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Why Blame Obama?
Let me count the ways.
Before inauguration. Senator Obama voted for the budgets he would later blame on Bush, and for the TARP bailout. After just two months of TARP, the Bush administration said it was done — crisis averted. In fact, President Bush was done after using about $270 billion of the $350 B that was authorized by Congress. But as a courtesy to the incoming president, Bush would request the second $350B from Congress if President-Elect Obama asked for it.
President-Elect Obama asked for it, and he got it. Tim Geithner, who could not do his own taxes and who, as a regulator, did nothing about the Libor scandal, would have all $700B to play with.
We usually call TARP a “bank bailout,” but the banks are paying back every cent lent to them. In fact, the part of TARP that went to banks is expected to return $3B to taxpayers. And most of that was paid back quickly. The “cost” of the “bank bailout” was less than zero!
The real bailouts. When the dust clears, the CBO expects TARP to cost taxpayers $32B. Who got that money if banks didn’t? General Motors, Chrysler, and “mortgage programs.” But GM and Chrysler went bankrupt anyway.
The U.S. auto industry was not “saved.” Going bankrupt does not have to mean going out of business. See, for example, Delta Airlines. It went bankrupt in the usual, lawful way and is operating today. On the other hand, GM could be heading into bankruptcy again, post-bailout. Oh, and since the bailout, “GM has increased its manufacturing capacity in China by 55 percent.”
The government auto takeovers did not prevent bankruptcies. What they prevented was the usual rule of bankruptcy law. Instead of paying back creditors in a predictable and lawful way, the federal government simply robbed bondholders and non-UAW workers and retirees (especially at Delphi) and delivered sweet, sweet payback to the union bosses of the UAW.
The effect goes beyond the direct costs to taxpayers and specific investors and employees. Who would make investments or long-term decisions with this kind of rule-of-man uncertainty and ascendant cronyism?
The Stimulus. Obama sold the stimulus this way: it would keep the unemployment rate from going above 8%, the jobs were shovel-ready, and it would cost $787B.
Since the Stimulus was passed three and half years ago, the unemployment rate has not gone below 8%. President Obama himself said, “Shovel-ready was not as shovel-ready as we expected.” And the Congressional Budget Office “estimates that the legislation will increase budget deficits by about $831 billion over the 2009-2019 period.” The stimulus stimulated nothing but our debt problem.
