William F. Buckley Jr. once said his job was to "stand athwart history, yelling stop!" If more liberals took this advice, they wouldn't end up looking like two CNN anchors who just don't know when to say no to unsustainable deficit spending.
On the eve of a disappointing jobs report in which the unemployment rate rose to 9.1 percent, CNN International's Richard Quest plowed ahead like the helmsman of the Titanic in calling for "classic Keynesian economics" to salvage the foundering economy.
[Video embedded after the page break.]
On CNN's June 2 edition of "In the Arena," Quest raved about the virtues of government spending: "Fiscal policy is good old-fashioned government spending. And normally what happens, of course – classic Keynesian economics – you spend your way out of a recession. You pull money into the economy."
Taking Quest at his word, CNN host Eliot Spitzer responded: "So why don't the Republicans embrace it?"
"Don't take me down that road!" replied the indignant host of "Quest Means Business."
The thrust of the segment focused on the "twin disasters" of debt and unemployment that "threaten" the re-election of President Barack Obama, yet neither Quest nor Spitzer considered the irony of continuing Obama's failed economic policies to save Obama's failing presidency.
Contrary to Quest's assertion that Keynesian economics "totally works," economic data shows the misery index, which is calculated by adding the unemployment rate to the inflation rate, has risen sharply to 12.33 since Obama took office in Jan. 2009. Under President Bush, the misery index, even in the immediate aftermath of the financial crisis, never eclipsed 8.66.
The CNN International anchor would also do well to remember Obama's promise to the American people that if Congress passed his Keynesian "stimulus package," the unemployment rate would not exceed 8 percent. At the time, Obama's Council of Economic Advisers predicted the unemployment rate would dip to around 7 percent by 2011.
Quest might contend that he was not advocating for more of the same, but for renewed emphasis on a long-term deficit reduction plan coupled with additional Keynesian "stimulus." But instead of citing the Ryan plan, Quest merely lamented, "...the problem in the United States at the moment is there isn't a plan."
Uninterested in the deficit side of the "twin disasters" coin, Quest focused all his bombast on ratcheting up federal spending to rescue the economy and the president– spending that for the last two years has only exacerbated both fiscal disasters and imperiled Obama's re-election prospects.
A transcript of the segment can be found below:
In the Arena
June 2, 2011
8:42 p.m. EDT
ELIOT SPITZER: No president has ever been re-elected when facing the kind of unemployment we have in the country right now. But that's not the only crisis facing Barack Obama. There's also the monster deficit. Take a look at these twin disasters. The federal debt has spiraled to a terrifying $14 trillion and counting. And more than 20 million people are out of work, underemployed or have just plain given up looking for a job. Worse yet, fixing one problem could aggravate the other. Joining me now to talk about all of this is the one and only Richard Quest, host of CNN International's "Quest Means Business." And usually Richard, you're far away in London when we get to chat. I'm thrilled you're here in New York.
RICHAR QUEST, CNN International host: Thank you.
SPITZER: So you got these twin problems, unemployment and the deficit. Usually you solve one by exacerbating the other. How do you make sense out of this?
QUEST: You can't do both at the moment. And in the battle between deficit and unemployment, at the moment unemployment is probably the most serious problem.
SPITZER: Stop and explain why.
QUEST: Well, because you've got to get people back to work to create economic activity. As long as you have the threat of unemployment and people worried about their jobs, you have a crisis of confidence and the spiral goes down even further. Now, but, the urgency on the deficit. You've got two deficits. You've got the total federal deficit, $14 trillion.
SPITZER: The $14 trillion.
QUEST: And you've got the annual budget deficit.
SPITZER: About $1.3 trillion.
QUEST: Right. Now, you don't actually have to start doing too much with the annual deficit. You don't really. All you've got to do is put yourself on the path of a program so the markets know where you're going.
SPITZER: You're trying to thread a needle brilliantly. I want to go back one step. Explain to folks how you would ordinarily deal with the problem of high unemployment. What would you do? What are the levers the government would use?
QUEST: Well, you do the two. Monetary, get interest rates down into the basement.
SPITZER: Some people borrow more and spend?
SPITZER: Where are interest rates right now?
QUEST: They're already in the basement.
SPITZER: They're at zero. You can't get any lower.
QUEST: There's a difference between what the banks are paying when they're borrowing from the Fed and the money market rates. And what you and I are paying on our credit cards.
SPITZER: You think so, you noticed that.
SPITZER: What are we paying on our credit cards?
QUEST: We're paying much higher than they are.
SPITZER: That's not fair, is it?
QUEST: Well, the Fed has nothing to do with it.
SPITZER: All right. Now you tell me.
QUEST: That's how the banks are managing to repair their policy.
SPITZER: Okay. So you've got monetary policy and then –
QUEST: And fiscal policy.
SPITZER: What does that mean?
QUEST: Fiscal policy is good old-fashioned government spending. And normally what happens, of course – classic Keynsian economics – you spend your way out of a recession. You pull money into the economy.
SPITZER: Does it work?
QUEST: Of course it does.
SPITZER: So why don't the Republicans embrace it?
QUEST: Don't take me down that road.
SPITZER: All right. I'll leave the politics out of it for now.
QUEST: Of course, it works. It totally works if you've got money to spend and at the moment you have a budget deficit of $1.3 trillion.
SPITZER: So, but we can't borrow anymore?
QUEST: You can borrow more and what's fascinating in the last 24 hours is the way long-term interest rates and 10-year bonds, then they're interest rate came down under three percent for the first time in many months. That tells me, that tells me that the market isn't too worried just at the moment about the U.S.'s ability –
SPITZER: Okay. You're saying something hugely important I want people to focus on. What you're saying is ordinarily, if you have high unemployment, the government spends money to stimulate the economy.
QUEST: They want to pay more.
SPITZER: A stimulus package.
SPITZER: For lack of a better word. The way it gets the money because there's no tax revenue, because the economy is bad is to borrow it.
SPITZER: But normally if the market was saying we don't trust you to pay it back, interest rates would go up.
QUEST: By a lot.
SPITZER: But since interest rates are going down, you're saying the market is saying the government needs to borrow.
QUEST: Those are the technical factors. The bears are out. There are people who are short.
SPITZER: Wait, what are we talking about bears for?
QUEST: Forget the bears for the moment. They're out. The bond market is basically re-telling us that inflation is not a worry at the moment.
SPITZER: Right. Explain because inflation would drive interest rates up?
QUEST: Up, absolutely.
SPITZER: All right.
QUEST: Because they kill inflation.
QUEST: Inflation is not a worry at the moment but could be.
QUEST: Secondly, it's telling us that equities are not going to be –
SPITZER: Stocks, right?
QUEST: Stocks. Shares.
QUEST: They're not going to be the great benefit that we thought they might have been. Even though the Dow is up 20 percent over 52 weeks. The point I want to make is we can dissect this like a sweater. We can pull the threads and watch it come apart. However, this economy is wading through treacle. It is in some of the most –
SPITZER: That must be a British phrase. What does that mean?
QUEST: Well, you know, it's syrup. It's wading through –
SPITZER: Oh, OK. OK.
QUEST: It's stuck in the mire. It's difficult to get –
SPITZER: Stuck in the mire, another British phrase. We'll let you use it.
QUEST: For the second time in as many years, it's a soft patch. And the problem is, all the traditional ways of getting out of that are not valid.
SPITZER: But I want to come back to what you suggested earlier where you did thread the needle. You said, look, you've got to deal with the long-term debt but you can push that issue down to years three, four and five as long as the economy comes back?
QUEST: No, no. You've conveniently forgotten one little bit that I said.
QUEST: Providing you've got a plan. And the problem –
SPITZER: Yes, we're creating –
QUEST: Well, no, because the problem in the United States at the moment is there isn't a plan.
SPITZER: So you create the plan for the deficit.
SPITZER: And then the other piece of it is you can go with some sort of stimulus now.
SPITZER: So you get the unemployment rate down. You generate the revenue. You pay down your debt in the long term and that's the objective.
QUEST: And you take the confidence. You give people confidence so they're not worried about their jobs. This is really about the corrosive effect of joblessness, worries about debt, and, of course, how people are worried about –
SPITZER: We haven't even gotten to the housing crisis. We're going to keep you here on the states, this side of the ocean so we can deal with that one either tomorrow or next week. Richard Quest, it is always great to talk to you. Stay around. Thank you.
--Alex Fitzsimmons is a News Analysis intern at the Media Research Center. Click here to follow him on Twitter.