 Federal government cut interest rates through most of 2008  Why? How would that help? ◦ Encourage more buying and allow people to pay back more debt  Relief, recovery or reform?

 February 2008 signed into law by President Bush ◦ Majority of Democrats and minority of Republicans approved it  Cost: About$152 billion  Gave tax rebate checks of about $600 per person  Goal was to get people to spend more money to stimulate economy  Relief, recovery or reform?

 Law signed by Bush in October 2008 set aside $700 billion to bail out failing industries ◦ General Motors (automotive industry) ◦ Fannie Mae and Freddie Mac (mortgage insurers) ◦ Banks  Why? ◦ “too big to fail”  Money was loans, and most have been paid back  Controversy and criticism ◦ Some took Social Darwinism approach (only strong survive… these companies failed, so let them) ◦ Top executives at some of these companies were paid large bonuses  Relief, recovery or reform?

 Signed into law by Obama in February 2009 ◦ Mostly a Democrat-sponsored bill; No House Republicans and only three Senate Republicans voted for it  Cost: $787 billion (about $500 billion in government spending, the rest in tax cuts)

 Things included in The Stimulus: ◦ Income-tax cut for everyone ($400 per year) ◦ Cash-for-clunkers (program giving rebates of up to $4,500 for those trading gas guzzling cars for more fuel-efficient ones) ◦ First-time homebuyer tax credit of $8,000 ◦ $86 billion for Medicaid (health care for poor)

 Tighter restrictions on banks, mortgage companies, insurance companies (more government control)  Tighter restrictions on who qualifies for loans (more government control)  Relief, recovery or reform?

 “No” arguments ◦ Unemployment rate … well, actually it’s 5.6 % now ◦ Economy is still not back to what it was before the recession ◦ A lot of government money spent, and government given more control  “Yes” arguments ◦ Recession technically ended in 2009 ◦ Most of bailout money has been paid back and there is some evidence that stimulus did create jobs ◦ There has been no Great Depression, part 2