Five years ago this week, Lehman Brothers collapsed, and America’s financial crisis began. On Monday morning, President Obama will mark the anniversary with a speech in the White House Rose Garden. The White House released a new report ahead of the address, assessing how the government’s efforts to stabilize the economy turned out.
Obama’s economic adviser, Gene Sperling, summed up the conclusions in a conference call with reporters. “These very difficult, bold and politically controversial measures that the president took in 2009 have uniformly performed better than almost anyone could have projected,” he said.
The report goes item by item through government interventions that cost taxpayers billions of dollars at the time. For example, the hugely unpopular Troubled Asset Relief Program was forecast to cost $350 billion. Ultimately, Sperling says, the government put in only $245 billion. Today, according to the report, the banks more than paid back the government investment. “So in a sense, taxpayers rather than losing hundreds of billions of dollars, made a $28 billion profit,” said Sperling.
“I don’t know that anybody at the time would have predicted that by the first quarter of 2011 the big three [automakers] would not only have survived but be profitable for the first time since 2004,” said Sperling.
But there are less sunny ways to look at the recovery. Wages for a typical worker have barely increased. The economy is hardly creating enough jobs to keep up with the growing workforce, and unemployment is still at 7.3 percent. According to the Pew Research Center, only a third of Americans believe the economic system is more secure than it was five years ago.
Hank Paulson, who was President George W. Bush’s Treasury secretary during the crisis, told NBC’s Meet the Press that the recovery is sluggish.
“So what we need to see,” he said, “is we need to see Democrats and Republicans coming together to deal with some of the big structural reforms we need. Immigration reform, we need a new tax system.”
But right now, Congress is just trying to avoid a government shutdown or a default on the nation’s bills. Obama told ABC’s This Week that he will not negotiate on raising the debt ceiling.
“We’ve never had the situation in which a party said that unless we get our way 100 percent, then we’re going to let the United States default,” Obama said.
So with those crises occupying the government’s attention, major structural changes will have to wait.