Financial Matters

It didn't start under Obama, but according to two economists, one of whom worked with McCain:

In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.

In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.

The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody’s Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years.

As for the Obama stimulus, it's not all public sector:

States are putting hundreds of thousands of people directly into jobs through programs reminiscent of the more ambitious work projects of the Great Depression

But the new efforts have a twist: While the wages are being paid by the government, most of the participants are working for private companies

The opportunity to simultaneously benefit struggling workers and small businesses has helped these job subsidies gain support from liberals and conservatives. Congress is now considering whether to extend the subsidy, which would expire in September, for an additional year. A House vote is expected on Thursday or Friday.

Despite questions about whether the programs displace existing workers, many economists have argued that direct job creation programs are a more cost-effective way to put some of the nation’s 14.6 million unemployed back to work than indirect alternatives like tax credits and construction projects.

So which is it? In any case, Obama is trying to help small businesses as well:

The battle was on full display on Wednesday as Senate Democrats pushed ahead with efforts to pass a bill that would increase lending to small businesses and provide tax breaks, and President Obama visited the Tastee Sub Shop in Edison, N.J., where he ordered a “super sub with everything,” to highlight his party’s small-business agenda.

The two sides agree that the nation’s 27 million small businesses will be a big factor in the economic recovery. Beyond that, however, the gloves come off, as Democrats say Republicans are stalling the small-business bill and Republicans say that Democrats will strangle small businesses with higher taxes and heavy-handed regulation — though Mr. Obama, in New Jersey, emphasized that he had cut taxes for small businesses eight times.

At the sandwich shop, Mr. Obama said there should be no argument. “Surely, Democrats and Republicans ought to be able to agree on this bill,” he said. “Helping small businesses, cutting taxes, making credit available. This is as American as apple pie. Small businesses are the backbone of our economy. They are central to our identity as a nation. They are going to lead this recovery.”

One last question. We know that George Bush Jr. used "fuzzy math." But is it systematic that Republicans have trouble with numbers?