The Media is Once Again Failing: There’s No Coverage On The Specifics of the Positive Economic Impacts From The Herculean $9 Trillion Covid-19 Rescue Efforts
This article was published on RichardQuadrino.com on April 26, 2020, at the start of the lockdown phase of the pandemic. It is republished here, because I believe it maintains its relevance.
The Mainstream Media (MSM) did a very poor job of covering the economic benefits of our government’s reactions to the economic carnage resulting from the 2008–2009 financial crisis. The Wall Street driven crisis caused the ensuing “Great Recession” from 2008 through at least 2010. Over 8 million jobs were lost, unemployment skyrocketed to 10%, yet we emerged into a growing economy that set a record in modern history: 10 years of continuous growth without a recession.
History is now already repeating itself regarding the virtually non-existent MSM coverage of the likely micro and macroeconomic benefits from the multi-pronged governmental response to the massive economic fallout from the Covid-19 quarantines.
Why and how did we succeed in 2008–2009 and thereafter? Why did Europe fail in taking a different tack and then succeed in creating economic growth when it carbon copied the US approach?
Why is this type of coverage important? The national mood and the psychology of a downturn is fear-invoking, upsetting, frustrating and enormously difficult. Economic pain is felt in almost all corners of society. The public’s mood affects consumer spending, and consumer spending — 70% of all economic activity in the US — drives an economic recovery.
If the truth is fully covered regarding the current economic crisis, the public may be in a position to congratulate what has been a dysfunctional government for quite some time — if the actions taken avert a disaster. Some morsel of faith in government could be restored if the current responses by The Federal Reserve Bank (The Fed) and Congress succeed in once again restoring economic growth in an impressively short time frame.
Without the truth being highlighted, the public is deprived of its right to “petition the government” — a cherished part of the First Amendment. The public could, if dissatisfied with the economic response, seek a better or modified set of economic policy prescriptions.
It is the epitome of arrogance to assume that the public would not understand a broad brush overview of the economy’s functioning and its recovery prospects resulting from specific government responses; ie., where the money is being pumped, how the programs are being executed, when results could possibly be seen, and how it may be effective.
Therefore, what’s missing in today’s MSM coverage is the following:
• An explanation and revelation as to the potential $6 trillion to be injected by the Federal Reserve (The Fed) in response to the current economic crisis;
• An explanation and revelation as to the purposes and likely economic benefits of the expanded unemployment benefits ($600 per week on top of typical state unemployment payments);
• An explanation and revelation as to the likely economic benefits flowing from the two rounds of small business funding of free money (forgivable loans) to pay employees and certain aspects of overhead (now $660 billion); and
• The timing and delays associated with this extraordinary financial injection, coverage of the help that has already arrived, and urging a little bit more patience as to money yet to be allocated, with assurances of its impending arrival; i.e., “help is on the way”.
President Obama failed in 2009 and 2010 to really tout what he did to enact the $787 billion stimulus, save General Motors, and administer the $700 billion TARP fund for the shoring up of Wall Street. He did not explain the Stimulus bill sufficiently nor did he say that “help is on the way”. His administration explained that they did not want to make those still suffering feel isolated and / or frustrated. This was somewhat laudable, but missed the mark in many ways — from a communications and consumer spending standpoint. By pivoting to healthcare, he missed an opportunity to educate, and the MSM followed his lead and did not do the job of covering the truth that could have ignited the “animal spirits” of consumer spending. The poor coverage actually had the effect, in my view, of slowing our economic recovery in 2010 and beyond.
In the Great Recession that emerged from the financial crisis of 2008–2009, the Federal Reserve was an unsung hero. The central bank came to the rescue — big time — and the effectiveness of its actions and role in pulling us out of the recession was virtually ignored by the Mainstream Media (MSM). The economic policy response worked, but it was actually taken for granted. This was a lost opportunity to educate the public.
When it comes to today’s governmental response, the same thing is happening; the lack of uplifting and optimistic media coverage regarding the extraordinary response by The Fed and Congress. Their actions can once again save us all, but we’re not hearing about how these actions could work to put a safety net under us and trigger a rebound. Today’s combined effort could top $9 trillion, a staggering sum of money. Up to $6 trillion by the Fed and nearly $3 trillion has been allocated by Congress — so far.
Of the $5.4 trillion pumped into the economy during and after the Great Recession, $4 trillion was by The Fed and $1.4 by Congress ($700 billion in TARP — Wall St. funding and $787 billion Stimulus). Most of our success was due to the actions of The Fed (led by Ben Bernanke) in brilliantly allocating the $4 trillion. Today’s $9 trillion is double the amount of our Great Recession response.
So where are we now in terms of the MSM’s coverage of our government’s heroic $9 trillion worth of actions — from a micro and macroeconomic standpoint?
When it comes to the “trickle up” Keynesian economics happening here (money directly into the hands of the consumer), combined with the potential $6 trillion from The Fed, we should be hearing that “help is on the way” and that our government is responding quickly and effectively to avert a depression. We should also study, as time goes on, as to whether trickle up works and whether the Republican’s fiction of the failed “trickle down” should be dramatically reconsidered.
Instead, we hear the big numbers but not how that money will ultimately affect the entire economy. To be sure, we are hearing about the first and second phases of the Congressional small business relief. But the big picture raises questions as to how many businesses can be saved from failure and how the swift response by our government might actually work. And in the interim, we are not hearing about the rehiring of employees or the freezing of furloughs as the billions flow from the banks, funded by the federal government in the form of “forgivable” loans.
Economics is complicated. But it can be explained. Communicating simply, in the style of Andrew Cuomo, is not really hard. Instead, the MSM has a flair for the dramatic, a bent toward covering the negative, and a reluctance to tackle anything that they — in their infinite wisdom — think is too complicated for public consumption. The big economic story in the Great Recession — the savior of the US and world economies — was relegated to the pages of The Wall Street Journal, the business section of the New York Times, the Financial Times of London, and other business magazines, papers, and websites. But on CNN, MSNBC, and Fox did we get the message that the mysterious institution called the The Fed saved us all from a depression? No.
Talk of an economic Armageddon and the number of Covid-19 deaths sucks all of the oxygen that is breathed by the MSM. The potential $9 trillion is beyond staggering, and it may do the trick.
But who really hears this uplifting message? Most don’t — because the message isn’t being communicated. And don’t we need some uplifting news these days? It would actually help the economy recover.