Here is a summary of a new study by economists Alan Blinder and Mark Zandi that gives evidence that the Troubled Asset Relief Program (TARP), and to a lesser extent the stimulus package, worked in keeping the economy out of a depression. I thought TARP made sense at the time and felt if prevented a complete financial meltdown:
In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.
In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.Even with the "bailout" the depth of the financial crisis is shocking:
Mr. Blinder and Mr. Zandi emphasize the sheer size of the fallout from the financial crisis. They estimate the total direct cost of the recession at $1.6 trillion, and the total budgetary cost, after adding in nearly $750 billion in lost revenue from the weaker economy, at $2.35 trillion, or about 16 percent of G.D.P.
By comparison, the savings and loan crisis cost about $350 billion in today’s dollars: $275 billion in direct cost and an additional $75 billion from the recession of 1990-91 — or about 6 percent of G.D.P. at the time.Politicians from both parties need to push back against those that say TARP was a disaster, and those that voted for TARP should be proud. This article from the New York Times details the backlash against politicians who voted for TARP, including Utah's conservative Bob Bennett who has already been voted out by members of his own party.