UPDATED – Wednesday, Feb. 17: President Obama, in his comments on the one-year anniversary of the stimulus bill, used much more precise language in talking about what he has done to prevent another Great Depression. For the first time, he linked the passage of the stimulus to the prevention of another Depression, rather than appearing to take credit for presiding over passage of the TARP, as he has done in other statements over the last month (see below). Here’s the pertinent portion of his remarks from Wednesday morning:
I want to begin by recalling where we were one year ago. Millions of jobs had already been lost to the recession before I was sworn into office. Another 800,000 would be lost in the month of January. We’d later learn that our economy had shrunk by an astounding 6.4 percent in the first quarter of 2009. And economists from across the political spectrum warned that if dramatic action was not taken to break the back of the recession, the United States could spiral into another depression.
That was the backdrop against which I signed the American Recovery and Reinvestment Act in Denver with Blake alongside. It certainly wasn’t a politically easy decision to make for me or for the members of Congress who supported it — because, let’s face it, no large expenditure is ever that popular, particularly at a time when we’re also facing a massive deficit. But we acted because failure to do so would have led to catastrophe. We acted because we had a larger responsibility than simply winning the next election. We had a responsibility to do what was right for the U.S. economy and for the American people.
One year later, it is largely thanks to the Recovery Act that a second depression is no longer a possibility. It’s one of the main reasons the economy has gone from shrinking by 6 percent to growing at about 6 percent. And this morning we learned that manufacturing production posted a strong gain. So far, the Recovery Act is responsible for the jobs of about 2 million Americans who would otherwise be unemployed. These aren’t just our numbers; these are the estimates of independent, nonpartisan economists across the spectrum.
In numerous public statements during the past month, President Obama has said that actions he took staved off a second Great Depression. The problem is, most economists point to the $700 billion bailout passed in October 2008 — when George W. Bush was president — as the key government action that kept the financial markets from imploding.
It is a blurring by the president of the distinction between preventing a total collapse of the economy and a recovery from recession that leaves him open to the charge that he is taking credit for a Bush-era decision (story here).
Here is a list of recent comments by Obama:
“Because we took bold and swift and coordinated action, we can stand here today and say we averted another depression. We broke the back of the recession. The economy is growing again.” – DNC dinner, Feb. 5
“So when I took office, we knew the first thing we had to do was to break the back of this recession. And sometimes that meant doing some things that weren’t easy, doing some things that weren’t popular. Lord knows it wasn’t popular to prevent our financial system from collapsing. We had to throw a lifeline to some of the very firms that had helped cause this crisis in the first place. But it was the right thing to do, because if we hadn’t taken those steps, the entire system could have gone down and taken our economy and millions of families and businesses with it. We couldn’t afford that. Because of the steps we’ve taken, the markets have now stabilized. Nobody’s worrying about another Great Depression like they were just a year ago, and the worst of the storm has passed.” – New Hampshire town hall, Feb. 2
“If we had taken office during ordinary times, we would have started bringing down these deficits immediately. But one year ago, our country was in crisis: We were losing nearly 700,000 jobs each month, the economy was in a free fall, and the financial system was near collapse. Many feared another Great Depression. So we initiated a rescue, and that rescue was not without significant cost; it added to the deficit as well. One year later, because of the steps we’ve taken, we’re in a very different place.” – Remarks on the Budget, Feb. 1
“And the fact is we’re standing in a very different place than we were just a year ago. Just last year, businesses were cutting 700,000 jobs per month. The markets were plummeting. Many people feared another Great Depression. Today, we’ve stopped the flood of job losses, we’ve stabilized the financial system, and we can safely say that we’ve avoided that looming depression.” – Jobs Tax Credit event, Baltimore, Jan. 29
“The first thing we had to do was break the back of this recession. And that required some tough, in some cases unpopular but unnecessary — all which were necessary steps. I mean — I mentioned this last night — none of us wanted to have to stabilize the banking sector, particularly since they helped create this mess. (Applause.) But, as I explained last night, if we hadn’t, the financial system literally could have melted down and that would have taken our entire economy and millions more families and businesses with it. But because of the steps we’ve taken, now the markets have stabilized. The economy is growing again.” – Tampa town hall, Jan. 28
“One year ago, I took office amid two wars, an economy rocked by a severe recession, a financial system on the verge of collapse and a government deeply in debt. Experts from across the political spectrum warned that if we did not act, we might face a second depression. So we acted — immediately and aggressively. And one year later, the worst of the storm has passed.” – State of the Union address, Jan. 27
“I walked into office a year ago in the middle of a raging economic storm that was wreaking devastation on your town and communities everywhere. We had to take some very difficult steps to deal with that mess, to stave off an even greater economic catastrophe. We had to stabilize the financial system, which, given the role of the big banks in creating this mess, was a pretty tough pill to swallow. I knew it would be unpopular — and rightly so. But I also knew that we had to do it because if they went down, your local banks would have gone down. And if the financial system went down, it would have taken the entire economy and millions more families and businesses with it. We would have looked — we would have been looking at a second Great Depression.” – Ohio town hall, Jan. 22
“This economic crisis began as a financial crisis, when banks and financial institutions took huge, reckless risks in pursuit of quick profits and massive bonuses. When the dust settled, and this binge of irresponsibility was over, several of the world’s oldest and largest financial institutions had collapsed, or were on the verge of doing so. Markets plummeted, credit dried up, and jobs were vanishing by the hundreds of thousands each month. We were on the precipice of a second Great Depression. To avoid this calamity, the American people — who were already struggling in their own right — were forced to rescue financial firms facing crises largely of their own creation. And that rescue, undertaken by the previous administration, was deeply offensive but it was a necessary thing to do, and it succeeded in stabilizing the financial system and helping to avert that depression.” – Remarks on Financial Regulatory Reform, Jan. 21
“It was little more than a year ago that we stood on that precipice. Several of the world’s largest financial institutions had already failed. Credit markets froze and banks refused to lend. Trillions of dollars in household savings evaporated as stocks, pensions, and home values plummeted. And we were losing hundreds of thousands of jobs each month. It was at this time that many large financial firms — those left standing — teetered on the brink of collapse, overwhelmed by the consequences of their irresponsible decisions. Even though these firms were largely facing a crisis of their own making, their failure could have led to an even greater calamity for the country. So the Federal Reserve and other agencies took emergency measures to prevent that outcome. And the previous administration started a program — the Troubled Asset Relief Program, or TARP — to provide these financial institutions with funds to survive the turmoil that they had helped unleash. It was a distasteful but necessary thing to do.” – Remarks on the Bank Fee, Jan. 14