The Republicans have been howling since Obama was elected that his policies would prevent the economy from improving. They also railed against the Federal Reserve’s strategies, saying they would surely cause considerable inflation and do nothing to help the economy recover. Austerity was needed, the Republicans advised. America needed to cut its budget deficits and pay down the national debt or the economy would remain in the tank or sink further.
Well, now that the economy is doing well, with the GDP in a decent range and unemployment at reasonable levels, who gets the credit for bringing the economy back? Should the Republicans recant and admit their criticism was wrong? (Fat chance of any politician admitting he or she was wrong about anything.) Was it the initial stimulus pushed by Obama that got the ball rolling? Was it the low interest rates by the Fed and their bond buying that put the economy back on the right track? Fortunately, austerity was never introduced in the U.S., unlike Europe where the economy is still in trouble, the Euro is crashing, and unemployment remains high. And by the way, there are no signs of inflation in America. Of course, according to the Keynesians, the economy would have improved faster and be stronger now if the stimulus has been larger and lasted longer.
In addition to the American economy broadly outshining those of Europe and Japan, the budget deficits have been cut dramatically over the last few years instead of going up. This was not because of austerity but because the economy was growing and government revenues were greater. So those who were worried about the budget deficits and the national debt increasing astronomically were obviously off base.
Maybe the Republicans will claim that their Congressional actions were responsible for the economic recovery because they didn’t permit a larger stimulus which kept the budget deficits under better control. What does it matter that our infrastructure is falling apart and the time to fix it cheaply was when interest rates were low and plenty of construction workers needed jobs. The stimulus should have much greater and devoted to fixing our infrastructure.
I think at some point, the GOP should concede that the Obama administration and the Fed in concert were responsible for the economic recovery and the low levels of unemployment. Undoubtedly, there will be some way the admission by the Republicans will be colored to make it seem as if the American economy was too strong to be kept down and that the policies of Obama and the Fed just helped it slightly as the recovery would have happened anyway. They can tell that to the Europeans who are still struggling and whose central bank has only recently started to copy the actions of the Fed. Though it will never happen, Americans need to give three cheers for the Federal Reserve and the Obama administration for doing the right things in bringing our recovery back. Hip, hip, hooray.
We can also expect convoluted attacks on the Obama administration and the Federal Reserve by the next coterie of Republican presidential candidates who have no choice but to find fault in the way the government was run (even if it were successful). It’s all part of the political game where you have to find issues about which you can blame your opponent. And the economy is most important. As Election Day nears, the attacks will escalate, big fights over nothing. And some historians in the distant future will write some books about the recession and how quickly America recovered, giving credit to the Obama administration and the Federal Reserve for doing the right things when missteps could have been disastrous.
Resurrecting Democracy
www.robertlevinebooks.com
Political junkie, Vietnam vet, neurologist- three books on aging and dementia. Book on health care reform in 2009- Shock Therapy for the American Health Care System. Book on the need for a centrist third party- Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party published in 2011. Aging Wisely, published in August 2014 by Rowman and Littlefield. Latest book- The Uninformed Voter published May 2020