Obama inherited a bad economy from Bush. My question what policies is Obama responsible for for improving the economy? What exactly did Obama do? When I look at the stats its clear during his presidency the economy had a major improvement.

Unempoyment rate Stocks

  • 4
    I look forward to the answers, but from the research I've done, unemployment and job creation are considered tricky metrics for how the president affects the economy. They don't seem to trend with presidential actions as much as we might be lead to believe. – Cort Ammon Mar 26 at 4:21

I'm going answer half of the question, What did Obama do? This answer is mostly taken from his own archives. That document lists three key actions attributed to Obama:

  1. He helped pass the American Recovery and Reinvestment Act. This act was a combination of direct financial payments to individuals, tax cuts and investment projects.
  2. He helped introduce financial regulation, including stress tests, which all banks needed to pass. These tests would attempt to make sure they could handle sudden unexpected shocks, and has plans of operation on the books in order to resolve them.
  3. He worked to stabilize the housing market, which was the proximate cause of the crash in the first place. The method by which this was accomplished seems to have been a combination of reduction of mortgage rates (not a direct presidential action), and the creation of programs for troubled homeowners (but this could be)

One can make a good argument that the majority of these actions are not precisely, directly presidential ones. The passing of new laws is done through congress, the FDIC worked on financial regulation and the lending rate is altered (indirectly) by the Federal Reserve. However, it is also true that perhaps none of these actions would have been accomplished without the pressure of the white house, although that requires additional evidence.

Lastly, I am fairly sure there are a plethora of executive orders addressing the problems of the recession, which are perhaps a better answer to this question, since those are created directly by the president.

  • Good answer. Just to be clear: I am not trying to talk down Obama's achievements, nor his effectiveness at averting a bigger recession. Merely saying that, a president acting at a different point in the business cycle would not manage to sustainably move employment numbers in such a large way as the OP inquired about. In fact, Trump would go on to try "gaining numbers" by cutting taxes at a time when it was not necessary and in such a fashion that has been panned by a number of deficit hawks as being likely to leave the economy worse off long term. – Italian Philosophers 4 Monica Mar 29 at 20:07
  • One thing which I didn't get to in my answer is military spending. While the house is in charge of budgetary laws, the president is Command in Chief and congress typically does not reduce the pentagon's suggested funding levels (actually usually the opposite). If I could find evidence of increased military action needing additional personnel, in lets say, cyber security or Afghanistan corresponding to the time period of the recession, that could also be considered direct presidential action. – code11 Mar 29 at 20:17

To a large extent, Obama's success was coincidental, in the sense that he took office soon after the start of a recession and would, unless he had been peculiarly incompetent, which he was not, be put in a good position to improve things from a low starting point. Which is precisely what he did.

From The business cycle is dying:

enter image description here

This is a fairly regular happening when you superimpose business cycles, which are a regular, natural, occurrence on top of electoral cycles.

You could argue that perhaps Bush, who took over from Clinton near a short contraction (the dot com bust) privileged easy money and residential real estate "investing" a bit too much.

But the fact that economy crashed and burned near the end of Bush's watch and that Obama then took over still set him for, if not an easy win, certainly the strong possibility of looking good.

BTW, as regards to business cycle dying and things being managed gracefully by the Fed all the time: that obituary has been written many times before and I sympathize somewhat with the Nassim Nicholas Taleb view of not privileging the avoidance of all shocks at the risk of storing up massive ones down the road.

  • 1
    Doesn't this answer presuppose that those cycles shown are some sort of 'strictly economic' pattern, independent from the policies of the US gov? Sure, all of them seem to been resolved fairly quickly, with no period of lingering maximal unemployment, but what if that is explicitly because of policy? – code11 Mar 29 at 19:36
  • There is ample economic literature about business cycles. In as far as US Federal policy goes, it seems to be more geared to suppressing cycles than to letting them take place. So, yes, I am taking the position that those cycles are natural and strictly economic when left to develop on their own. And, yes, Obama's action did aim to minimize the downturn, as they should, but my point is he was given an opportunity to catch the cycle at a moment that made him look good. Just like Trump would go on to claim that he was some form of economic genius for his positioning in the cycle. – Italian Philosophers 4 Monica Mar 29 at 19:44
  • This answer, essentially, is "He was competent." This is rather broad and not much of an answer. Downvote. – John Wu Mar 30 at 18:15
  • @JohnWu Not really. This answer says that you need to take into account his circumstances when you judge how much he improved things. If the US economy had been humming along smoothly, then there is no way, no matter how competent he was, that he would have improved things as much. So, a question which boils down to "Wow, Obama was great. How did he do it?" needs a bit of qualification. code11's answer is good at telling you what he did, but another POTUS doing the exact same things in better circumstances would not see anywhere near that level of improvement in employment rates. – Italian Philosophers 4 Monica Mar 31 at 2:54
  • @ItalianPhilosophers4Monica He did a great job of framing the answer and setting up the context, but he failed to describe anything that Obama actually did. The only description is "incompetent... he was not" and "improve things from a low starting point... which is precisely what he did." It is actually rather strange that the author chose to use the word "precisely." There's nothing precise about this answer. We can argue about whether his actions had any effect, but in order to do that, you have to know what his actions were, and this author does not. – John Wu Mar 31 at 5:40

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .