Although unemployment remains high and the U.S. economy remains weak, the situation would be much worse without the massive intervention that the federal government undertook in the last year and a half, according to a new analysis.
The U.S. economy remains mired in severe distress, as the nation’s unemployment rate stands at nearly 10 percent, and the gross domestic product remains anemic. But without such extraordinary federal actions as the Troubled Asset Relief Program (TARP) to bailout banks, the $787 billion American Recovery and Reinvestment Act, and the bailout of the Big Three automakers, the nation’s unemployment would stand at a staggering near-16 percent level.
That’s according to a snapshot released by the left-leaning Economic Policy Institute (EPI).
EPI references a recent report by Princeton University economist Alan Blinder and Mark Zandi, chief economist at Moody’s Analytics, How the Great Recession Was Brought to an End. Zandi was a top adviser to Republican John McCain’s 2008 presidential campaign.
The report offers a different perspective on actions the government has taken since the 2008 financial meltdown, interventions that have become unpopular. Republicans have hammered President Obama and congressional Democrats for the Recovery Act’s economic stimulus, while many on the Left have railed against TARP and other corporate bailouts.
“Today, with nationwide unemployment close to 10% and millions of jobs still needed to return to pre-recession employment levels, it can be easy to overlook the enormous economic progress that has been made since early 2009, when monthly job losses averaged almost 750,000 and GDP was severely contracting,” EPI says.
Despite the Herculean efforts of the federal government, recent GDP data indicates the U.S. recovery may be fading to an extent that the ongoing anemic economic growth is not enough to spur new hiring required to solve the nation’s pernicious jobless problem.
The U.S. presently is experiencing a level of long-term unemployment unseen since World War II, and estimates indicate four or five unemployed Americans are in line for each open job position.
Blinder and Zandi acknowledge that because the economy remains weak, all of government’s economic policy initiatives have been widely criticized as being expensive and ineffective. But they say that criticism lacks perspective of how bad things were.
“From the perspective of early 2009, this rapid snap back was a surprise,” they state. “The Great Recession gave way to recovery as quickly as it did largely because of the unprecedented responses by monetary and fiscal policy makers.”
The fact that unemployment remains as high as it is today speaks to the magnitude of the economic crisis and the need for continued policy intervention to create more jobs. EPI says in its snapshot.
Democrats have continued to pursue a variety of job-creating legislation, but has often by blocked by the congressional GOP. Republicans say their objection to further measures are motivated by concern over a mounting federal budget deficit, but Obama and other Democrats have criticized the GOP for blocking legislation strictly for political gain and embarrass Obama and his fellow Democrats.
“Republicans need to stop betting on failure and get serious about putting our economy back where it needs to be. Democrats will not rest until America’s small businesses get the support they deserve,” says Senate Majority Leader Harry Reid (D-Nev.).
The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.