While much of the national media was focused on a Christmas Eve Senate vote to pass health care reform legislation, the Obama administration's Treasury Department was tending to other business that will have serious implications for the U.S. economy. But did anyone notice?
As Zachary Goldfarb reported for The Washington Post on Christmas Day, the Obama Treasury said it would lift the limits on what the federal government could provide in "emergency aid" to Fannie Mae and Freddie Mac - without seeking permission from Congress. That led CNBC CME Group floor reporter Rick Santelli to ask if anyone noticed and/or realized what was really at stake with this move during the Dec. 29 broadcast of "Squawk Box."
"Well you know, I guess the one thing when I was off, working on the wallpaper, working on the floors was the Freddie and Fannie backstops, caps, ceilings were removed," Santelli said. "And you know what - you hear all of us this talk about how well some of the government programs are working. And once again, what we need to talk about more - we need to zero-in like a laser beam how many hundreds and hundreds of billions of dollars of slop are being shoveled in to these conservatorships. And now, look for large-scale buying of more big slop because they're not going to have any limit to the amount of junk they can put in a pig pen."
The question is - did anyone notice on the mainstream broadcast network news media? Santelli argued it should be at the forefront, but instead the importance of the fate of the former government-sponsored enterprises had diminished.
"This should be the number one story," Santelli said. "You know the networks would never cover it. Fannie Mae to the networks is like, you know, candy you buy on Valentine's Day."
Santelli attempted to put the amount of money in perspective by comparing government expenditures to the big deal being made out of the news Hollywood passed $10 billion at the box office in ticket revenue, especially under the current economic circumstances. As he explained, that same amount of money is nothing in terms of federal government spending.
"I don't look at it in the form of a quantitative limit. I look at it as though the fact is - is that it can go pretty much anywhere and nobody talks about it" Santelli said. "[A]nd the debt ceiling being raised - I don't know that the average viewer can put their hands around - you know, for all of '09, a record year for Hollywood, you know what gross ticket sales are going to be? Gross ticket sales are going to be gross ticket sales - $10 billion. We write a check for $10 billion like it's nothing, like it's a dollar. It's just unbelievable how we've all become anesthetized to these numbers. It's flabbergasting."
And this sort of desensitization to billions of dollars will have consequences down the road, Santelli said. They will come in the form of higher taxes and inhibit economic growth.
"In the end, can you not see where this is going?" Santelli said. "The cost to service all of this wasted dough is going to come back to haunt us in the form of higher taxes and whether you like to pay taxes or not, it's really going to be a stranglehold on production and the economy. They might have to start taxing the people in Hollywood, you know for making all these hundreds of millions of dollars for a picture, God forbid."