Santelli Takes On Liberal Economist Robert Reich on $1.1 Trillion for IMF

April 3rd, 2009 6:29 PM

For the second time in a week, CNBC's Rick Santelli faced down one of the standard-bearers of liberalism.

First, he explained to Huffington Post editor and founder Arianna Huffington on the March 31 "Squawk Box" that markets are more efficient in correcting economic hardship, in the banking and housing sectors. On CNBC's April 3 "The Call," Santelli took on University of California at Berkeley economics professor and former Secretary of Labor for President Bill Clinton, Robert Reich.

According to Reich, the agreement brokered between President Barack Obama and other G20 leaders - to give the International Monetary Fund (IMF) $1.1 trillion - was positive and should be celebrated.

"I just want to respond to this notion - I mean, a trillion, $1.1 trillion for the IMF, for poorer nations is a very, very major victory," Reich said. "I mean, these poor nations have been taking a beating. They're half of the global economy. If they don't come back, we are all in trouble." 

Reich, for the Talking Points Memo blog on April 3, declared the current economic conditions were a Depression. "This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on a very large scale.

However, Santelli, who rose to prominence earlier this year when he railed against President Barack Obama's policies on live TV from the floor of the Chicago Mercantile Exchange, disagreed with the notion the only way to come out of these economic conditions would be to throw money at poor and developing countries.

SANTELLI: But you're assuming it's going to be spent well, Mr. Reich and we really don't know that.

REICH: But what is the alternative, Rick? I mean, you assume any spending, you assume all spending is bad.

SANTELLI: The alternative is to know how it's going to be spent, before we cheerlead about it.

REICH: I mean we are now in a deep, deep hole. This is not a Great Depression, but this is moving in the direction of the Great Depression.

SANTELLI: It's nowhere near a Great Depression. Eight-and-a-half percent unemployment.

REICH: If we don't have - consumers are not going to spend, investors are not spending. The global economy is at a standstill.

SANTELLI: I hope the whole world saves because that'll throw into question spending money. What if everybody saves, Mr. Reich? That would be a good thing. It wouldn't be a good thing if your theory is that spending is going to reflate credit, which put us back at this point.

REICH: Let me just respond to this. This is a very important point. Let me just respond - please. We need government spending now because there is nobody else - consumers and investors, businesses, exports. No other place in the globe is actually generating the aggregate demand to get jobs back. I mean, Rick Santelli - you look at today's job numbers - you tell me that if we just have more savings or we have tax cuts, or we have more of a budget balance, that that is going to get jobs back? That is just bizarre, that is just Herbert Hoover.

SANTELLI: I don't think anything is going to get jobs back for a while. We have to heal.

Santelli has been a hit with conservatives staging tea parties to protest the bailout culture in Washington throughout the country.