United States

Tackling the “Great Recession,” the “Party of No,” and the emergence of the Tea Party movement

The economic downturn, widely referred to as the “Great Recession” (which officially dated from December 2007 to June 2009 in the United States), included the most dismal two-quarter period for the U.S. economy in more than 60 years: GDP contracted by 8.9 percent in the fourth quarter of 2008 and by 6.7 percent in the first quarter of 2009. Efforts to stabilize the economy included extending $80 billion to automakers Chrysler and General Motors, with the government assuming ownership of 8 percent and 61 percent of each, respectively; the Federal Reserve pumping well over $1 trillion into the economy by purchasing Treasury bonds; and the passage of a $787 billion stimulus spending measure. In the third quarter of 2009, GDP finally turned positive, gaining 2.2 percent on an annualized basis. However, unemployment, which had stood at 7.2 percent at the beginning of the year, hovered around 10 percent in early 2010. Moreover, the stimulative policies had helped balloon the U.S. federal deficit to $1.42 trillion, earning widespread criticism from Republicans.

economic recessionStore closings, one of the consequences of an economic recession, 2009.© Carolyn Franks—Whitestar1955/Dreamstime.com

Obama had entered office vowing to reduce partisanship in Washington, but he made little progress in that direction in his first year; indeed, the $787 billion stimulus package had been passed in the House of Representatives without a single Republican vote. With Democrats holding substantial majorities in both houses, Obama allowed congressional leaders to shape important legislation, and Republicans, claiming that they were being largely excluded from substantive negotiations on key bills, took what most Democrats saw as an obstructionist approach, earning the nickname the “Party of No” from liberal commentators.

In the meantime, a populist reaction emerged among libertarian-minded conservatives that was generally opposed to what they considered excessive taxation, to illegal immigration, and to government intervention in the private sector. This “Tea Party” movement gained steam during the summer of 2009, when town hall meetings were held across the country to debate proposed health care insurance reform, the signature issue of the Obama presidential campaign.