In 2008, in the midst of massive economic turmoil, Congress passed the Troubled Asset Relief Program, or TARP, in hopes of sparing the economy from what many viewed as a near certain collapse. Since then, TARP, which funneled hundreds of billions of dollars into the coffers of the nation’s biggest banks, has become a symbol of both Washington’s overspending and its corporatist leanings.
But while popular sentiment has hardened against the law, elite consensus has come to celebrate it. Last fall, Politico’s Ben Smith wrote that it was Washington “insiders’ finest moment, a successful attempt to at least partially fix their own mistakes.” Earlier this week, Washington Post columnist Robert Samuelson, a frequent critic of government intervention in the economy, echoed the sentiment that TARP was a success, writing that the real lesson of the program is that “only the government is powerful enough to prevent a complete collapse.”
Garett Jones, a professor of economics at George Mason University, has spent the last two years arguing against the elite consensus. Reason Associate Editor Peter Suderman spoke with Jones earlier this week about the why he blames TARP for destroying the American economy, and why its long-term consequences could be more serious than most people realize.