Day By Day

Sunday, April 03, 2011

The Good President (continued) -- TARP

In the avalanche of anti-Bush hysteria ginned up by political opportunists and journalistic know nothings in the past few years every one of his actions has been subject to intense criticism -- none more so than TARP [Troubled Asset Relief Program] created by the Emergency Economic Stabilization Act, signed into law back in October, 2008. Variously attacked as a "bailout" for Wall Street, a "takeover" of the banking industry, and a mean-spirited and limited failure to respond effectively in the face of economic collapse, TARP has actually been one of the most successful government responses to an economic crises in history. At least that is what Robert Samuelson has argued. He writes:
It isn’t often that the government launches a major program that achieves its main goals at a tiny fraction of its estimated costs. That’s the story of TARP — the Troubled Assets Relief Program. Created in October 2008 at the height of the financial crisis, it helped stabilize the economy, using only $410 billion of its authorized $700 billion. And most of that will be repaid. The Congressional Budget Office, which once projected TARP’s ultimate cost at $356 billion, now says $19 billion

This could go lower.

One lesson of the financial crisis is this: When the entire financial system succumbs to panic, only the government is powerful enough to prevent a complete collapse. Panics signify the triumph of fear. TARP was part of the process by which fear was overcome. It wasn’t the only part, but it was an essential part. Without TARP, we’d be worse off today.
Indeed we would! One might quibble with some ways in which the Obama administration has administered the program -- I certainly would -- but as originally conceived and signed into law by President Bush it has been a stunning accomplishment. It is important to appreciate this. TARP is one of the few examples in which the government has responded effectively to economic crisis. There will be other such crises and it will be to nobody's benefit if the shining example set by President Bush should be buried under a cloud of politically-inspired acrimony.

Read Samuelson's column here.

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