More Praise for TARP
By Arnold Kling
David Ignatius writes that the bailouts
almost surely saved the country from another Great Depression.
You might expect that the rest of the essay would explain why we should believe this. Instead, he goes on to ask,
What accounts for the public rage toward Washington?
The essay mostly is a valentine to Steven Rattner, who was the czar in charge of the auto bailout.
Rattner cautions: “If the task force had not been able to operate under the aegis of TARP, we would have been subject to endless congressional posturing, deliberating, bickering and micromanagement, in the midst of which one or more of the troubled companies under our care would have gone bankrupt.”
In other words, we should be thankful that we gave this individual unchecked power.
The TARP was passed over public opposition. It was presented as a plan to buy toxic mortgage assets, not as a plan to bail out the auto companies. From a political standpoint, I think it is fair to describe the bailouts as a bloodless coup conducted by elites against the traditions of democratic government. I think that accounts for the rage against Washington.
I believe that the assertion that the bailouts prevented another Great Depression is false. My best guess is that the unemployment rate would be about where it is today with or without the bailouts. However, I deliberately choose the word “guess.” Ignatius instead uses the phrase “almost surely.” Do not confuse his stronger rhetoric with having more evidence or better judgment.