If it seems like we’ve recently been through this kind of leak-the-good-news cycle, it’s because we probably have. Did you see that Journal story on Monday, about how the bailout might not end up being as expensive as feared? (It’s a factor, as the Post and others noted, that’s contributing to those improved deficit numbers.)
As momentum grows at companies that looked like zombies just a few months ago to repay taxpayers for lifelines they got during the financial crisis, the projected cost of the bailout is shrinking to just a fraction of previous estimates. Treasury Department officials say the tab is likely to reach $89 billion, which includes the Troubled Asset Relief Program, capital injections into Fannie Mae and Freddie Mac, loan guarantees by the Federal Housing Administration and Federal Reserve moves such as buying mortgage-backed securities and propping up the commercial-paper market.
Here’s Andrew Ross Sorkin with the call at the Times:
Every couple of months the Treasury Department takes a moment to strategically leak some good news about the bailouts. It happened again on Monday, when a Treasury official told The Wall Street Journal that America’s coffers would be only $89 billion lighter after all accounts were settled from the rescues, down from an earlier estimate of $250 billion.
It’s enough to make us all feel rich, isn’t it?
Inside the Obama administration, there are whispers of even greater optimism, with some officials suggesting that if the economic recovery continues apace, the bailout program could eventually turn from red to black.
Sorkin goes on to recall the debates of 2008 and early 2009 over what the government should do about the teetering financial system. “Some economists, including Nouriel Roubini of New York University and The Times’s own Paul Krugman, declared that we should follow the example of the Swedes by nationalizing the entire banking system.”
Krugman doesn’t like that at all, insisting that he only wanted the government to take “temporary full ownership of a few weak banks.” It’s an important distinction, and looks like an argument that could run for a while.
But, back to the deficit. As the Post piece shows, there’s a lot of subtlety to those numbers, and to what counts as news. It’s a good idea for readers to be alert to the art of leak-and-spin as it’s practiced in Washington.