Democrats have been timid about driving home the mess Obama inherited from Bush. Pulitzer-winning NYT economics writer David Leonhardt offers an unsettling look at how much worse off the country could be. In a Fresh Air interview where he strove hard to keep a "balanced" view, he nonetheless points out that "The economy has stabilized since the recession in 2008, which was "a little bit worse than 1929. And yet, of course, we don't have anything that looks like the Great Depression. As bad as the economy is, we don't have unemployment at 20 percent."
So much for the GOP's "are you better off" attack. Typical American households may be worse off, he says, "because financial crises don't do all their damage at once. They do it over many months and then there are long, slow disappointing, painful recoveries". Most of the reason why we're not better off is because that's the way financial crises work, but also to some lesser degree "that the policy makers, The Fed and Obama administration looked on the bright side a little bit too often."
Bottom line, we were veering toward a Great Depression scenario when Obama came into office. Just as New Orleans is still suffering the effects of Katrina and the Gulf is still paying for the BP spill, American households are still feeling the pain of Bush's legacy, and massive disasters don't turn around on a dime. Obama may have been unwilling or unable to pump more stimulus into the economy early on, but as Leonhardt says, it could have been much worse. He's too "neutral" to say it explicitly, but there's little question that a GOP-controlled America in '08 would have made today's troubles, and maybe even the 1930s, seem almost easy by comparison. But there's still time to find out what a real depression is like: all we need to do is put Republicans in charge again.
The entire interview is must reading/hearing. Some context below the fold:
"Paul Ryan said the people are not better off. And Joe Biden said America is better off. I actually think you can make a really good argument that they're both right. And here's what that argument would look like. The country itself is better off. Four years ago, September 2008, we were just about to enter a horrific downturn. The collapse of Lehman Brothers set off the worst of it. If you look at something like world trade, stock prices, industrial production worldwide — an economist named Barry Eichengreen with colleagues have done some of this work — it is remarkable how similar 2008 looks like 1929 in terms of the speed of the declines, in almost any global economic indicator of import that you look at. In most of the ways, 2008 was a little bit worse than 1929. And yet, of course, we don't have anything that looks like the Great Depression. As bad as the economy is, we don't have unemployment at 20 percent. When you look at those measures, what you see is in 2009, the economy really stabilized. It's remarkable to look at those lines continue to fall back in 20s and 30s, and sort of flatten out in 2008 and 2009. The Obama administration can claim a lot of credit for that. They broke the back of this, along with the [Federal] Reserve, and by the way, with an assist from the outgoing Bush administration, which was quite aggressive in its final months. And so is the country better off today or when it is was in the very early stages of this really frightening crisis? I don't think there's any question that we're better off today as a country than we were then. ...
"But, there is also a very serious argument that a typical American household is worse off than it was four years ago and that's because financial crises don't do all their damage at once. They do it over many months and then there are long, slow disappointing, painful recoveries. And I think one of the fairest indictments of the Obama administration is that it has consistently underestimated the severity of this crisis. It didn't in 2009, but since then it has. It thought the recovery would be better than it really was. And the same goes for the Federal Reserve. And so most of the reason why we're not better off is just that's the way financial crises work. But some portion of it is that the policy makers, The Fed and Obama administration looked on the bright side a little bit too often. And didn't take every step they could have taken. And so when you look at something like household income, when you look at median wealth, when you look at the percentage of the population that's working — on all of those measures we are lower than we were four years ago. And so I think it's fair to say the typical American household isn't better off, but the country is."