page_title: Economic policy of the Barack Obama administration
section_title: Responding to the Great Recession
hierarchical_section_title: Economic policy of the Barack Obama administration / Responding to the Great Recession
caption_attribution_description: English: U.S. Changes in Household Debt as a percentage of GDP for 1989-2016. Homeowners paying down debt for 2009-2012 was a headwind to the recovery. This behavior tends to slow recoveries from financial crises relative to typical recessions.
context_page_description: The economic policy of the Barack Obama administration was characterized by moderate tax increases on higher income Americans, designed to fund health care reform, reduce the federal budget deficit, and decrease income inequality. His first term included measures designed to address the Great Recession and Subprime mortgage crisis, which began in 2007. These included a major stimulus package, banking regulation, and comprehensive healthcare reform. As the economy improved and job creation continued during his second term, the Bush tax cuts were allowed to expire for the highest income taxpayers and a spending sequester was implemented, to further reduce the deficit back to typical historical levels. The number of persons without health insurance was reduced by 20 million, reaching a record low level as a percent of the population. By the end of his second term, the number of persons with jobs, real median household income, stock market, and real household net worth were all at record levels, while the unemployment rate was well below historical average.
context_section_description: President Obama's first inauguration was held during the depths of the Great Recession. The situation was dire; the economy had lost nearly 3.6 million jobs in 2008 and was shedding jobs at a nearly 800,000 per month rate when he took office. During September 2008, several major financial institutions either collapsed, were forced into mergers, or were bailed-out by the government. The financial system was nearly frozen, as the equivalent of a bank run on the essentially unregulated, non-depository shadow banking system was in-progress. Ben Bernanke later stated that 12 of the 13 largest U.S. financial institutions were at risk of failure during the crisis.
  The Bush Administration had passed the $700 billion Troubled Asset Relief Program in October 2008 and provided enormous loan guarantees to help strengthen the banks as late as January 2009 during the transition period. Further, the U.S. Federal Reserve under Ben Bernanke was taking a series of innovative emergency steps to inject money into the financial system, acting in their role as the "lender of last resort." Obama and Bernanke agreed that further action was also needed by Congress to help boost the economy beyond Wall Street.
caption: U.S. changes in household debt as a percentage of GDP for 1989-2016. Recoveries from financial crises tend to be protracted, as debt levels must be reduced before typical borrow-and-spend patterns are resumed. In this case, homeowners paid down debt from 2009-2012.[24]
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