Well enough time has passed to evaluate the two major efforts to stop and reverse the “Great Recession.”  The TARP program implemented by then President Bush (”W”) was a novel and precedent setting piece of legislation that was implemented with flexibility and imagination. While its core objective, to recapitalize our financial industry, was achieved, it was done not as originally designed, i.e. buy “troubled assets,” but ad hoc used to lend to banks and buy shares in them.  It was also imaginatively used by President Obama to shore up and rebuild our auto industry. 

The TARP program succeeded beyond all expectations.  It stabilized and revived our financial industry in less than a year.  It was funded entirely from borrowed funds that have in all but one case been recovered and may even eventually yield a tidy profit for Uncle Sam. 

The “Stimulus Plan” of President Obama was constructed using hoary “Keynesian” remedies and implemented in an plodding, inflexible fashion.  It did succeed in putting a floor to the recession but took three years to achieve its goal of bringing unemployment below 8% and has yielded only a feeble 1-2% economic growth, far below the minimum 3% generally considerd to be necessary to restore our economy to a “normal” state.  And this was done at a cost of almost $800 billion to the US taxpayer.

I supported in this blog site both measures.  In fact I urged the Feds to use the TARP plan to buy even more of US industry and finance using funds borrowed at 1% and invested at 6% return or more.  I also urged for more “stimulus” but suggested it be aimed more at infrastructure investment, rather than income support.  However, in retrospect it appears that the TARP program was far more successful than was the “Stimulus.”