In New Study, Two Economists Argue That Bush And Obama's Intervention Prevented Depression

So has the Obama economic program been working? While the economy certainly continues to have problems, the Obama administration -- and some members of the Bush administration -- have consistently argued that things would have been worse without their intervention. And now, two economists have published a study arguing in favor of that very idea, saying that there's quantitative evidence that the interventions of the Obama and Bush administrations helped avert a depression.

As the New York Times reports, a new economic paper from Princeton professor and former Fed vice chair Alan S. Blinder and Moody's chief economist Mark Zandi argues that the combination of financial reforms such as TARP, bank stress tests and emergency lending by the Fed, plus the stimulus, have indeed saved the economy from far worse problems.

The report also finds that while the financial reforms alone would have been been stronger than the stimulus alone, the whole is not directly comparable to the sum of the parts in isolation, "because the policies tend to reinforce each other."

From the Times report:

In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, 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.

...

"While the effectiveness of any individual element certainly can be debated, there is little doubt that in total, the policy response was highly effective," they write.