Cokie Roberts and Steven V. Roberts

This Program Worked

Weeks after voters dissed the Democrats, an important economic benchmark was passed with little public notice: The U.S. government sold off its stake in Ally Financial, the auto financing company once known as GMAC. It even made money on the deal -- about $2.4 billion.

That sale ended the six-year effort to rescue the American auto industry from financial disaster. Treasury Secretary Jacob Lew was correct in saying, "This program worked."

In 2014, American carmakers sold 16.5 million vehicles, their best year in almost a decade. That boom fits into a broader picture of economic progress: declining unemployment, soaring stock prices, steady inflation and interest rates. But President Obama has gotten little credit for those successes.

Last November, voters were gripped by gloom, even as they crowded into car showrooms. In exit polls, 3 out of 4 expressed anxiety about the economy's direction this year. Half said living standards would decline for the next generation.

That's why the president took to the road this week, visiting Detroit and other cities to reinforce Lew's message: The economy is rising. The program works.

There are good reasons why the president has trouble breaking through. Wages for many middle-class families remain stagnant. Unemployment numbers don't reflect the workers who can't find full-time jobs or have quit looking entirely.

But as the president starts his final two years in office, it's worth remembering what the economy looked like when he entered the White House. It was threatening to collapse. Depression loomed. Emergency measures were necessary. Large bipartisan majorities in Congress passed -- and President Bush signed -- a measure in October 2008 creating the Troubled Asset Relief Program, or TARP.

Saving Ally Financial and the big automakers was only one part of a much larger strategy to protect banks, brokers and insurance companies from insolvency. All told, the government disbursed $426.4 billion and got back $441.7 billion, turning a tidy profit of $15.3 billion.

Doug Elliott, an economist at the Brookings Institution, told the Wall Street Journal that TARP's "benefits in stabilizing the financial system and the economy as a whole were worth hundreds of billions of dollars, and yet it turned out to be essentially free. I call it the best large federal program ever to be despised by the public."

Despised it is. Critics on both sides -- tea partyers on the right, Elizabeth Warrenites on the left -- use the same catchphrases to undermine public confidence in the program: special interests, taxpayer bailouts, Wall Street fat-cats. Big is bad. The little guy always loses.

"What we learned from TARP, the stimulus and the Detroit bailout is when big government, big business and big labor join forces at the taxpayers' expense, it's the average citizen who is left out," says Jenny Beth Martin, co-founder of the Tea Party Patriots.

That's classic class warfare -- cheap and easy populism, echoed by Warren in her repeated denunciation of "the billionaires and the big corporations and the lawyers and lobbyists."

It all sounds great. It just happens to be wrong.

The Center for Automotive Research estimates that TARP saved 1.2 million auto industry jobs; the president says another 500,000 have been created. And that doesn't include the services patronized in turn by those autoworkers: dentists, dry cleaners, day care centers.

No public policy is ever perfect. Costs and benefits always have to be weighed. And TARP made plenty of mistakes.

One was the failure to help many homeowners who held underwater mortgages and faced foreclosure. Another was the reluctance to demand equity positions in the companies receiving help. So even though TARP made a small profit, it could have been larger.

"The Treasury left too much money on the table," wrote law professor Steven M. Davidoff in The New York Times.

Perhaps the biggest flaw was the message sent to large financial institutions: If you take bad risks, the government will protect you anyway.

"To save the economy, we had to violate a core American principle: You bear the risk, you suffer the consequences," Neel Kashkari, who ran TARP, told the Wall Street Journal.

This is a messy world. Choices have to be made. TARP had a downside, but on balance, it was the right course at the right time.

This debate is not just about the past, however; it's about the future. The tea partyers and the Warrenites, who continue to deny the value of TARP, cast doubt on their own judgment. How can they be trusted to lead on other issues if they were so misguided on this one?

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