Justin responds to our colleague Jim Poniewozik’s rumination that maybe the media is to blame for the bailout bill’s failure. The argument: the mainstream business press dropped the ball on clearly articulating what awful things would happen to ordinary Americans if Congress didn’t pass a rescue package.
Like I said, Justin takes that notion head on here. And I do my own bit of trying to explain why certain people don’t make the connection between the credit crunch and their own lives in this story that just went up on Time.com.
I’m also going to refer everyone back to part of Fed chairman Ben Bernanke’s testimony before the House Financial Services Committee last Wednesday. It’s the part where our country’s top economist explains what will happen if we don’t do something quickly. I think the back-and-forth he has with Rep. Steve LaTourette, an Ohio Republican who voted against the bill, also nicely encapsulates the frustration on both sides of the debate—the side that understands why we need to take grand action, and the side that doesn’t. The bulk of the exchange is after the jump:
MR. BERNANKE: Thank you, Mr. Chairman.
Excellent points that Mr. Kanjorski asked about before. This is all esoteric Wall Street stuff. It doesn’t make any — have any meaning to people on Main Street, but it connects very directly to their lives. Credit is the lifeblood of the economy. If the — if the credit system isn’t working, then firms cannot finance themselves. People cannot borrow to buy a car, to send a student to college, to buy a house. That’s not just an inconvenience, because if that is true generally, it’s going to cause the economy to slow markedly. We’ve already seen the effects of that. A lot of the slowdown in the economy we’ve seen over the last six months to a year comes from the credit crunch, which is affecting all parts of the market.
REP. LATOURETTE: Mr. Chairman, if I could just interrupt you for a minute. I get that. But I’m telling you, the guy at home, he says, “The market is something that my neighbor with the swimming pool is dabbling in. I just go and work in a factory” –
MR. BERNANKE: So let me just say, then, that I think that if the financial situation stays where it is or doesn’t improve, that we’re going to see higher unemployment, fewer jobs, slower growth, more foreclosures, fewer people able to buy houses and cars, and a much slower economy.
If you look at other countries, Japan had a decade of slow growth. We see other countries with very severe downturns. This is going to have real effects on people at the lunch-bucket level because it’s going to affect the way the economy and jobs can grow in this country.
REP. LATOURETTE: Mr. Secretary?
SEC. PAULSON: I should just say, he should — he should be angry and he should be scared. And I think right now he’s angrier than he is scared. And the — and it puts us in a difficult position because no one likes to be painting in, you know, a overly dire picture and scaring people. But the fact is that if the financial markets are not stabilized, the situation can be very severe as it relates to not just his current situation, but keeping his job, his retirement account, his investment in equities and in securities, his ability to borrow.
So this is a — is a serious situation, and it is one he should be concerned about, and we need to figure out how to communicate better about this.
REP. LATOURETTE: Right before I go to red, I have to tell you, I get that he should be concerned about it, but — and I know you don’t want to scare people, but somebody has to say, if we don’t do this, you may not have a job, you may not have a car, your kid’s not going to college. I mean, I’m –
MR. BERNANKE: You just said it. We agree with you.
SEC. PAULSON: I think we’ve all said that.
REP. LATOURETTE: Well, I’d never heard you say it. I said it twice, but go ahead, say it. Thank you.