In his interview with Fox New's Chris Wallace Barack Obama was asked what was the happiest day of his presidency, and what was his greatest achievement. To the first question Obama answered that it was Congress passing the Affordable Care Act (ACA). But unfortunately for Obama however it was not the happiest day for the vast majority Americans. On the day he signed ACA into law six out of ten Americans (according to a CNN poll) opposed it (see). And now six years latter (according to the RCP average) it's hugely unpopular by double digits (see) because the skyrocketing costs of premiums and deductibles (see) are putting financial strains on an eroding middle class that is struggling with a low growth, bad jobs stagnant economy of declining wages and work hours-among other problems.
Now to the question (the more interesting of the two) of what was his greatest achievement Obama proudly answered, "Saving the US economy from a second Great Depression." But this wasn't the first time Obama made this lofty claim; that was six years ago on February 16, 2010 when Obama celebrating the first anniversary of his massive $850 billion fiscal stimulus (that he promised would trigger a robust Reagan-like recovery) said that it "prevented another Great Depression and kept millions of people working (see)." And later that year Obama addressing the UN alluded to his policies preventing the global economy from crashing into a depression. For as the US economy goes so goes the world. As the global depression of the 1930s began with the US Obama believing that his stimulus prevented a second Great Depression domestically also saved the world economy from that fate (see).
But is this true? Did the stimulus prevent the US economy from collapsing into a severe depression (with the world economy to follow) to rival the economic crisis of the 1930s when unemployment hit a historic high of 25% and there were bread lines across America feeding starving people?
The facts are these: over the last eight years the US economy was on the brink of a real depression only once; that was in September 2008 when in the midst of a nine month old recession the housing and credit markets crashed. This was due to the US government (going back to the Clinton administration) creating the largest and most dangerous housing and credit bubble in US history using sub prime mortgages (27 million issued) to massively and artificially boost the rate of home ownership. When the market tanked in 2008 the US government either guaranteed or purchased 76% of these risky loans from banks and mortgage firms (see). It wasn't Wall Street that sank Main Street (as Bernie Sanders and Hillary Clinton want us to believe); the US government was the principal villain which is why no one has been prosecuted and jailed (see and see) .
To save the US financial system from collapse and the economy from depression George Bush signed into law the Troubled Asset Relief Program or TARP, a $700 billion package to rescue our banks and lending institutions. And it worked (at least in the short term).
And this is where Obama's grandiose claim to have saved the US and world economy is exposed for the self-serving lie that it is. When Obama took office in January 2009 he inherited a financial system that had been stabilized by TARP averting a likely depression. But he inherited more than that. By December 2008 (see the Bureau of Economic Analysis graph below) the US economy began a V-SHAPED GDP RECOVERY. This marked the beginning of the end of the Great Recession when the economy stopped contracting, bottomed out and started to grow and become productive again.
Moreover, at precisely the same time (December 2008) the US manufacturing sector also made a V-shaped recovery and started to become profitable again after many months of steep decline.
Now though the GDP and manufacturing recoveries began before Obama took office the economy nevertheless (as a lagging indicator) was still losing massive numbers of jobs. But this started to change in March-April 2009 (see graph below) when the V-shaped jobs recovery began just before the end of the Great Recession in June. This is when job loss bottomed out and the growing economy started creating more jobs than it was losing.
Now with the financial system stabilized by TARP and the V-shaped GDP, manufacturing and jobs recovery underway, and the 18 month long Great Recession over in June 2009, Obama's claim that his stimulus (which became law in February 09) prevented the loss of millions of jobs and saved the economy from a "second Great Depression" is total, self-serving, make believe poppycock. It's Obama desperately clinging to the fiction that his presidency has served some grand positive world saving messianic purpose in the scheme of things. Indeed, by the time Obama entered the White House the worst was clearly over, the likelihood of a depression (domestic and globally) was past and the economy was on the rebound (weak though it was and remains) having nothing to do with the change in leadership or his Keynesian stimulus. Indeed, if McCain had been president or Bush had a third term these three V-shaped recoveries (GDP, manufactoring, jobs) would have happened all the same and the Great Recession would have been over by June 2009.
Now while Obama wrongly takes credit for all of these pre-inaugural developments contradicting this his administration has said repeatedly that the 14 million new jobs (mostly low paying and part-time) that his "stimulus has created" begins not from February 2009 (when the stimulus was signed into law) but from a year later in February 2010. For it was then says the administration that the stimulus started to impact the economy and grow jobs (see). This delay, of course, is normal for a new economic program. Reagan's Economic Recovery (Supply-Side) Tax Act of August 1981, for example, didn't start showing results until 1983 (see).
However, because the stimulus worked poorly and the recovery remained weak throughout 2010 Obama taking the advice of Christine Romer and Larry Summers extended all (100%) of the (hated) Bush tax rates another two years (see). For Romer and Summers frightened Obama into believing (and rightly so) that raising taxes on his poor, pathetic, trickle growth recovery (typical for a Keynesian fiscal stimulus) would likely make it worse possibly causing a double dip recession and jeopardizing his reelection.
When FDR took office in 1933 he inherited a worsening economy from GOP liberal progressive Herbert Hoover who tried and failed to tax, spend and regulate his way out of the depression; FDR then amplified and added to Hoover's failed programs and failed all the same. For the economy in 1939 was not much better than in 1933 having suffered a "recession within the depression" along the way-in 1937 the bottom fell out of the New Deal wiping out most of the growth and jobs that had been gained in the preceding years. And Obama (hailed by MSM as the "new FDR" with a "new New Deal") having learned nothing from Hoover's and FDR's failures (or more recently from the Japanese and 23 years of failed stimulus spending and infrastructure projects) went boldly ahead and repeated their mistakes thinking he'd defy the laws of economic gravity and achieve a different result because the size of his stimulus (the largest ever) was so great. And after seven years in office the result is the worst recovery since the Great Depression that is losing productivity and growing weaker by the day.
As for Obama's claims to have saved the US and world economy from a severe 1930s type depression, and that it was the greatest accomplishment of his administration, that distinction belongs to George W. Bush who left Obama with a stabilized banking system and an economy that was unmistakably on the mend. In short, the end of the Great Recession in June 2009 was Bush's recovery not Obama's. And I defy anyone to show me differently!
APOLLO ANSWERS BOSTONLIB4LIFE ON THE "OBAMA" AUTO BAILOUTS
BL4L writes in the comment section:
"Apollo, you’re forgetting about Obama’s auto bailouts of GM and Chrysler and the one million jobs that it saved from the hundreds of suppliers in the auto industry: stereo manufacturers to steel and rubber producers, etc. If Obama had let those two companies fold the recession might not have been over in June of 2009, but continued for a long time afterwards"
In December 2008 while the V-shaped GDP and manufacturing recoveries were starting George W. Bush began the bailout of GM and Chrysler with a $17 billion loan taken from TARP funds. This was Bush's last economic decision as President. Obama simply continued what Bush began, and then took all the credit for saving both companies when he was running for reelection in 2012.
APOLLO ANSWERS TEX ON DISQUS
So much of economics is irrational emotion, and crashes and recoveries can be spurred by what people are betting on, or "EXPECT" to happen next. So such turnarounds are often not based on events, but on anticipation.
So, correct me if I'm wrong, but the V-shaped recovery happened at a time that optimism was high that a terrible GOP president would soon be replaced by a good Democratic President.
Don't bother to connect those events, just tell us the DATE you credit with being the centerpoint of the recession, the time when things started to improve. We'll be able to compare that to what was happening politically, and then try to find out what your point is in all this ...
After Ronald Reagan crushed Jimmy Carter in a 44 state electoral sweep and at his inaugural there was a surge of national optimism and jubilation (which was greatly amplified when the hostages were freed) it did nothing to arrest and reverse the deterioration of the economy and massive loss of jobs. This was because Jimmy Carter, unlike George Bush, put nothing in place that could stop the economic carnage.