No Dodos, Bush and Obama Stopped a Depression
Forty years ago, I won what became my family’s first "Dodo of the Year" award. Instead of calling me an unmitigated idiot, my father called me a dodo, after the now-extinct bird famous for being too stupid not to run away from, but toward, its captors who then killed it.
Before each new year, while doing resolutions, my dad sought nominations for new "Dodos," and an annual ritual was born.
My act of dodo-ism was parking my car on the hill on Main Street and failing to engage the parking brake. As I got out of the car, it began to roll backwards across four lanes of traffic. After making a useless effort to stop it, all I could do was watch helplessly. Fortunately, no cars were coming in either direction, and brick planters across the street stopped my car from crashing through two stores.
Had I not jumped out of the path of my runaway car, it would have crushed me. My dad may have had to bury me, but he still rightly would have called me a dodo. Instead, we had an honest conversation about the virtues of emergency brakes on hills.
If only we could do the same in this presidential election with all the screeching about jobs losses and bailouts.
In February 2008, 137.9 million Americans had jobs, a national high. In January 2009, 133.5 million people had jobs, a loss of 4.4 million jobs during the last year of President George W. Bush’s presidency.
In January 2010, at the end of President Barack Obama’s first year in office when jobs started to climb back up, another 4.3 million had lost jobs, leaving 129.2 million Americans employed. Both 2008 and 2009 saw similar losses, though technically, a few more were lost during Bush’s last year.
November 2008 and January 2009, both under Bush’s watch, were the two worst months of this recession, when more than 800,000 jobs were lost. February and March 2009, President Obama’s first two months in office, were the next two worst months.
Like my inability to stop my car rolling down the street, no one – a president, a Treasury secretary, a Fed chairman – could have stopped the job-loss express either immediately or within two months.
At the beginning of the Great Depression, President Herbert Hoover’s laissez-faire, leave-it-to-the-markets policy believed government should get out of the way and allow markets to fix the problem. At the same time, the Fed did nothing to stimulate the economy. The result? Unemployment jumped from 4.2 percent in 1928 to 8.7 percent in 1930 – very similar to President Bush’s last year in office – and with no government intervention, unemployment continued to rise until it hit 25 percent in 1933.
When Franklin Roosevelt became president in March 1933, he immediately closed the banks, instituted banking reforms and initiated a broad range of government programs. The bleeding stopped within a year – similar to President Obama’s first year. Though growth remained anemic under Roosevelt, unemployment trickled down to 17 percent in 1939 when the industrial production required by World War II pulled the country out of the Great Depression.
This time, Presidents Bush and Obama sought and received $700 and $800 billion, respectively, and the Fed kept money flowing. It stopped a depression.
Memories get fuzzy – or selective – in the heat of a presidential election. The various presidential candidates are arguing that the bailouts were failures, that Obama is the cause of the job losses, and that the Fed should be eliminated. In effect, they are arguing for Hoover’s laissez-faire policies.
When President Bush looked down the black hole of “laissez-faire,” he famously said, “This sucker could go down,” asked for $700 billion and cut the checks. Had President Bush done nothing, the two largest U.S. banks and two of the three U.S. auto companies – Citibank, Bank of America, GM and Chrysler – would have disappeared. Heaven knows what catastrophe would have followed. Yet, the presidential candidates, in effect, are suggesting that would have been better.
Like Roosevelt, Presidents Bush and Obama, and the Fed, took dramatic action. They saved a now-thriving auto industry. Our banks are recovering. More than 3 million new jobs have been created in the last two years. Government can do good.
When my car was going to crush me, I jumped out of the way. Presidents Bush and Obama had the courage to step in front of failing banks, collapsing car companies, and a landslide of job losses and try to stop them. Had they followed my example, they, too, could have won "Dodo of the Year."