The following editorial first appeared in the Kansas City Star:
It's popular, but unwise, to unload on the presidential responses to this deep recession.
Across the country, a disappointing number of political candidates of all stripes are lining up to bash the bank bailout, federal stimulus efforts and government loans. Their evidence of the failure of these policies promoted by President George W. Bush and President Barack Obama: Look around, and it's obvious the economy isn't back to what it once was, so we've saddled ourselves with debt for nothing.
This is dangerous thinking. Throughout this debate what has been missing is a comprehensive look at what the nation faced without the government response. There is one now, and the picture is eye-opening.
In fact, the report notes that not only would we still be deep in a recession and shedding millions more jobs, but the federal deficit would be a trillion dollars higher than now because of lower tax revenues.
Mark Zandi, chief economist for Moody's Analytics and former adviser to John McCain's presidential campaign, and Alan Blinder, a Princeton University economist and former economic adviser to President Bill Clinton, modeled the past and what might have happened without the much-derided government responses.
Their findings: "Effects on real Gross Domestic Product, jobs and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government's response, GDP in 2010 would be about 6.5 percent lower, payroll employment would be less by some 8.5 million jobs, and the nation would now be experiencing deflation."
The report notes that the bailout and federal loans had a deeper effect than stimulus spending, but that the stimulus added 2.7 million jobs to a limping economy and raised GDP by a full 2 percent.
They stated, "Maybe the country and the world were just lucky. But we take another view: The Great Recession gave way to recovery as quickly as it did largely because of the unprecedented responses by monetary and fiscal policymakers."
What might have happened without intervention matters greatly to the current political climate. While this study is an estimate, it is based on trusted modeling.
There is still work to be done. This recovery is fragile. The report concludes: "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 policymakers had not acted at all."