The U.S. economy has suffered two devastating economic crises in the past 15 years. The first was the 2008-2009 financial crisis, which ushered in the first deep recession in a quarter century. Unemployment reached 10 percent — far above what U.S. President Barack Obama’s economists had predicted — and the subsequent recovery was painfully slow.
In response, the U.S. Federal Reserve lowered its target interest rate to zero and later implemented quantitative easing and other unconventional measures. Obama’s $787 billion American Recovery and Reinvestment Act of 2009 was quickly followed by other stimulus measures, but these proved ineffective and largely benefited special interests. Although the costly Cash for Clunkers program to replace older polluting cars briefly sped up new car purchases, sales soon collapsed, resulting in only a trivial reduction in emissions.
Meanwhile, then-Vice President Joe Biden was tasked with a commendably transparent effort to “create or save” 3.7 million jobs, and major humiliations followed. Two Los Angeles city departments hired just 55 workers after receiving $111 million in federal stimulus money. Solar energy startup Solyndra received a $535 million government loan and quickly went bankrupt. A high-speed rail project in California received a $3 billion grant but didn’t begin construction until 2015. “Government is a lousy venture capitalist,” noted Lawrence Summers, then Obama’s chief economic adviser.
