Hendren gave three soundbites to Cato economist Dan Mitchell, who pointed out that “government spending doesn’t work very well,” how “bad government policies got us into this mess,” and that while letting the free market run its course might be painful, “we can make that transition much quicker and have a faster and stronger recovery.”
Hendren termed the free market economists “do nothings,” but suggested they may be influential enough to at least block a little of the runaway spending. Hendren told co-anchor Bill Weir: “Now, the do-nothings know they’re going to lose this debate. But they’re hoping to hold down the size of the stimulus. As one economist told me, I can see them cutting $100 billion, and that ain’t chump change. Bill?”
The hook for ABC’s story seems to have been the big full-page newspaper ad Cato ran the previous day in the New York Times and Washington Post. The ad begins by quoting President Obama declaring that everyone agrees with him -- “There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy” -- followed by large letters proclaiming: “With all due respect Mr. President, that is not true.”
Over the signatures of more than 250 economists, the Cato ad declared:
Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's ‘lost decade’ in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.Prior to the invasion of Iraq, the networks loved to champion anti-war dissenters as offering a valuable minority opinion on an important issue, but other than this one ABC story there has been virtually no acknowledgment by the networks of those like Cato’s Mitchell who argue that the Democrats’ big government spending plan will delay our eventual recovery from this recession, not “stimulate” the economy to renewed prosperity.
MRC intern Mike Sargent noticed the segment appeared at about 7:12am ET on the January 31 Good Morning America and provided this transcript:
BILL WEIR: Turning to politics now. And in his weekly radio address, President Obama is once again urging Congress to pass his stimulus plan ASAP. The Democrats’ bill didn’t get a single Republican vote in the House, and now faces a skeptical Senate, some who say the best stimulus is no stimulus. ABC’s John Hendren is in Washington. Good morning.
JOHN HENDREN: Good morning, Bill. The debate on Capitol Hill has been all about the size of the stimulus. Should it be merely big? Bigger? A behemoth? But there’s another school of thought that’s getting less attention. Call them the do-nothings. In these free-spending times, there’s a growing movement among economists who say the best way out of this recession is to do nothing. Nothing at all.
UNIDENTIFIED ECONOMIST: I think there’s nothing wrong with doing nothing.
HENDREN: Nor do the 250 other economists who signed on this week to this ad in The New York Times and Washington Post.
CATO SENIOR FELLOW DAN MITCHELL: Government doesn’t work very well. We tried big spending under Bush. It didn’t work. We tried big spending under Hoover. It didn’t work.
HENDREN [While an animated Uncle Sam pumps up a large green ball with a dollar sign on it]: President Obama and supporters of the nearly $1 trillion stimulus says it works like this. In a recession, money is scarce. So, the government needs to pump money into the economy. That gives consumers money to spend. And the economy rises. The do-nothings say letting the free markets run their course might cause short-term pain.
MITCHELL: A lot of bad government policies got us into this mess. And we don’t have a magic wand that’s just going to get us out right away.
HENDREN: But they say it would end the recession more quickly and leave the economy stronger. Take Circuit City. The electronics retailer is shutting its doors and laying off 34,000 workers. The do-nothings say that paves the way for stronger rivals like Best Buy, to take over market share. It’s all vinegar and no sugar. During the hard times, the do-nothings argue, Americans would pay down their debt and cut back on the kind of borrowing and spending that brought the economy to where it is now.
MITCHELL: Some of the discomfort from that is probably unavoidable. But at least we can make that transition much quicker and have a faster and stronger recovery.
HENDREN: The do-nothings point to the banking bailout. Since Uncle Sam invested $165 billion in the nation’s eight largest banks, they’re worth $418 billion less than they were in October. That’s a loss of more than 1,000%. Now, the do-nothings know they’re going to lose this debate. But they’re hoping to hold down the size of the stimulus. As one economist told me, I can see them cutting $100 billion, and that ain’t chump change. Bill?
BILL WEIR: Interesting idea, John, in these days when we’re throwing around the word “billion” a lot.