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US Government Reaction to Economic Crisis

First, identify at least one aspect of the U.S. government's response to the economic crisis first discovered in 2009 that reflects rational choice behavior on the part of the Obama administration.

Second, identify at least one aspect of the Obama administration's response to the economic crisis SINCE 2009 that reflects Lindblom and Wildavsky's science of muddling through.

Third, describe the political consequences of these government responses by the Obama administration and explain.

Economic crisis here refers to the economic recession (i.e., two successive quarters of zero growth in the economy), a $14 trillion deficit, a 9% rate of unemployment (twice this number for certain minorities), housing market failure, the need to lift the debt ceiling, individual bank failures, major losses of individual savings/investments, Wall Street Bailouts, etc..

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US government Response to the Economic Crisis:

One aspect of the US government's response to the economic crisis first discovered in 2009 that reflects rational choice behavior on the part of the Obama administration is the stimulus package that temporarily focused on increasing the people's disposable income by sending checks, reducing withholding and at the same time temporarily increasing tax credits. The objective of this aspect of the stimulus package was to jump start consumption in the economy. This response reflects rational behavior as it uses rational pluralist interest formation to maximize utility. In this case political actors interests in remaining in favor with the population experiencing financial hardship influenced this policy response in order to maximize political utility (TenHoor, 2009; Taylor, 2010).

One aspect of the Obama administration's response to the economic crisis since 2009 that reflects Lindblom and Wildavsky's "science of muddling through" is the use of the Fed's balance sheet to fund extraordinary and massive lending and securities purchase programs and in specific Fed's ...

Solution Summary

Specific aspects of the US Government and the Obama administration's response to the economic crisis is looked at and then reviewed for their political implications.

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