They Lit the Fire and Tried to Stop the Fire Trucks

Chuck Sheketoff

Because of smokescreens put up by opponents of the federal Recovery Act, many Americans have yet to grasp the true nature of the Obama administration’s efforts to stabilize the economy.

Enter Larry Mishel, president of the Economic Policy Institute (EPI), to clear away the smoke. In a little over a minute, he gives one of the best metaphors that I’ve seen explaining the Recovery Act.

Watch this great little video and discuss.

Comments

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    Chuck

    Given that you spend most of your days researching this stuff, I was wondering...

    Have you ever come across any conservative answer to what would have happened had there been no TARP/stimulus? I mean, all the experts world wide said we were days, if not hours, from a global economic collapse and the rights answer to this was to do nothing. Were they hoping for the world to go back to the stone age?

    Thx

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      Who is the "they" in your question?

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          You mean you are shocked by the GOPs flaming hypocrisy on big issues?

          The GOP voted for TARP (which was Bush's response). They know fully (at least most of them do) that we were indeed 48 hours (if not less) form full economic collapse. But since then, they have turned in flaming hypocrites because they believe their is political gold to mine in faux populist rage against "Wall Street bailouts" that they themselves know had to be made or the entire finical sector would have collapsed.

          It is no different than Dick Cheney railing against Kerry in the 2004 election for voting against DoD weapons programs in 1990 budget. The very same weapons programs Cheney, who was then Secretary of Defense, put on the chopping block because we had "won the cold war".

          In his first appearance before Congress as Defense Secretary in April 1989, for example, Cheney outlined $10 billion in defense cuts including proposed cancellation of the AH-64 Apache helicopter, and elimination of the F-15E ground-attack jet. Two years later Cheney's Pentagon budget also proposed elimination of further production of the Bradley Fighting Vehicle and targeted a total of 81 Pentagon programs for termination, including the F-14 and F-16 aircraft. And the elder President Bush said in his 1992 State of the Union address: "After completing 20 planes for which we have begun procurement, we will shut down further production of the B - 2 bombers. . . . And we will not purchase any more advanced cruise missiles."

          That as VP candidate he turned around in 2004 and attacked Kerry for voting to eliminate those weapons systems is the chutzpah on steroids. But since win has context and facts won political narrative arguments?

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    This is supposed to convince me that TARP was necessary? Not only is his metaphor weak, it's extremely biased.(I guess the "damn" was just a Freudian slip.)

    I'm not saying I disagree with TARP, but the level at which government should or shouldn't have been involved is a philosophical question. And each person's perspective is based on which theory/view of economics they hold.

    Personally, I believe TARP would've been more effective - and had longer-lasting impacts - if more of the money went to small businesses and entrepreneurs, rather than to deferred government maintenance and other projects.

    I understand the argument that TARP was only meant as a band-aid, or a short-term fix - but I'm of the opinion that investing in long-term job creation would've had a greater return and put more people back to work.

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      Actually, the video is more about the effects of the stimulus package, not TARP.

      TARP is a whole 'nother discussion and I will continue to stand by the unpopular opinion that it was absolutely necessary and would have been a disaster of huge proportions had it not passed.

      My feeling is that the problem is not that we had TARP and the Stimulus bill, it's that we didn't do enough after these to build on the benefits they gave us (again, the benefit being saving the building from burning down completely.) And for that I primarily blame the Republicans, who saw political opportunism as more important than actually doing something to help America get back on its feet.

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        Something surely had to be done. Buying back toxic assets without knowing exactly who had them and bailing out the back end (banks) instead of the front end (people with bad mortgage paper) may not have been it.

        A stimulus of 40% tax cuts ain't much of a stimulus.

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          Except the entire credit market was shutting down in the days before TARP was put together and passed. That was why the emergency stabilization had to come int. Businesses rely on lines of credit to keep functioning day to day. That's how they make payroll, and float accounts payable/receivable, through their lines of credit. That was beginning to be shut down. That is why we were staring into the abyss when this crisis came to a head.

          If the credit market shut down almost every sector and businesses would have been ham-strung, even those which have nothing to do with the mortgage or the derivatives markets.

          That's not to say that a both/and approach could not have been done, but the credit market side demanded that emergency stabilization actions take place on the financial/credit market side at a min. or the entire world economy (outside of the barter economy) would have shut down.

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    Rachel Maddow spent some time on her show this week about the attempt to renew the welfare to work program, which has enjoyed broad popular support from Dem and GOP governors. It has meant 250,000 low income people have had real jobs at relatively low cost. GOP senators blocked the funding renewal for the program in Sept. and then turned around and made speeches attacking the Dems for not renewing this program. Another example of every attempt to make the economy worse to win votes come election time. It doesn't get much more cynical than this. Those 250,000 workers and their families will be cast upon nothing so that the GOP can crow about unemployment and how bad the economy is. There's no way to describe that except pure evil.

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    To extend the metaphor... we may have done a reasonable enough job reducing the fire from an inferno to a smoldering mess of ash and debris, but we're a long way from rebuilding the building.

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    Is anyone surprised that Larry Mishel would defend the stimulus plan he largely authored? And that is a terrible metaphor. It is fun to use fire and total destruction but even the Great Depression saw only about a 30% drop in GDP.

    Mitchell said, "The GOP voted for TARP..." He might want to check his facts rather than make them up to fit his argument. (see - http://www.politifact.com/oregon/statements/2010/oct/18/kurt-schrader/kurt-schrader-says-more-republicans-democrats-vote/)

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      Thomas- Seriously? "Only 30% of GDP." Only? So you think the current 9% unemployment should be 27%? if it keeps government from stabilizing the economy? You are either a survivalist with a well-stocked cave or crazy.

      30% of GDP is what about $6 trillion? we have 14.8 million unemployed workers with a 1-3% decline, so I guess we'd be looking at a further 40 million or so unemployed at a minimum.

      yikes

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        Peter, Sorry if I was misunderstood. My comment was intended to show how silly the metaphor was. The metaphor implied complete (100%) failure. I agree with you completely that our current situation is very bad and I would not trivialize it in any way. I was calling into question both the prejudice of the author and the very poor choice of rhetorical tool he made. If Mishel really believes that his metaphor is accurate then I question his wisdom. If, as I suppose is the case, he is just trying to persuade people to his belief, I think he should stick to his chosen field and leave the political posturing to others. By becoming a political partisan he is undercutting his credibility and giving up what stature he had to be called an expert. In a similar way, i think that Mitchell is either totally misinformed, or being blinded by his desire for his political view to be 'right.'

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