The cool thing about the massive Federal intervention that saved the US economy is that we can talk about it — at least in part — without talking about politics.<\/p>\n
Obviously, TARP and the bailouts and the Obama stimulus plan were all political in a way.\u00a0 They helped spark the tea party movement, which is transforming this year’s election.<\/p>\n
And liberal groups are still fuming about the amount of money that Democrats funneled to Wall Street banks.<\/p>\n
But those efforts were also fundamentally bipartisan, launched under Republican President George Bush, continued by Barack Obama’s Democratic leadership, and approved by both parties in Congress.<\/p>\n
So the question isn’t whether one party or another is culpable for foisting these policies on the American people.\u00a0 The question is…did they work?\u00a0 Were they the right thing to do?<\/p>\n
Despite the deep conviction held by tens of millions of voters that the programs were a bust, most experts say the answer is a fairly unambiguous Yes.<\/p>\n
Let’s start with effectiveness:\u00a0 Was it necessary for the Federal government to intervene in order to stave off a much worse recession — or even a full-blown depression?<\/p>\n
Here’s what Douglas Elliott, a former investment banker who now works with the Brookings Institute, told the New York Times<\/a>.<\/p>\n \u201cIt was probably the only effective method available to us to keep from having a financial meltdown much worse than we actually had. Had that happened, unemployment would be substantially higher than it is now, the deficit would have gone up even more than it has.<\/p>\n But it really cuts against the grain for a public that is so angry at banks to think that something that so plainly helped the banks could also be good for the public.\u201d<\/p><\/blockquote>\n Elliott’s assessment is shared almost universally by economists — even most conservative ones.<\/p>\n The widely held view is that a full-blown depression would have taken down even many healthy parts of the economy, triggering a downspiral of layoffs, homeforeclosures, unemployment and bankruptcy.<\/p>\n So how about cost?\u00a0 Were the bailouts and stimulus funds too expensive, or were they doled out unfairly?<\/p>\n Here the answer appears to be No.<\/p>\n It now appears that the ultimate cost for the TARP program will be around $50 billion — far less than the $700 billion once feared.\u00a0 (It’s even remotely possible that the bailout will generate a small profit.)<\/p>\n That’s because many of the companies propped up by the Federal government — from Citigroup to AIG — are fairly healthy again and they’re paying back the money they owe taxpayers with interest.<\/p>\n Meanwhile, the White House is trumpeting a new report that shows fraudulent activity as part of the Stimulus program was extremely low.\u00a0 This from the Washington Post<\/a>.<\/p>\n “Certainly, the fraud and waste element has been smaller than I think anything anybody anticipated,” said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan watchdog group.<\/p>\n “You can certainly challenge some projects as questionable economically. But there haven’t been the examples of outright fraud where the money is essentially lining somebody’s pocket.”<\/p><\/blockquote>\n Indeed, many of the lawmakers most critical of the stimulus money have trumpeted the actual projects funded in their home districts.<\/p>\n But what about the socialism question?<\/p>\n As a matter of principle, isn’t it dangerous for the Federal government to own big chunks of stock in major corporations?\u00a0 Isn’t this a sign that our free market system is being usurped?<\/p>\n Two years after the crisis began, there’s actually no evidence of this.\u00a0 No one has accused the Obama administration of attempting to actually run these companies, or sway their decisions.<\/p>\n On the contrary, the government has cashed out its holdings as quickly as possible.<\/p>\n Despite all these successes, the Federal intervention in the economy remains unpopular for four reasons.<\/p>\n