Harrop on Obama Economic Record

Syndicated columnist Froma Harrop makes a case for President Obama's management of the economic crisis with a study by Alan Blinder, former vice chairman of the Federal Reserve, and Mark Zandi, chief economist at Moody's Analytics and former advisor to Republican presidential candidate John McCain.

Had Washington not taken any aggressive steps starting in 2008, the results would have been horrific, their study says. Real gross domestic product would have fallen a "stunning" 12 percent, rather than the actual decline of 4 percent. Nearly 17 million jobs would have vanished, twice as many as the real count. And the unemployment rate would have peaked at 16.5 percent.

If Washington had not reacted as quickly and as forcefully as it did, the two economists write, "the costs to U.S. taxpayers would have been vastly greater." With no special government intervention, the 2010 deficit would have passed $2 trillion, according to their model. It would have reached $2.6 trillion in fiscal 2011 and $2.25 trillion in 2012. Add outright deflation to the expected massive employment and falling GDP, Blinder and Zandi conclude, and "this dark scenario constitutes a 1930s-like depression." Happily, government stepped in, and America bucked a catastrophe. How fortunate for us all that the tea party wasn't running Washington.

Conservative blogger David Frum has made a similar case on Frum Forum.

At a gathering last night of intelligent young conservatives, I was defending the point that the TARP and some kind of fiscal stimulus had been absolutely essential last year – that otherwise the world economy might have plunged into Depression – and that conservative organizations like the Heritage were right and courageous to have supported the Obama administration’s actions at the time. We can criticize some of the details of those actions, especially some of the payoffs to Democratic interest groups embedded in the stimulus and the budget for the second half of 2009. But as an AEI colleague of mine put it, in those critical hours it was more important to be fast than to be smart. And it’s not like the GOP does not sometimes deliver payoffs to our interest groups too.

This defense met some resistance. The dominant view in the conservative world rejects the decisions of last year, and even questions whether conditions were really so very dangerous after all. One attendee said something very thought-provoking. “Maybe it was a good thing we weren’t in power then – because our principles don’t allow us to respond to a crisis like this.” My answer: If your principles don’t allow you to save your country when it needs to be be saved, then there’s something wrong with those principles.

--Ballard Burgher