Grading Government Intervention in the Great Recession

The New York Times reported on a new paper by two leading economists, Alan Blinder and Mark Zandi, that used econometric modeling to demonstrate how government intervention helped stem a second Great Depression and kept us at a Great Recession.

The paper notes, "that without the Wall Street bailout, the bank, 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."

Immediately critics will point out that Blinder worked in the Clinton administration and Zandi is a registered Democrat. I would humbly suggest that party affiliation doesn't make someone's research automatically irrelevant.

And I'll note that i haven't read the whole paper, but will be in the next 24 hours to look at some of the assumptions and the models they used. I mean, I should use my bachelors degree for something, right?

Finally, I'll request that people looking to question the conclusions Blinder and Zandi reach base their criticism on the paper and its methodology, not just knee jerk rejection that a registered Democrat couldn't possible comment on the stimulus. Thanks.

Bunning’s Misstep

Last week, as Jason pointed out, Sen. Jim Bunning (R-Ky) single-handedly blocked the extension of unemployment benefits for millions of Americans left jobless by the Great Recession. Bunning defended his action as one of fiscal conservancy, a determination that the cost of unemployment benefits not be added to the deficit. Bunning’s claim is at best disingenuous.

Absent from the conversation last week, though, was any discussion of the impact Bunning’s tactics would have on those people with jobs. It turns out, the bill that Bunning blocked included highway funds. Not only is Bunning denying unemployment assistance to Americans who desperately need it, he’s killing jobs. According to the New York Times, 2,000 workers from the Federal Highway Administration, the Federal Motor Carrier Safety Administration, and the National Highway Traffic Safety Administration were furloughed (without pay) on Monday. Transportation Secretary Ray LaHood (Republican) says that these furlough will also halt 40 major projects.

Even though Bunning isn’t running for re-election, his job-killing misstep may do some lasting damage to the Republicans. In light of the unemployment rate and the apparent concern of the American people that the government isn’t doing enough to improve the economy, a Republican obstructing a bill that simultaneously extends unemployment and keeps other individuals employed, may give resonance to the Democrats’ recent embrace of a jobs-focused, populist message. This is more than inside baseball, stories about Bunning causing furloughs appear today on A-2 in the Washington Post, on A-15 in the New York Times, and on the front page of at least several small, local papers.

A Nice Curve

The Council on Foreign Relations has put out a Stimulus Package Report Card (h/t Kennedy). And you can see how the Recovery Act (Stimulus) money has been distributed near you here.