While Krugman's book makes the case that we still need to go full speed ahead, Zandi is more or less declaring a job well done. He's not fully satisfied with the way everything turned out, or the way all programs were structured, but he thinks the response was basically correct. Zandi is also of the opinion that the American economy is set to spring back and ready for strong future growth.
He describes each of the major actions the government took - TARP, the auto bailout, the stimulus bill, and so forth - and argues that while flawed in many important respects, these programs were invaluable in keeping major sectors of the economy afloat. So how persuasive is his case? Not fully, but it's respectable. I think his biggest weakness is his lack of real response to the counterpoints he mentions. For example, he dedicates a chapter to the bailout of the auto industries. He then turns his attention to some real concerns raised by the government's actions:
In contrast with Washington's bank bailout, aid to the automakers would have a net cost to taxpayers. How much would depend on when the government sold its remaining GM shares, but a reasonable estimate put the total bill at approximately $20 billion. There may have been other costs that were harder to quantify. First, any industry bailout raises the specter of moral hazard: Would businesses and investors take on more risk than they should, thinking Washington will catch them if they fall? Second, the government muscled ahead of other creditors in GM's and Chrysler's bankruptcies. Would this precedent discourage lenders from once again extending credit, raising its costs to future borrowers?All legitimate and important questions - which is why it's a shame that Zandi's response to them is just kinda nothing. He instead reassures the reader that "the price tag would have been much larger and the questions more difficult had the government done nothing." But how does he know? If I said "we have two choices - A and B. I have no idea what the price for B will be, but A's is higher," we'd all recognize how unsatisfactory that logic is. But that's what Zandi gives us throughout his book. Giving some clearly explained reasons to think the costs were worth it, rather than just saying they were, would have done a lot to improve the strength of his arguments.
Finally, there was the threat of political interference in business decision making. Did labor unions receive an outsized ownership stake in the restructured automakers as a reward for backing Democrats? Would GM have the same commitment to it's electrical car, the Volt, if not for the administrations interest in green energy? Was GM picking it's suppliers and dealerships based on which congressional districts they were in? The auto bailout costs lots of money and created many questions.
It's clear that Zandi has a good deal of faith in the abilities and intentions of policy makers. Early on in the book he notes "Of course there is a line between encouraging prudent risk taking and igniting counterproductive speculation, and at times the government has crossed it - but not often enough to believe that reasonably skilled policymakers can't tell the difference." Maybe, maybe not.
Zandi does, however, show a distaste for the degree of the governments current level of involvement in finance and the auto industry, arguing that these were justified by temporary necessity but now it's important that the government start scaling back its involvement. For example, he tells us "Most important was the risk of politicizing GM's business decisions. For example, the Obama administration had loudly touted the Chevrolet Volt extended-range electric car, but GM's CEO termed the Volt a 'political football.'" It will be interesting to see how many more strings the government attempts to tug, and if this affects Zandi's confidence in the skills of policymakers in the future.
If Russ Roberts has read this book, I'm sure his blood pressure took a spike when Zandi wrote "As a newly minted economist many years ago, I believed that everything about the economy could be measured accurately by data, assessed with statistical and mathematical tools and represented with precision by equations that relate one part of the economy to another." Zandi has, thankfully, outgrown this view.
Overall, I'd give this book high marks - if you're looking for a good defense of all things Keynesian, leave Krugman's book behind and pick up Zandi's instead.