"Republicans urge Obama to let banks fail." That's how Financial Times and other news outlets describe statements by Senators John McCain & Richard Shelby, who spoke on Sunday news talk shows. Shelby said,
"We bury the small banks. We've got to bury some big ones and send a strong message to the market."And McCain argued that the administration should "let these banks fail." Is it any wonder that the public doesn't trust the GOP regarding the economy, when two senior Republicans come out with such tone-deaf pronouncements?
Hearing a government official advocate "burying" banks or letting them fail, does not inspire confidence in the average citizen. It sounds like government sitting idle in the face of disaster. It scares people. This should be obvious to politicians like Shelby & McCain, but apparently it isn't. We already know that John McCain has no clue how to talk about the economy from his presidential run. Why can't these guys get some decent political advice on how to put out a message?
How about saying something like this instead:
We need to stop giving handouts to corporations, especially banks that mismanaged their assets, took unnecessary risks, and helped bring on the economic crisis we now find ourselves in. Instead of rewarding the bad behavior of banking executives and big investors, we need to make sure individual depositors are protected, and focus on shoring up the financial system as a whole.
It amounts to the same thing -- let the bad banks fail. But it emphasizes things that are politically viable. People don't like hand outs; they don't like wasting taxpayer money, and they especially don't like rewarding people they see as greedy, risk-taking bankers. If you put it that way, while at the same time making it clear that depositors will be protected, you might get a lot more traction with the public.
It's not just failure to communicate. Boehner just said something completely dumb, saying that the government should "tighten its belts" together with the population. In other words, official Republican policy seems to be that the government should splurge when the economy's up, and contract when it's down.
ReplyDeleteSpending money when we have money to spend, and spending less when we have less money. Yeah, that sounds real irrational. Amazingly enough, many people do not accept the theory that more borrowing and spending is going to help the economy.
ReplyDeleteBut the economy never did have the money to spend! Every boom ends. That's the point of countercyclical policy - you conserve when the private economy is booming, so that you have money for stimulus when it's contracting. The idea that booms last forever is a delusion that leads to deficit spending in times of growth. In the US, the current debt to GDP ratio is 77%, and is one of the main worries of many stimulus skeptics. In Canada, which is about to run its first budget deficit since 1997, it's 35%.
ReplyDelete"you conserve when the private economy is booming, so that you have money for stimulus when it's contracting. "
ReplyDeleteWhat if you don't accept the idea that spending is a stimulus?