When a stimulus may not be a stimulus
Allan Sloan is a senior editor-at-large at Fortune
TEXT OF INTERVIEW
Renita Jablonski: Perhaps the biggest question for markets this week: How will stocks respond to tomorrow's presidential election? As we head into the last day of campaigning, lawmakers in Washington are tossing around ideas for a second government stimulus package.
Let's bring in Fortune Magazine's Allan Sloan. Allan, what do you make of the discussions on stimulus part two so far?
Allan Sloan: I suspect, Renita, that the stimulus package is not so much about stimulating the economy but stimulating votes tomorrow. Because the incumbents want to show that not only rich people and big corporations can get, say, a trillion dollars from the government, but regular people can get their own hundreds of billions of dollars. So why not? As long as we're throwing these unimaginable amounts of money around, why not throw some of it to regular people, which might help a few people keep their seats?
Jablonski: You had state leaders, trade groups, economists all descending on the House last week to sort of talk about what should be next -- looking at a lot of ideas that are going out right now, including guarantees for municipal debt.
Sloan: But that has nothing to . . . the only thing that stimulates is bond owners. It has nothing to do with stimulating the economy. If you want to say, let's insure this, let's do that, let's do public works, fine -- let it rise and fall on its own merits. But to call it stimulus is a kind of thing that ought to get the Federal Trade Commission -- if it's still alive -- after you for false labeling.
Jablonski: Well in fact, as I understand it, the first stimulus bill had initially included some money for infrastructure spending and those kinds of things, but ended up being taken out because the fear was, you know what, putting this into construction projects would take too long to create any sort of economic benefits. You know, people wouldn't feel like something's happening.
Sloan: Right. There was also, forgive me, a political component to that as I remember -- whether Republicans were against it, because, you know, ideologically. And I'm sure the Republicans would so ideologically be against public works -- I might even be ideologically against public works. But public works work really well as a long-term thing in the depression. I think it's clear that they worked, that it worked well. This isn't the depression, and we're talking about giving the economy a shot in the arm. And public works won't do it.
Jablonski: Where's your head right now with all this talk of psychology?
Sloan: My head is where it always is, Renita -- I'm just trying to survive and take care of myself and my family.
Jablonski: Mmmm, I hear that. Fortune Magazine's Allan Sloan. Happy voting to you.
Sloan: And to you as well, Renita.