Times economics writer David Leonhardt continued his front-page cheerleading forthe stimulus, and Obama-nomics in general, in his Saturday "Economic Scene" column, "As Economy Turns, Washington Looks Better."
What if in the end they got it right?
What if, amid all their missteps and all the harsh criticism, the people in charge of battling the worstfinancial crisissincethe Great Depression- Ben Bernanke,Timothy Geithner, Lawrence Summers, Henry Paulson and the rest - basically succeeded?
It is clearly too soon to know for sure. But the evidence is now pointing pretty strongly in one direction: history books may conclude that the financial crisis of 2008 turned out to be far less bad than it could have been and that Washington deserved much of the credit.
The Labor DepartmentannouncedFriday that the economy lost fewer jobs in July than in any month since beforeLehman Brotherscollapsed last fall.Credit marketsno longer look anything like they did after Lehman's collapse and are in considerably better shape than just a few months ago.Stocksare up almost 50 percent from their March low. "It's over," the economists atBarclaysCapital declared Friday, referring to the Great Recession.
Washington's early responses to the bubbles in real estate andstocks, and then to the crisis that followed, were full of mistakes. But since the collapse of Lehman Brothers, the record has started to change. The government has undertaken one extraordinary effort after another to revive the economy, and the economy has seemed to respond.
Leonhardt eventually got to a conservative counter-argument in paragraph 10:
Most confusing of all, no one can know how bad - or how good - the economy might have been if the government hadn't pursued the aggressive policy it did. But there are certainly some clues.
Leonhardt went abroad to make an overly reductionist case for big-government intervention: "Large programs" (no details provided) worked in some countries, while "smaller ones" didn't (again, no details).
As for the stimulus, economies in countries that enacted relatively large programs, like the United States, China and Australia, have survived fairly well this year, relative to forecasts. Countries that enacted smaller programs, like France, Italy and India, have not done as well, asChristina Romer, a top Obama adviser,pointed outthis week.
But the best clue may be history. Washington did not respond proactively to the financial crisis of 1929, and the Great Depression ensued. Japan didn't respond to its 1990s crisis with much force, and its economy languished.
In July, Leonhardt supported Obama's health-care overhaul in a similar front-page column, especially the idea of rationing health care in the name of cost control, which isn't proving very popular, as indicated by the vociferous opposition at town halls this month.