December 16, 2011 | 8 comments
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December 14, 2011 | 39 comments
December 14, 2011 | 4 comments
A remarkable admission by President Obama on the Daily Show:
If you had told me two years ago that we’re going to be able to stabilize the system, stabilize the stock market, stabilize the economy, and, by the way at the end of this thing, it’ll cost less than 1 percent of GDP where the S&L crisis two-and-a-half percent of our entire economy — a much smaller crisis — I’d say, we’ll take that. Because we saved the taxpayers a whole lot of money.
It’s clear Obama considers the outcome of the bailouts one of the bright spots of his administration, and uses this talking point to praise his own management. But the only way that the claim that the bailouts cost less than 1 percent of GDP could be remotely true is if Obama is referring to Bush’s policies, not his own.
If Obama defined the measures taken to stabilize the financial system more broadly, he could not make the “one percent” claim, because of the costs associated with the bailouts of Fannie Mae and Freddie Mac. So he has to narrow the claim to include just TARP — which, of course, Hank Paulson designed and Bush signed into law.
Even on those terms, though, the claim is dubious. The financial blogger Yves Smith is incredulous that Obama would make such a claim:
I’m so offended by the latest Obama canard, that the financial crisis of 2007-2008 cost less than 1% of GDP, that I barely know where to begin. Not only does this Administration lie on a routine basis, it doesn’t even bother to tell credible lies. .And this one came directly from the top, not via minions. It’s not that this misrepresentation is earth-shaking, but that it epitomizes why the Obama Administration is well on its way to being an abject failure.
Smith’s post includes a back-of-the-envelope accounting of the costs of the various bailouts, with the conclusion that Obama’s claim is impossible on its own terms.
Even more unbelievable than Obama’s willingness to embrace Bush’s economic stewardship to make one rhetorical point is his speed in immediately blaming Bush’s policies to make another. His answer to a follow-up question from Jon Stewart was in this vein:
[Stewart] If they had told you the same thing: stabilize the banks, stabilize the Dow, unemployment will be near 10 percent, would you have taken that deal?
[Obama] If I had the capacity to have prevented the unemployment that happened basically before we put our economic plan into place, obviously we would have done that. But the problem was we lost 4 million jobs before I was sworn in…most of the jobs that were lost, were lost before the economic policies that we put in place had any effect.
So, within two minutes, Obama takes credit for the Bush policies that he deceitfully suggests were effective and also blames Bush’s policies for the terrible state of the economy.