NO GOVERNMENT initiative in recent history has been more controversial than the Troubled Asset Relief Program (TARP), the $700 billion financial rescue fund Washington deployed in fall 2008. Though then-Federal Reserve Chair Ben S. Bernanke and Treasury Secretary Henry M. Paulson declared it indispensable to prevent another Great Depression, critics reviled TARP as a bailout for Wall Street malefactors, underwritten by a blameless Main Street. Yet a bipartisan majority of both houses of Congress mustered the courage to back TARP, and the results speak for themselves: Disaster was averted, at an ultimate cost to taxpayers far, far smaller than even TARP’s most optimistic supporters expected. All told, the program poured $426.4 billion into banks and automakers — and got back $441.7 billion.
In short, TARP represented a calculated risk that responsible politicians took in order to save the country, and it paid off. Strangely enough, though, the candidates who are trying to get the most mileage out of TARP in the 2016 presidential campaign are the ones who opposed it at the time, or say they would have.
Sen. Bernie Sanders (I-Vt.), the democratic socialist running against former secretary of state Hillary Clinton for the Democratic nomination, was one of 25 senators to vote “no” on TARP, along with a few populist Democrats — and some ultra-conservative Republicans such as then-Sen. Jim DeMint (S.C.). Mr. Sanders boasts of this repeatedly on the campaign trail, adding the flourish that he told Mr. Paulson, a former chief of Goldman Sachs, that his Wall Street pals should pay for TARP through a tax increase, and he even proposed an amendment to make that happen. For his part, Sen. Ted Cruz (R-Tex.), is calling out GOP rival Donald Trump for his contemporaneous (verbal) support of TARP. A super PAC aligned with Sen. Rand Paul (R-Ky.) has attacked former Florida governor Jeb Bush in a similar vein.
This is happening because the two parties’ presidential primaries are disproportionately influenced by the sort of voters who value ideological purity above everything else, and who therefore look back at TARP and see only principles violated. Otherwise, Ms. Clinton, who supported TARP as a senator from New York, would be unabashedly touting that vote. She might even note that, whereas Mr. Sanders’s position puts him in the company of Republican ultras such as Mr. Cruz, hers was identical to that of both President Obama and Vice President Biden.
Contrary to much rhetoric, Wall Street banks and bankers still took losses and suffered upheaval, despite the bailout — but TARP helped limit the collateral damage that Main Street suffered from all of that. If not for the ingenuity of the executive branch officials who designed and carried out the program, and the responsibility of the legislators who approved it, the United States would be in much worse shape economically.
That is the truth, and we can’t think of a sorrier comment on American politics than the fact that so many candidates have an interest in pretending otherwise.