Great quote from White House economic spokesperson Austan Goolsbee from the Bloomberg-Vanity Fair panel the other night.
Context: Jack Welch has just opined that Barack Obama’s budget is “from the moon.”
GOOLSBEE: The budget is from the moon, Jack is from Mars and Joe [Stiglitz] is from Venus.
Look, we enter the government essentially in a hotel that is on fire. We’re throwing people from the windows into the pool to save their lives and this is the evaluation of the Olympic diving committee: Well, the splash was too big.
[L]ook, we were facing in the fourth quarter of 2008 and the first quarter of 2009 epically horrible declines in GDP, every measure of the economy falling through the floor, completely on fire.
Joe will tell you, in every Ph.D. program, students – in economics, students must take an economic history class and in every economic history class, the professor says, “There could never be another Great Depression because we’re smarter than we were then and we would never allow that to happen.”
We were put to the test to answer that question. If you had asked people in 1929, “Here is what is about to happen. How much would you pay to avoid the Great Depression from occurring?” The answer is they would have paid a lot.
They would have borrowed money if it could be used to prevent the Great Depression.
The fact that we are here to bitch about the economy and about this policy and that and the budget forecasts for GDP growth are 1 per cent too low, I’m thrilled, I’m overjoyed that we aren’t all out of our jobs and we prevented the Great Depression. That in itself is an overwhelming accomplishment.
Now, take a step back. And we can talk about budget, we can talk about banking, anything you want. The fact is…
SORKIN: By the way, are we going to give Obama credit for that or are we going to give Bush credit for that?
GOOLSBEE: You’re going to give Bush credit for what?
SORKIN: Stopping the Great Depression, or no?
GOOLSBEE: No. I wouldn’t do that as a “no.”
SORKIN: You’d be better than “no.” OK. So Paulson didn’t do anything.
GOOLSBEE: I didn’t say he didn’t do anything. Many of the things he did I wish he hadn’t done.
GOOLSBEE: How long is this?
GOOLSBEE: You’re going to have to stop me. Now, the president’s view, and I don’t think he’s wrong, is you can’t do one thing at a time. You have to confront many issues at once.
I don’t agree with the – yes, it is a – if you want to call it a paradox, it’s a paradox. But if you have accumulated too much debt and you go into a period of massive deleveraging, added to a momentous decline in GDP, with asset values getting wiped out, you are in a bad spot and you need to run – if you tried to go slash spending and raise taxes at this moment, you would have just repeated exactly what drove us deeper into the Great Depression.
There’s no – the next two years, that is not the time to go out and yank the belt as tight as it will go, period.
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