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Post date: Jun 24, 2012 5:19:41 PM
Snap Fact #228
Are We Better Off Today Than 4 Years Ago, Before President Obama Took Office?
The simple answer is Yes, we are better off, much better off.
Officially the Great Recession started in December 2007, long before most Americans on Main Street realized what was about to happen. After all, our portfolios were solid, our homes were worth a lot more than we owed, credit was easy, the deficits were low ($400B - $500B per year) and we were even being encouraged by Dick Cheney to go shopping! How could we know that there was a large bubble growing?
Three months before the recession was officially declared, Treasury Secretary Paulson and Federal Reserve Board Chairman Bernanke embarked on the largest bailout program ever conceived with the blessing of a lame-duck president and a complicit Congress - a program which so far will cost taxpayers $8.5 trillion. This staggering sum encompasses: loans backed by worthless assets ($2.3 trillion), equity investments in bankrupt companies with negative net worth ($3.0 trillion), and guarantees on crumbling derivatives and other hollow collateral ($3.2 trillion).
Looking back to 2008, the world and U.S. economies were tanking. Wall Street firms Bear Stearns and Lehman Brothers would collapse, as the subprime mortgage crisis was raging. The private-sector economy would plunge, losing 700,000 jobs per month. The Dow was in a downward spiral that would see it fall to below 7,000 and with it, our hard-earned wealth. Record foreclosures and massive losses in home equity would be felt throughout the country. Car companies would threaten to go belly-up. Banks, financial institutions and insurance companies considered "too big to fail" would face catastrophic losses threatening to undermine the entire economy, wiping out credit, savings and retirement plans. We were at the precipice of the second Great Depression.
Since then, much has been done. President Obama continued the TARP program begun by President Bush, designed to stabilize the lending industry. The actions taken by the president cannot be overstated, as the bailout of the financial industry prevented a run on the banks, avoided a severe depression and restored stability to the financial markets. The car companies were given a controversial bailout that saved the shrinking base of American auto manufacturers, their supply chain and the tens of thousands of jobs that support them.
The much-maligned stimulus package prevented a contraction in the overall economy, enough to avoid a second Great Depression. The Dow improved, almost doubling in two years; the hemorrhaging of private-sector jobs began to ease, as private-sector hiring improved. Taxes were cut for working Americans. While facing intense opposition, the dirty little secret is that states used stimulus money to pay their teachers, police officers and firefighters — the act of taking with one hand while slapping with the other.
Along the way, our old nemesis, Osama bin Laden, was eliminated, making the world a safer place. As a measure of prevention that did not go far enough, big banks were reregulated under the Dodd-Frank Act, and consumers were given an independent watchdog. Upwards of 30 million more Americans will now be eligible to enter the health-care system under the Patient Protection and Affordable Care Act.
Are we better off? Of course! Do we still have a long way to go to get to where we want to be? Certainly!
The question we must ask ourselves is can we afford to bring back the same policies of the brain trust that dug America into a hole so deep that that we almost drowned; or should we bring back the man whose strong hand and careful planning turned the situation around?
Sources:
What Caused the Great Recession of 2008-2009? - http://economics-the-economy.knoji.com/what-caused-the-great-recession-of-20082009/
The Real Cost Of The 2008 Recession - http://www.resourceinvestor.com/2008/12/10/the-real-cost-of-the-2008-recession
Better Off Than Four Years Ago - http://elections.firedoglake.com/2012/03/13/better-off-than-four-years-ago/
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