Debate Club

President Obama's Policies Revived the Economy

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The economy had already lost 4.5 million jobs before President Barack Obama took office in January 2009, with job losses that month alone surging to 818,000. Economic contraction had also accelerated, reaching a staggering 8.9 percent annualized decline in the fourth quarter of 2008—the worst in 60 years. From this downward spiral, Obama's economic policies proved instrumental in generating and sustaining a recovery.

[See pictures of Obama's re-election campaign.]

In February 2009, Obama enacted the American Recovery and Reinvestment Act, and the pace of economic contraction and job loss immediately decelerated. As the stimulus ramped up, sustained economic growth took hold in mid-2009, and job growth resumed early in 2010—with 3.5 million jobs added since February 2010. The nonpartisan Congressional Budget Office estimates that without the Recovery Act, unemployment would have averaged roughly 10.7 percent in 2010, instead of 9.6 percent.

The Recovery Act was intended to jump-start the economy and avert a depression, not to restore full employment. The $831 billion price tag, spread over more than four years, was dwarfed by the staggering loss in economic activity caused by the bursting of the $7 trillion housing bubble. After economic growth resumed, mass unemployment and underemployment compelled more fiscal support. However, passing additional economic support through Congress proved a Herculean task.

In December 2010, the administration negotiated a payroll tax cut, continuation of emergency unemployment benefits, and targeted tax credits to sustain the delicate recovery as the stimulus began winding down. Without this boost, the economy would actually have slipped back into contraction in the first quarter of 2011.

[Opinion: Barack Obama's Un-Fair Energy Taxes.]

It should be noted that the Federal Reserve also deserves credit for extraordinary measures taken to resuscitate the financial sector and facilitate recovery. But the Fed had already maxed out its key policy lever, the federal funds rate, when Obama entered office; monetary policy could not have single-handedly revived the economy.

While the economy has improved greatly under Obama's stewardship, creating jobs for the millions of unemployed Americans who want to work remains imperative. In September 2011, Obama proposed the American Jobs Act, which would boost employment by roughly another 2 million jobs, according to numerous outside economists, including Mark Zandi.

Unfortunately, Obama's substantive jobs agenda continues to be undermined by congressional partisanship. While more must be done to restore full employment, it is unquestionable that President Obama's economic policies have been instrumental in ending the worst downturn since the Great Depression.

Andrew Fieldhouse

About Andrew Fieldhouse Federal Budget Policy Analyst at the Economic Policy Institute

Tags
Obama administration
Obama, Barack
economy

Other Arguments

#1
281 Pts
Obama Has Tried All the Wrong Policies

No – Obama Has Tried All the Wrong Policies

Daniel Mitchell Senior Fellow at the Cato Institute

#2
94 Pts
It's Not the Economy, Stupid--It's Entitlement Spending

No – It's Not the Economy, Stupid--It's Entitlement Spending

David Primo Author of 'Rules and Restraint: Government Spending the Design of Institutions'

#3
64 Pts
Obama's Policies Have Not Turned the Economy Around

No – Obama's Policies Have Not Turned the Economy Around

William W. Beach Director of the Center for Data Analysis at The Heritage Foundation

#5
-153 Pts
Obama's American Recovery and Reinvestment Act Has Been a Success

Yes – Obama's American Recovery and Reinvestment Act Has Been a Success

Heather Boushey Senior Economist at the Center for American Progress

#6
-209 Pts
Obama Deserves Credit for the Recovery

Yes – Obama Deserves Credit for the Recovery

Dean Baker Author of 'The End of Loser Liberalism: Making Markets Progressive'

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