CNN's Velshi: Stimulus Didn't Fail

CNN's business guru Ali Velshi argued that the stimulus did not fail, in a testy exchange Monday with CNN contributor Dana Loesch that followed President Obama's jobs plan speech.

"It failed!" exclaimed Loesch when Velshi mentioned the stimulus, to which he excitedly replied that it did not fail. That set off a back-and-forth between the two pundits, where Velshi argued that unemployment could have been higher without the stimulus – a rather tired hypothetical thrown around by liberals.

Velshi also claimed that Americans were responsible for being duped by a conservative "cuts-only" approach to the deficit. "Americans have to be responsible for the fact that they have fallen for this line that the only way to reduce deficits is to cut spending," Velshi contended. Anchor John King added that such a narrow approach means that "'compromise,' 'consensus' has become a dirty word."

CNN contributor John Avlon argued in favor of Obama's jobs plan, with a compromise between the President and Republicans. "I do think people do feel the urgency now on the economy," he stated. "And when the President put forward a plan that was entirely bipartisan policy proposals, he was speaking to them."

"And so it becomes very difficult, I think, for Republicans simply to write this off as stimulus, too. Because people are feeling the economic pain, they want to see Washington be able to take action, which means putting some of the hyper-partisanship aside," Avlon added. "And then it really does put pressure on the Republicans as well. Can they politically oppose a plan that would create incentives for companies to hire returning Gis?"

A transcript of the segment, which aired on September 12 at 10:36 a.m. EDT, is as follows:

[10:36]

JOHN AVLON, CNN contributor: I do think people do feel the urgency now on the economy. Independent and swing voters in particular. And when the President put forward a plan that was entirely bipartisan policy proposals, he was speaking to them. And so it becomes very difficult, I think, for Republicans simply to write this off as stimulus, too. Because people are feeling the economic pain, they want to see Washington be able to take action, which means putting some of the hyper-partisanship aside. And finally, there's this. How cynical does it look for Republicans to oppose tax cuts, simply because they come from President Obama? That's a real practical problem, it's also a policy problem. So I think there is an obligation to act.

[10:46]

ALI VELSHI, CNN chief business correspondent: And even if you did settle it, this recession that we came out of, in theory, in the middle of 2009, was so deep and so immense and so global that you are not going to see a response from it. There are some people who have just come to accept the fact that this was long, it was deep, and it's going to take a long time to recover. The Federal Reserve had predicted that we would – and the White House – the White House had predicted that we'd get back to pre-recession unemployment levels, around 5 percent, by 2013. And boy, when we heard that, we thought really, 2013, that's a long way away. Now they're talking about 2017. The fact is, we're going to have to find something else. And you're right, it's not just politics, it's real policy.

[10:55]

VELSHI: You know, here's the problem, is that we are treating this – and to some degree, we have to hold the Tea Party responsible for this – we're treating it like it's a zero-sum game. The economy is not a balance sheet. The economy is dynamic, and if more people are working and paying taxes and demand is created, all of a sudden your deficits can reduce much more quickly than they can in a slow-growing, stagnant economy. So while we talk about cuts offsetting spending, that makes sense for most people. It makes sense in your household budget. This is why this isn't a household budget. If you can do something – if you can invest – invest, spend, whatever you want to do to get people to do more work, you can bring that deficit down faster than you can with just math.

[10:56]

VELSHI: Americans have to be responsible for the fact that they have fallen for this line that the only way to reduce deficits is to cut spending. In fact, the best way to reduce deficits is to grow the economy.

JOHN KING, CNN anchor: And the result of that is that "compromise," "consensus" has become a dirty word.

[11:10]

VELSHI: And I think that this is the problem, that we've got these – the unemployment rate is a lagging indicator. It's very hard to have an impact on that in the near future. And it's going to be very hard even if this – what the President proposes – passes in some form and succeeds – it may be a year, might be 18 months before we start to see this. We're in a dire situation.

[11:12]

AVLON: So by putting forward a balanced, bipartisan plan, of things that Republicans and Democrats have been able to agree with in the past, the President's really upping the ante. And then it really does put pressure on the Republicans as well. Can they politically oppose a plan that would create incentives for companies to hire returning GIs? I mean, there's a cost to that kind of simply opposition approach as well. So this is a high-stakes political moment, it will be a test of the President's muscle. Whether folks do pick up the phone, call and e-mail. Because this is a plan that has a bipartisan lineage. And the President's been criticized for not leading aggressively enough in the past, over-delegating to Congress. Well here's a specific plan with a bipartisan basis. So it really becomes a question of whether Republicans will be able to accept yes for an answer, and if they simply oppose tax cuts for the first time because they come from the President, I think people will see through that.

[11:15]

VELSHI: We did have the stimulus. There's this –

DANA LOESCH, CNN contributor: It failed!

VELSHI: No it didn't fail!

LOESCH: It did fail.

VELSHI: No, there's this – and you know what it goes through –

LOESCH: Then why do we have 9.1 percent unemployment?

VELSHI: And you know what you're going to hear? You're going to hear Rick Santorum saying that it lost jobs for America. That's just wrong.

LOESCH: If it were successful –

VELSHI: It didn't create as many jobs as anyone would have liked, and to have done that so fast –

LOESCH: Why do we still have unemployment over nine percent? If it was successful – why?

VELSHI: But how do you know unemployment wouldn't have been 12 percent? How do you know what would have happened if not for stimulus? There's no study –

LOESCH: The promise was that if this passed, we were going to have unemployment eight percent. So it failed. On that premise alone, it failed.

VELSHI: And I think – not only is that promise clear – the failure of that promise clear – and I think that's probably why President Obama didn't mention how many jobs this is going to create. But the reality is– I think we have to understand that they did promise they would do something. Whether or not it was successful wasn't the breaking of a promise. It may have just been an ineffective – or a stimulus that was not as effective. So if somebody were to come forward with that silver bullet and say this is how you do it – but simply saying cutting taxes and then not supporting a plan that does actually cut taxes, how does that help you?

Matt Hadro
Matt Hadro is a News Analyst at the Media Research Center