Creepy Condescending Wonka

Wall Street likes divided government, and investors got just what they were hoping for.

Stocks moved sharply higher Wednesday following midterm election results that gave Democrats control of the House but increased Republicans' control over the Senate.

The Dow soared nearly 550 points, a gain of 2.1%. The S&P 500 was also up 2.1% and the Nasdaq surged 2.6%. Stocks hit their highs of the day after Attorney General Jeff Sessions announced that he was resigning at the request of President Donald Trump.

Presidents aren’t mere bystanders. The policies they carry out, in conjunction with Congress, matter a great deal. In times of acute danger, Presidents can give the economy a much-needed boost. Or they can prolong the agony. In the longer term, policies such as new spending programs, changes to the tax laws, and reforms of the regulatory code can have a major effect. Anybody who doubts this needs to read up on the legacy of Franklin Roosevelt or of Ronald Reagan.

Obama’s policies helped lift the economy out of a frightening slump and set it on a path to steady, if unspectacular, growth. In fact, I’d call this his biggest achievement. The scale of the financial panic of 2008 and the extent of the job losses that occurred in the first months of 2009 should never be forgotten. By “a number of macroeconomic measures—including household wealth, employment and trade flows—the first year of the Great Recession in the United States saw declines that were as large or larger than at the outset of the Great Depression in 1929-30,” Jason Furman, the chairman of the White House Council of Economic Advisers, recounted in an exit memo that he posted online this week.

The Federal Reserve, the Federal Deposit Insurance Corporation, and Hank Paulson, President Bush’s Treasury Secretary, all played key roles in quelling the panic. But the Obama Administration finished the job, continuing the crisis measures that had been introduced, pushing through the rescue of the auto industry that Paulson had set in motion, and carrying out a set of stress tests that restored confidence in the big banks. The new Administration also boosted the over-all level of demand in the economy with an eight-hundred-and-forty-billion-dollar stimulus package, which featured temporary tax cuts and more federal spending. By the second half of 2009, the gross domestic product was growing again. By October, 2009, the unemployment rate had peaked, at ten per cent. If other policy decisions had been made, things could have been very different, and much worse.