Media, Obama Gearing Up for 'Stimulus, The Sequel'
"Fool me once, shame on you; fool me twice, shame on me" That's a saying once bungled by President George W. Bush, to the loud delight of the liberal media. But that same media should keep it in mind as Washington mulls a second round of stimulus spending.
A July 7 Bloomberg story by Shamim Adam reported that Laura Tyson, an economic advisor to the Obama administration, had put forward the notion that the $787 billion approved in February was "a bit too small," and that government should consider a second stimulus package "focusing on infrastructure projects."
Although Senate Majority Leader Harry Reid, D-Nev., maintains there is "no showing that a second stimulus is needed," other members, including House Majority Leader Steny Hoyer in a July 7 Politico article, say it shouldn't be taken off the table.
As trial balloons are being floated for a second stimulus, some familiar faces that pushed the first package are making the rounds once again.
Economy Worse Than They Thought?
In a July 5 appearance on ABC's "This Week with George Stephanopoulos," Vice President Joe Biden may have fired the first salvo in a battle for a second round of stimulus spending when he said the administration had "misread" the economy and he did some second-guessing of the government's policy maneuvering.
"And so, the truth is, there was a misreading of just how bad an economy we inherited," Biden explained "Now, that doesn't, I'm not laying this on anybody - it's now our responsibility. So, the second question becomes, did the economic package we put in place, including the Recovery Act - is it the right package, given the circumstances we're in? And we believe it is the right package, given the circumstances we're in. We misread how bad the economy was, but we are now only about 120 days into the recovery package. The truth of the matter was - no one anticipated, no one expected, that that recovery package would in fact, be in a position at this point, of having to distributed the bulk of the money."
Obama took it a step further in an interview with Fox News on July 7 from Moscow, suggesting a second stimulus hasn't been ruled out.
"I don't take anything off the table when unemployment is close to 10 percent and a lot of Americans are hurting out there," Obama said.
At the same time, Moody's Economy.com chief economist Mark Zandi, who played a prominent role in the media during the previous stimulus debate, has re-emerged, championing more Keynesian economics to push the economy back in a positive direction.
Zandi appeared on CNBC's July 7 "Fast Money" and explained the economy was far worse off than before. He contended that the Democrats' mentions of more stimulus weren't trial balloons, just prudently leaving the options on the table in case things didn't go as forecasted.
"I think trial balloon is too strong of a word," Zandi said. "I think they're nervous. They know everyone else is nervous and they want to let everyone know that they're worried about this. They're thinking about this. They're not out of bullets if things don't go according to how they expect them, they'll come back with something. But I don't think at this point it's trial balloons. They're saying, ‘Hey, we got a forecast and if we don't stick to the forecast we're going to come up with something else.'"
However, the economic consequences proponents warned of, should the $787-billion stimulus be rejected in early 2009, have come true anyway. The unemployment rate hit 9.5 percent, nearly the double-digits some economists warned about. And a sinking consumer confidence number suggests the Obama administration will indeed have to come back with something.
That, according to liberal Nobel Prize winning economist and New York columnist Paul Krugman, is enough reason to go forth with a second stimulus. In his July 3 Times column, he argued jobs data settled the matter, chastised the GOP for opposing more spending, and offered advice for the Obama administration.
"What I don't know is whether the administration has faced up to the inadequacy of what it has done so far," Krugman wrote. "So here's my message to the president: You need to get both your economic team and your political people working on additional stimulus, now. Because if you don't, you'll soon be facing your own personal 1937."
And that was the sort of rhetoric being doled out by policymakers and media voices during the first stimulus debate. A Business & Media Institute study showed two networks, ABC and NBC showed particularly strong support for the president by relying on pro-stimulus voices by a more-than 2-to-1 ratio.
Remember Stimulus, Part I?
Flashback to Feb. 9, 2009 - It was President Barack Obama's 15th day in office and he used the bully pulpit by penning an op-ed that appeared in The Washington Post adamant about the passage of the first round of stimulus.
"What Americans expect from Washington is action that matches the urgency they feel in their daily lives - action that's swift, bold and wise enough for us to climb out of this crisis," Obama wrote. "Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."
Lucky for the president, he wasn't alone in promoting the need for the stimulus. The media echoed his warnings of the economic Armageddon if the stimulus bill failed to pass promptly. MSNBC's Contessa Brewer sounded the alarm in a Feb. 6 interview with Sen. John Barrasso, R-Wyo.
"But if it fails, if it fails and our economy implodes and we see ourselves stuffing cardboard back in our shoes like they did in the Depression era, are you willing to put your name behind that?" Brewer asked.
And Brewer's colleague, MSNBC host and liberal talk show host Rachel Maddow called GOP arguments against the stimulus "bullpuckey" on her Feb. 6 program. The stimulus, she said, would create a demand for "stuff" that would get the economy back on track.
"You know, I hate to be the one to call bullpuckey here, but bullpuckey," Maddow said. "We're in this economic crisis because people aren't buying enough stuff. There's supply but there's no demand. People aren't buying. Every job that gets lost, every day a job is lost, means that someone's got even less money to buy stuff, which means that less stuff gets bought, which is worse for business, which begets more unemployment. This is something that snowballs. The timing does matter. There is urgency. There is actually, literally, scientifically, economically, a big need to hurry. It's not a matter of perception. It's the truth."
But, for all their campaigning and vivid depression-era imagery, the stimulus they sold to the public hasn't born fruit.
Fail: Government Spending as Efficient Stimulus
Whether it's the post office or the state DMV, big government bureaucracies are notorious for not operating at an efficient pace. And the same is being proven true with the original stimulus.
Despite the immediate knee-jerk cash-dump the left campaigned for and got, the money is slow to help the economy. According to the Congressional Budget Office, only about a tenth of the money has been spent so far, and only about half of it will have been spent by October 2010.
The mainstream media are beginning to notice.
A July 2 ABC "World News" segment reported the stimulus wasn't all it was advertised, as unemployment figures released by the Department of Labor's Bureau of Labor Statistics caused a ripple throughout the financial markets.
"Today, the government reported another 467,000 jobs lost in June, taking unemployment to 9.5 percent, and that's the highest level in more than a quarter century," "World News" anchor Charles Gibson said. "The stock market fell as a result. The Dow Industrials and the NASDAQ each lost more than 2.5 percent. The rising unemployment raises questions about the economic stimulus, which was supposed to create jobs."
And the inefficiency of the first stimulus is something CNBC's John Harwood noted when he suggested perhaps tax cuts might have been a more effective way to tackle the economic malaise.
"Well, I think they're hoping that this summer period is when they can in fact ramp up the spending," Harwood said on CNBC's July 6 "Squawk Box." "It's not easy to spend the amount of money that they appropriated, $800 billion, that quickly."
The solution to get it "out the door" might have been tax cuts - to stimulate the economy in a timelier manner.
"Can they be faulted for not getting more money out the door earlier?" Harwood said. "Certainly if you think tax cuts were the best option, you could have gotten more of that money out quicker."
However, Harwood explained now is the make-or-break time for the $787-billion stimulus bill that passed through the House and Senate with only three Republican votes (one of which, Sen. Arlen Specter, Pa., switched parties after the vote).
"They have an argument that direct government spending is more stimulative," Harwood said. "The summer months, when you got prime, sort of construction season is when they're hoping to get more of it out. So now is their time to prove themselves."
The question remains: If Obama's economic team and policies fail to prove themselves, will the media report it honestly? And if they do fail, will the media help him sell a second round of failure?