I was in the East Room of the White House last night for the press conference. I was, alas, not one of the 13 journalists given an opportunity to ask the president a question, though I had a real zinger ready (Mr President: don’t you think poor people should be doing more to help out Wall Street?).
Anyway, a few scattered thoughts:
1) Not one question about the trillion-dollar toxic asset program. This really stunned me. On the very slim chance I was called on, I had prepared a few questions about the rescue but figured that if I were called on the topic would be pretty exhausted by then, so also prepped a few about the defense budget and incarceration rates. But remarkably, no one asked about it. Why? My sense is that most political reporters (the people who were in the room, and got to ask questions) can’t really make heads or tails of it either way. In their defense: it’s complicated! I’m struggling to make sense of it, too. But it just seems crazy to me that the day after the White House announces a very complicated, high stakes and possibly expensive plan to remove toxic assets from bank balance sheets, the President is not asked about the details of the plan.
2) Why the president needs authority to take over non-bank financial institutions. I thought the first question, from the AP reporter was pretty good: why should we trust the government to take over big non-financial institutions. I also thought the president’s answer was fairly smooth and fluent. But upon close inspection, it didn’t make much sense. He praised the FDIC’s capability to take over insolvent depository institutions, and their competent management of the process recently. But of course, the five largest banks, the one’s many think are insolvent and need to be nationalized are all (thanks to deregulation!) depository institutions. It would seem to me the FDIC can already take the over. As for AIG, he noted, correctly, it’s an insurance company and that there was no authority to take it over, which is part of the reason the situation’s a mess. But authority or no, we *did* take it over. The Federal Reserve purchased 80% of the equity in the company. So under what authority did they do that? This is not to say I don’t think the WH is totally correct to want the authority in advance to be able to take over firms that pose systemic risk. I just thought the explanation last night was a bit muddled.
3) The press’ obsession with deficits. Look: deficits are important. You can’t always and forever borrow a ton of money at low rates and keep amassing debt. Fine. Stipulated. But I continue to be amazed by how obsessively the press focuses on the deficit and debt. During he campaign, you had debate moderators attempting to browbeat the candidates into embracing totally crazy-ass neo-Hooverism in the face of a massive drop-off in demand. Now you have reporters pressing the White House on deficit projections for the out-years based on very low GDP growth projections. (If growth is as low as the CBO says, we’ll have bigger problems than a deficit). Part of the reason for this is that “fiscal conservatism” is a weird Beltway religion (except when defense is the issue). Even though it’s meaningless, and, at its core, reactionary (it’s a way of saying government is too big), it is just part of the general worldview/frame of political reporters.
Second, there’s the problem that we are operating under fairly unique macroeconomic circumstances, what Paul Krugman calls “depression economics.” When you’re in the midst of this kind of demand collapse, you really /can/ have a free lunch, Milton Friedman’s infamous dictum notwithsanding. The press hasn’t figured this out yet.
Finally, the complexity of the substance of a $3.6 trillion budget is just staggering. To ask a question about the policy mechanisms and implications on the spending or revenue side of it, you have to have some expertise and facility with policy. Most political reporters don’t have a ton of that. (And that’s not necessarily a knock. If you’re a daily political reporter, you’re working pretty hard just following the day’s news cycle and producing something for your outlet) What everyone can understand is a simple figure of how much more the government is spending than what it’s taking in.