Private markets at core of Obamanomics
Despite all the right-wing rhetoric about rampant socialism, the Obama administration’s economic policies have been based, more or less, on market forces.
Ezra Klein EXPLAINS.
Isolate the eight key economic decisions of the Obama presidency: The intervention in the financial sector, the intervention in the auto sector, the intervention in the housing sector, the stimulus package, the health-care bill, financial regulation, and the tax deal. The financial and auto interventions, it should be noted, were begun under George W. Bush but carried out and expanded under Obama.
In each case, the Obama administration sought to support or improve private markets. It refused to leave the market to sort itself out, as some on the right would have preferred, and resisted entreaties to take it over, as some on the left advocated.
Where there was a market that they considered functional-but-frozen, they worked to unfreeze it. That’s what TARP was, and the stress tests. It’s not quite right to group the Federal Reserve’s actions with the administration’s. But the Fed and team Obama were in close contact, and the basic philosophy was the same: Get the market for securitized assets moving again, restore confidence in the banks, give participants some assurance that it was safe to keep borrowing, lending and investing. Calls to remake the financial sector were also rejected, and regulation focused on new safeguards and emergency procedures rather than a new way of doing business. Calls to nationalize the banks were rejected.