National Press Club

"A Story No One Wants to Hear" is Problem, WaPo's Perlstein Says

February 11, 2009 | By Bill Miller

Journalists writing about the economic crisis face a major problem: “telling a story that nobody wants to hear,” said Steve Pearlstein, Pulitizer-prize winning business and economics columnist for The Washington Post, at the Club Wednesday.

“It’s a complicated story to write for family newspapers – a hard story to tell correctly,” Pearlstein said at the Club's first “Business Breakfast,” a new monthly event sponsored by the Events Committee.

Popular perception, he explained, holds that “sleezy, greedy real-estate brokers investment bankers and incompetent regulators” are to blame for the crisis. But, although they share fault, “they were only the enablers. We – the public – were the ones who were living beyond our means. We were the drug addicts. … Nobody has successfully told this story.”

In addition, Pearlstein said, journalists writing about the crisis face a problem of unrealistic public expectations. Noting that the public generally regards former Treasury Secretary Hank Paulson’s bank bailout last fall as a failure because the economy is still falling and banks remain in trouble, he said that “it is hard to get people to have realistic expectations of what success is. People think the government can fix things.”

Yet, he pointed out, “there’s no way to go from people living at 106% of their income to 96% of their income without creating a recession. And that’s very hard to get across.”

A third problem for journalists, said Pearlstein, is the conflicting desire of the public – and many in Congress – to both punish Wall Street and fix the economy.

“You can’t do both at the same time,” he said. Although it is “great sport” to criticize efforts “to bail out the bad guys,” he said, journalists need to make clear that “it is not possible to restore the health of the banking system without helping banks.”

Pearlstein, who won a Pulitzer for commentary last year last year partly for his early columns warning of an impending worldwide financial meltdown, spoke the morning after Treasury Secretary Timothy Geithner unveiled the Obama administration’s $1.5 trillion financial rescue plan. Asked about the size of the package, he observed that most people think that it involves “trillions of dollars going out the door and never coming back.” That’s incorrect, he said. “At some point. it will be called back in.”

And in response to a question about the controversy over the stimulative effect of provisions in the federal stimulus package that a House-Senate conference committee approved late Wednesday, he acknowledged that “not all spending has equal stimulus.” Yet, he said, “buying goods and services generates economic activity. … “All [spending provisions] “are stimulus.”

He also endorsed spending as more efficient than cutting taxes in creating jobs.

Answering another question, Pearlstein said that the economic consequences of the “Buy American” provisions of the stimulus package “don’t amount to a hill of beans, but they’re symbolic.” He predicted that Congress “will finesse” the issue.