Almost exactly one year ago, on a cold winter’s day, I met with my new economic team at the headquarters of my presidential transition offices in Chicago. Over the course of four hours, my advisors presented an analysis of where the economy stood, accompanied by a chilling set of charts and graphs, predicting where we might end up. It was an unforgettable series of presentations.
Christy Romer, tapped to head the Council of Economic Advisers, and Larry Summers, who I’d chosen to head the National Economic Council, described an imminent downturn comparable in its severity to almost nothing since the 1930s. Tim Geithner, my incoming Treasury Secretary, reported that the financial system, shaken by the subprime crisis, had halted almost all lending, which in turn threatened to pull the broader economy into a downward spiral. And Peter Orszag, my incoming Budget Director, closed out the proceedings with an entirely dismal report on the fiscal health of the country, with growing deficits and debt stretching to the horizon. Having concluded that it was too late to request a recount, I tasked my team with mapping out a plan to tackle the crisis on all fronts.
It was not long after that meeting, as we shaped this economic plan, that we began to see these forecasts materialize. Over the previous year, it was obvious that folks were facing hard times. As I traveled across the country during a long campaign, I often met men and women bearing the brunt of not only a deepening recession, but also years – even decades – of growing strains on middle class families. But now the country was experiencing something far worse. Our Gross Domestic Product – the sum total of all that our economy produces – fell at the fastest rate in a quarter century. $5 trillion of Americans’ household wealth evaporated in just twelve weeks as stocks, pensions, and home values plummeted. We were losing an average of 700,000 jobs each month, equivalent to the population of the state of Vermont. The fear among economists across the political spectrum was that we were rapidly plummeting toward a second Great Depression.
So, in the weeks and months that followed, we undertook a series of difficult steps to prevent that outcome. And we were forced to take those steps largely without the help of an opposition party which, unfortunately, after having presided over the decision-making that led to the crisis, decided to hand it over to others to solve.
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