establish confidence in the new administration, under lefty pressure at the time to reinflame the crisis by nationalizing the industry.
He gave us a $787 billion pork-barrel “stimulus,” an exercise in hand-waving which ever since has figured prominently in the efforts of Obama publicists to create confusion about what ended the crisis.
Jenkins is not saying that the Bush administration or the Federal Reserve did a good job. They apparently botched the Lehman Bros. collapse. In so doing they unleashed a global financial panic:
As all now agree, it was Lehman, not the washing through of modest subprime losses, that turned a regional U.S. housing downturn into a global financial panic. In his memoirs, Fed chief Ben Bernanke protests that the Fed knew exactly what a catastrophe Lehman’s unmanaged collapse would be, but its hands were legally tied at the time.
Let it be said that, in the kind of omission that damns a presidency in the eyes of the cognoscenti, it was President Bush who should have and could have stepped up and provided his appointees political cover to spare the world the Lehman meltdown.