Monday, December 7, 2009


TARP has turned out to be much cheaper than we had expected, although not cheap. It means that some of that money can be devoted to deficit reduction. And the question is: Are there selective approaches that are consistent with the original goals of TARP — for example, making sure that small businesses are still getting lending — that would be appropriate in accelerating job growth?

So spoke President Barack Obama today, in what amounts to a prelude to tomorrow's speech on his fight against unemployment. Should he do what the pundits anticipate - i.e., should he use leftover funds from TARP (Troubled Asset Relief Program) in order to create what will essentially be a second economic stimulus - it will be fantastic news for the country. Already the first stimulus package has shown to be remarkably effective, both in preventing our great recession from becoming a full-fledged depression and in causing the slight growths in GDP and national employment that we have seen over the past couple of months. While the turnaround has not been as immediate as many would have liked (myself included), and while this fact has not only given conservatives political ammunition, but caused some liberals to question Obama's efficacy as Commander-in-Chief (myself included), the reality is that the unflappable steadiness with which Obama has stuck by his original economic program appears to have been derived from wisdom rather than bullheadedness. The current stimulus shows every sign of working; should Obama infuse an additional dash of cash into the economic engine, beginning with tomorrow's speech, we may actually have good reason to be cautiously optimistic about our economic future.

Of course, in this day and age, even preaching cautious optimism is a perfect way to be accused of naivete. Pessimism is very chic in the world of politics. Liberals and conservatives alike are prone to being hailed for "realism" when they issue cynical, critical, and even apocalyptic proclamations about the present and future (the only difference between both ideological groups being what subjects they select as fodder for their gloomy observations, assessments, and forecasts). Simultaneously, there is a knee-jerk impulse to assume that anyone who expresses optimism has either succumbed to ideological poisoning or is simply wanting of the perspective necessary to have the proper "balanced" outlook at the actual world around them.

Allow me to demonstrate this with a brief thought experiment. Pretend, for a moment, that we were in the inverse situation right now - that is, if the economy had WORSENED beyond any and all predictions, instead of improved. Do you honestly believe that there would be many voices saying that we shouldn't embrace this bad news as reflections of a new trend in reality? Would anyone say that although the economy was expected to decline, the fact that it has fallen so far so fast is probably an aberration? Or do you think it would have been considered more fashionable to rend our clothes, cover ourselves in ashes, and assume that the days of Hoover had returned?

The objective truth is that virtually every projection - by liberals as well as conservatives - held that the economy would be continuing its state of decline at this point. The fact that it has actually improved, however marginally, means that those assumptions were wrong. Since Obama's stimulus package is the only variable that can be realistically assumed to have caused the beginnings of this recovery, he deserves credit for what he has done; since it appears that Obama has found a clever new way of giving us more of the medicine that we now know is working, he deserves credit for what he is about to do (especially since lesss than one-third of the stimulus money already in place has been spent so far, meaning that its full effects haven't even begun to be made manifest). While none of this means that we have reached the end of our long national nightmare, it does - for the first time in more than a year - provide us with an empirically-verified and realistic source for optimism. There is an intelligent case to be made that the worst may be over, and an equally sound argument to be put forth that the economy will begin to grow again - slowly at first, perhaps, but with increasing acceleration.

For a long time experts on both sides of the political spectrum have predicted that this recession would forever change America's economic life, to say nothing of our place in the world, and that its continued deterioration would mark the doom of Obama's reelection effort in 2012. So widely and fervently has this claim been made that many have taken its truth for granted, ignoring in the process that similar proclamations were made during the recessions of the early 1980s and the early 1990s - both of which not only ended after a few years, but were followed by periods of tremendous economic growth, to say nothing of the resounding re-election of the presidents who presided over them (Ronald Reagan in 1984, Bill Clinton in 1996).

Of course, that doesn't mean that our recession will join its two predecessors and become a painful and frightening - but ultimately past - part of our national experience. What it means is that there are signs that this COULD plausibly happen. Indeed, if it weren't for the fact that such an assumption would justify that most unfashionable of outlooks - optimism - the consensus might even deem such an assumption to be - dare I say - realistic.

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