Obama economist: US should consider second stimulus package
Filed under: Economy
The U.S. recession has created a big hole, and it's going to take a great deal of capital from a variety of sources to fill it, most economists agree. The GDP hole is so big it may require a second fiscal stimulus package, says Laura Tyson, a member of President Obama's Economic Advisory Panel, the Agence France-Presse reported Tuesday.
Speaking in Singapore, Tyson said the current, $787 billion fiscal stimulus package "will have a positive effect, but the real economy is a sicker patient," Bloomberg News reported Tuesday. Tyson added the current stimulus package was "a bit too small."
Tyson's take on the need for a second stimulus package differs slightly from recent administration comments by U.S. Vice President Joe Biden, who said Sunday it's too soon to consider a second stimulus package because not enough time has passed to gauge whether the first stimulus package was large enough to produce the targeted GDP increase.
However, Tyson's analysis is in-line with Nobel Prize-winning economist and New York Times columnist Paul Krugman, who argues the 6.5 million jobs lost and statistics on real wage declines during the pronounced recession are sure signs that the U.S. economy will need more fiscal stimulus. Failure to do so will put the United States on a track for Japanese-style deflation, which is very hard to reverse, Krugman says.
Was the stimulus package too small?
Critics of the fiscal stimulus package say it wasn't structured properly and that not enough money was front-loaded to provide the large, immediate jolt of stimulus many economists argue is essential to create a maximal increase in GDP, commonly known in economics circles as 'the biggest bang for the buck.'
Other Obama administration opponents, including House Minority Leader John Boehner (R-Ohio), have criticized the stimulus package tactic because they are philosophically opposed to using public spending to help stimulate the economy; they argue a better tactic would be to cut federal taxes.
Tyson also said the United States can afford to pay for a second stimulus package, despite its large budget deficit, expected to approach $1.8 trillion this year, and total about $1 trillion next year, fiscal year 2010, the AFP reported.
Fiscal Policy Analysis: Interpret economist Tyson's remarks as floating a trial balloon for a second stimulus package: at this juncture, it's an open question as to whether Congressional Democrats would favor a second package. Expect all House Republicans and most Senate Republicans to oppose it, ignoring all facts and logic. A second stimulus package would not occur before September, after Congress returns from its summer break.
Further, the critique of the first stimulus package is partially valid: only about $60 billion of the 'stim 1' has been spent so far, but that criticism must be qualified by the fact that the infrastructure component was designed to allocate funds incrementally, each month, to continue to add dollars to the economy over about a year and half. Moreover, some spending items are and will continue to have an immediate impact; others will take three to six months to have an affect on GDP and on related economic statistics.
That said, one error of 'stim 1' was its small size, as economist Krugman has astutely noted. Massive declines in the stock market, housing sector, and bond market have taken tens of trillions of dollars out of the U.S. commercial system and near-double digit unemployment has seriously reduced consumer demand. It was unrealistic to expect a $787 billion stimulus package to fill those large holes. Stim 1 should have approached $1.2 billion – with at least $400-500 billion in front-loaded spending to jump-start GDP growth. Hence, policy makers should think in terms of a supplemental stimulus package of at least $300-400 billion, including increased hiring for government jobs at the IRS, State Department, Defense Department, National Institutes of Health, SEC, and National Parks Service, among other departments and agencies, if necessary.
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Reader Comments (Page 1 of 3)
7-08-2009 @ 6:55AM
mary kirk said...
obama need to fix it fast not by giving bank tax payers money.
first he need to take 5 million people over 50 give then 1 million dollars to retire.
thats 5 million jobs open
and out of the 1 million dollars they have to by an american car.
car companys fixed
and yhey have to buy a house houseing market fix
Reply
7-07-2009 @ 3:49PM
larry said...
The first stimulus package was used by Democrats (85%) of it more or less to support pork spending within their constiuency. About 15% may have headed to job creation but it certainly ahsnt arrived there with only 200,000 new jobs created. Obama doesnt get it. Housing remains unresolved and he knows it. It is exactly in the same state it was when he took office and is continuing to sysle down it will. He wants to run everyone out of their home that is obvious. The banks are not lending money and he knows it. He has not created anywhere near the 3.5 - 4.0 mllion jobs he promised is all his speeches. He knows it. How does he get out from under being confronted with why he has not addressed and focused on this, he creates new subjects, Healthcare, taxes, taxing your benefits, or he makes wise comments. We dont need a second stimulus we need a person who is focused on the few key issues at hand. He clearly does not work with a preato chart, or LEAN, or KAIZAN, etc. You solve the key items first and go from there. Clearly Housing and 20,000,000 out of work need his undivided attention NOW. He made fun of the AIG and GM guys about how they spent millions on planes, saunas and hotels. One Oboma and his administrationis doing them one better, they are spending billions soon to trillions on pork, plane trips, vacations, lavish dining, theaters, commercials, etc while the rest of us are going to the poor house. Not another dime for this blow hard
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7-09-2009 @ 8:45AM
Dan said...
The best stimulus plan yet.... GET A JOB, and stop leaving it to the working class to support your dead weight, then you will see how it truly feels to watch your paycheck support worthless liberal deadbeats!
7-09-2009 @ 10:44AM
rich said...
Absolutely Not!!! It will not work any better then the first one.
Too much debt now.
7-15-2009 @ 7:27AM
Pat said...
About the only thing this dictator in our white house has done is try to get his pet projects passed and give his fellow democrats to spend on their pet projects. The 2 most important things the American people were worried about were the economy and the deficit, and he seems to be quite happy to just ignore that and spend away. I disagree with anyone who thinks he created or saved any jobs (the few that were saved were only given a temporary reprieve and once federal money ran out the states couldn't afford to continue paying people.....just a bandaid).
He only cares about power for himself and living high on the hog at taxpayer expense and time will tell how well that plays out when the "free" money stops. I mean, afterall, socialism works fine until you run out of other people's money and he since he is deficit spending (over a trillion now which is 3 times where Bush left us), I would say anymore money for our big spender in charge would be a waste of taxpayer money. Personally, I think if he just quit spending and the congress/senate didn't give him any more money for anything, confidence would return and the economy would recover!
7-07-2009 @ 6:00PM
Sid said...
It might be called a "stimulus surge" to get sufficient Republican support. If we can justify a surge of war, let's have a surge in support of the homeland.
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7-07-2009 @ 6:34PM
James Raider said...
Don’t look to China for a recue from this deepening recession. It’s not up to the challenge. China has created a massive middle class in a single generation, but it has yet to empower it.
http://pacificgatepost.blogspot.com/2009/07/dont-believe-pundits-on-chinas-century.html
The world still waits on the American consumer.
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7-08-2009 @ 3:42PM
Basilovecchio said...
There are presently 8 to 12 million home owners in trouble,defaulting,defaulted or soon to be defaulting.
The worlds "braintrusts" have stated that recovery MUST
come to the housing market and housing prices Must be stabalized.The Fed Chairman stated,when asked how
much money would be lost?,answered we will only know that after the housing market is stabilized.
So FIX THE HOUSING MARKET !
ALL 8 to 12 million homes can be stabilized,and can become a 100% asset based AAA note.Not only at NO
cost to the taxpayer but also without the use of ANY NEW MONEY....No stimulus...No asking Congress for
trillion dollar bailouts.
Just by using what is already in place,legislation already in place with a modification.
THEY SOLVED THE PROBLEM with the "Housing and Economic Recovery Act of 2008"
It simply has to be implimented.
MAKE ALL CITIZENS ELLIGIBLE (NOT JUST 62+)
and MAKE 100% of the ASSET AS THE GUARANTEED LOAN!
"The Everybody Wins Plan"
Reset all loans with a new VERY AFFORDABLE
payment,a special 10-30 year loan.
Example : A $100,000 home would have a fixed payment
of $500 per month for the first part (10yrs)THIS WOULD BE P.I.T.I......It is unbelievable low.All homeowners would love to have a payment like that.
email a request for free details this is taking up too much time and space and also these ussually are drowned out
by the volume of comments anyway.
Who would like to challange a plan that:
...makes all homeowners current
and all gladly paying the mortgage
...get the lender 100% of Fair Market Value.
...NO more foreclosures
..No cost to the taxpayers
NO MONEY NEEDED
I promise all of this,PLEASE BOB SHILLER,BEN,
OBAMA,please prove me to be that "ONE FOOL"
Check "The Everybody Wins Plan"
request by email cbasilovecchio at aol dot com
or
bestsolutionsfl at aol dot com
Reply
7-09-2009 @ 7:08AM
Jim Race said...
What does Obama want his legacy to be, "The Man" who guided America through tough times or "The Man" who brought "Old America" down ? I f we stay on the same path, no matter his intent, it will be the latter of the two.
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7-09-2009 @ 8:15AM
joyceches said...
We are somewhere between 11 and 13 Trillion in debt. Wrong....we are somewhere between 50 and 65 Trillion in debt considering entitlements like welfare, social security, etc. that have to be paid monthly. Our major industries are all but non-existant. One Trillion Dollars is 1,000,000 million and that translates to aproximately 10 Million Dollars Per MINUTE. At two trillion everyone who pays taxes living west of the Mississippi does nothing with their taxes but pay the interest on the debt. At 50 to 65 Trillion.....we are doomed. There will be no recovery. Brace for the worse, you haven't seen anything yet!
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7-09-2009 @ 8:31AM
sosted said...
You cannot legislate the poor into freedom by legislating the wealthy out of freedom.
What one person receives without working for, another person must work for without receiving.
The government cannot give to anybody anything that the government does not first take from somebody else.
When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the end of any nation.
You cannot multiply wealth by dividing it."
~~~ The late Dr. Adrian Rogers , 1931 to 2005 ~~~
However beautiful the strategy, you should occasionally look at the results.
If you have ten thousand regulations you destroy all respect for the law.
It has been said that democracy is the worst form of government except all the others that have been tried.
Never, never, never give up.
No crime is so great as daring to excel.
Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.
Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon.
Study history, study history. In history lies all the secrets of statecraft.
Success is not final, failure is not fatal: it is the courage to continue that counts.
The best argument against democracy is a five-minute conversation with the average voter.
The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.
There is no such thing as a good tax.
There is no such thing as public opinion. There is only published opinion.
When you are winning a war almost everything that happens can be claimed to be right and wise.
You can always count on Americans to do the right thing - after they've tried everything else.
You have enemies? Good. That means you've stood up for something, sometime in your life.
An appeaser is one who feeds a crocodile hoping it will eat him last
If you destroy a free market, you create a black market.
In Russia, a man is call a reactionary if he objects to having his property stolen and his wife and children murdered.
Some people's idea of free speech is that they are free to say what they like but if anyone says anything back, that is an outrage
The first duty of a university is to teach wisdom not trade; character not technicalities.
The root problem of modern economics: the strange discordance between the consuming and producing power.
We must beware of trying to build a society in which nobody counts for anything except for the politician or an official, a society where enterprise gains no reward and thrift no privileges.
All the Quotes above by Winston Churchill,
Hmmm---- Wonder why Obama did not want his likeness in the White
house?
Big business never pays a nickel in taxes, according to Ralph Nader, who represents a big consumer organization that HAS NEVER paid a nickel in taxes.
Dave Barry
If you don't read the newspaper you are uninformed,
if you do read the newspaper you are misinformed."
Mark Twain
Suppose you were an idiot.
And suppose you were a member of Congress....
But then I repeat myself.
Mark Twain
I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
Winston Churchill
A government which robs Peter to pay Paul can always depend on the support of Paul.
George Bernard Shaw
A liberal is someone who feels a great debt to his fellow man .which debt he proposes to pay off with your money.
G Gordon Liddy
Democracy must be something more than two wolves and a sheep voting on what to have for dinner.
James Bovard, Civil Libertarian (1994)
Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries.
Douglas Casey, Classmate of Bill Clinton at Georgetown University
Giving money and power to government is like giving whiskey and car keys to teenage boys.
P.J. O'Rourke, Civil Libertarian
Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.
Frederic Bastiat, French Economist (1801-1850)
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Ronald Reagan (1986)
I don't make jokes. I just watch the government and report the facts.
Will Rogers
If you think health care is expensive now, wait until you see what it costs when it's free!
P.J. O'Rourke
In general, the art of government consists of taking as much money as possible from one part of the citizens to give to the other.
Voltaire (1764)
Just because you do not take an interest in politics doesn't mean politics won't take an interest in you!
Pericles (430 B.C.)
No man's life, liberty, or property is safe while the legislature is in session.
Mark Twain (1866)
Talk is cheap...except when Congress does it.
Unknown
The government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other.
Ronald Reagan
The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery
Winston Churchill
The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.
Mark Twain
The ultimate result of shielding men from the effects of folly is to fill the world with fools.
Herbert Spencer, English Philosopher (1820-1903)
There is no distinctly Native American criminal class...save Congress.
Mark Twain
What this country needs are more unemployed politicians.
Edward Langley, Artist (1928 - 1995)
A government big enough to give you everything you want, is strong enough to take everything you have.
Thomas Jefferson
To The Point and simple;
'Here's my strategy on War: We win, they lose.'
'The most terrifying words in the English language are: I'm from the government and I'm here to help.'
'The trouble with our liberal friends is not that they're ignorant; it's just that they know so much that isn't so.'
'Of the four wars in my lifetime, none came about because the U.S. was too strong.'
'I have wondered at times about what the Ten Commandments would have looked like if Moses had run them through the U.S. Congress.'
'The taxpayer: That's someone who works for the federal government but doesn't have to take the civil service exam.'
'Government is like a baby: An alimentary canal with a big appetite at one end and no sense of responsibility at the other.'?
'The nearest thing to eternal life we will ever see on this earth is a government program.'
'It has been said that politics is the second oldest profession. I have learned that it bears a striking resemblance to the first.'
'Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.'
'Politics is not a bad profession. If you succeed, there are many rewards; if you disgrace yourself, you can always write a book.'?-
'No arsenal, or no weapon in the arsenals of the world, is as formidable as the will and moral courage of free men and women.'
'If we ever forget that we're one nation under God, then we will be a nation gone under.'
All quotes by Ronald Reagan
The Blame Game
"Toxic Assets": The fact is that 25% of the borrowers for home mortgages were not properly qualified.
The explosion of the real estate market was Federally Funded and intentionally created but the unintended consequences are being used to politically defeat opponents with their partners in the biased media.
These loans were all guaranteed by the Federal government because Freddie Mac and Fannie Mae, created by the Federal Government, would buy the paper(mortgage) regardless of the credit worthiness of the home buyer. This,of course, allowed banks, realtors and brokers to qualify anyone that could fog a mirror. They had no risk in the deal. "predatory" ??
A demand for more single family homes created an artificial shortage of homes due to more (unqualified)home buyer in the market. The single family housing shortage caused an inflationary spiral. This spiral of housing prices also allowed 2nd mortgages to be added within weeks of closing and many home buyers bought new cars and paid off credit card debt with the 2nd's. Then they would run up the credit cards and refinance again. Some refinanced four or more times and lived off the artificially inflated proceeds.
The refinance industry had loans at 125% of value, in anticipation of the continued inflationary spiral in the market. Eventually many of these home owners started defaulting on their loans because they did not know how to manage money, and borrowed more than they could pay back. What a surprise!!
The so called "predatory lenders" were created by policies of the US congress, and that is were the blame lies. Without the Federally backed guarantee of loans through Freddie Mac and Fannie Mae, no bank would have risked financing the borrowers that could not qualify. These toxic assets were packaged and sold to investment banks and insurance companies around the world as solid investment product.
That is what caused this financial meltdown and nothing else!!
The US real estate boom was in every investment product, worldwide.
The real blame lies squarely on the shoulders of Congress, both parties, for creating the environment that led to this implosion of the credit market.
Only the qualified deserve credit, regardless of race, it is not a right!!!
Maybe the media will come out of it's drunken stupor long enough to really analyze the facts and study history, B.O (before Obama)
This is the "Naked King" that the media cannot see!!
Get rid of Freddie Mac and Fannie Mae and require the banks/brokers/realtors to take the risk and this will never happen again.
This is how I see it!!
Ted Storm, American
Let's tax the rich
Well the uninformed that elected OBAMA will be happy, but they are ignorant enough to believe that you can actually tax the rich and the corporations.
When you tax the rich or corporations they pass it on by raising the price of their goods and services as a cost of doing business. This is just a back door tax on all consumers and Obama knows this.
Oh yeah, he is not going to raise taxes on 95% of taxpayers (DIRECTLY).
This is the secret way that the middle class will pay for pork filled (so called) stimulus bills.
Think about it, businesses cannot operate at a loss and must pass on all taxes imposed by government.
Individuals that already pay high taxes due to high income levels have a budget too. If Obama raises their taxes, the business will raise his salary to compensate for the increase and pass it on to the consumer.
The (so called) rich also live with a budget and will not sell their home, airplanes, automobiles or decide not to send the children to Harvard just because a "class warfare" tax has been imposed. They just pass it on to you in the price of the goods and services that we all need to survive in today's society.
Don't be hood winked into believing that taxing corporations and the rich will somehow help you. IT WON"T AND OBAMA KNOWS THIS!!
They have just "picked your pocket" and the changelings elected him to do it!!
It's all about change of power, " from the citizen to the government"
Reply
7-09-2009 @ 8:40AM
jim said...
I poked myself in the eye yesterday, seems to be infected now,,,,so, to ease the pain I think I'll poke the other one too!!!! Stimulate this!!!!!!!!!!!
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7-09-2009 @ 8:51AM
Gary said...
Another stimulus package for the rich that is. Us poor folk will get what the government calls a stimulus check. That check will be for a few hundred dollars if we are lucky. It is hardly any compensation for the huge chunk of money we poor folk lost because of the banking scams. Where's Obimbo's spread the wealth? Oh, that's only ofr the rich, not us!!!
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7-09-2009 @ 11:19AM
don said...
OUR PRESIDENT FOR LIFE WILL HAVE THIS FIXED BY HIS 6TH TERM IN OFFICE
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7-09-2009 @ 2:47PM
Dave said...
we didn't need the first stimulus. It hasn't helped anyone but the poiticians and their friends. This administration is about the biggest joke I have ever seen. If the citizens of the United States don't stand up for their rights, than we are not going to have any rights.
Reply
7-10-2009 @ 7:27PM
LARRY said...
WHAT WE DON'T NEED IS A NEW STIMULUS WHAT WE DO NEED IS A NEW CONGRESS AND A NEW PRESIDENT--ONE THAT CAN LEAD NOT ONE THAT PAYS HOMAGE TO EVERY DICTATOR---------------------
Reply
7-09-2009 @ 3:48PM
ralph said...
we need different president not more "give me give me" crapa
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7-09-2009 @ 4:54PM
Bob said...
Where is the first one???????? Come on people get real? Im not poor and I am not rich and that is probably the reason I dont see where the first one even went. The only ones that will benefit from this is those classes of society!!!! What happened to the working class????? Maybe Nancy Puslosi and Mr. Obama should get on national tv with their teleprompters and explain all of that to us!!!!!! NOT!!!!!!!!
Thanks to all of you who voted in November for all this!!!! To the rest of you that didnt, I am so sorry!!!!!!!!! We tried!!!!!!!!! Suck is up people, and get ready for the longest, hardest, ride you have ever been on in your life!!!!!!!! I sure enjoyed my country in the past 60 years!!!! Hate to see if fall like this,but, the MAJORITY lost in this case!!!!!!!!!!
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7-09-2009 @ 5:04PM
Cool Dave said...
I'm baffled by the economic team put together by Obama and his fellow Dems. I've come to the conclusion that they have no idea what's going on, that they do not listen to nor hear to rational economic ideas and thinking. I am no economic whiz but have done alot of research and have worked with others on a local level. As mentioned a few times ahead of me, the housing market NEEDS to be fixed FIRST. History shows this and it's on "paper"...how the housing market goes, so does the economy. Nation wide, the housing market, construction of new homes, the supply of new homes, etc...provide more to our economy, the gdp,etc,..than the auto industry, there's no comparison. Fix housing and the economy will see a drastic, immediate impact. I am amazed that the current administration has pretty much moved this issue to the back seat. Sure, the tax credit to first time home buyers did some good but didn't scratch the surface of what could have been done. Further more, the credit ends at the end of the year. The National Home Builders Association suggested a "stimulus" package, a "bailout" for the home buyers but was shot down by the majority in D.C. I can't recall all the details right now but it was to offer up to 22,000.00 to first time buyers. This would have done tremendous good for everone.
Most stimulus money, pork spending aside, aims at the construction of roads and energy...this is a joke. There's no long term impact here and energy serves no immediate impact. The first stimulus was not thought out, it couldn't have been or housing would have been a huge part of it. They claim it saved jobs..really? how do you gauge "saved" jobs? This is just wording to doll up the stimulus that is NOT working.
To get this economy pumping again, THE HOUSING INDUSTRY NEEDS TO BE ADDRESSED AND FIXED. It was the democrats, NOT the repubs who started this mess with housing and the mortgage crisis...Do the research, it's all there. I'm not a republican either, just a concerned American who was, I'm afraid to admit, caught up in all the Obama hype...and hype was all that it is. I am convinced he will go down as the worst president in modern times, especially in regards to dealing with the economy...
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7-09-2009 @ 5:18PM
BigPoppaKhan said...
I smell what your cooking brother. I agree with the housing market as well, it needs to be fixed, inventory needs to be slashed and the proposal by the NHBA would have done this in no time. It's when the current inventory goes down, new homes construction will be cranking again and when this happens, the economy is fat and happy. This has been the case in the past and as you said, as housing goes, so does the economy. The fact that the Obama administration is not putting this in the forefront is sad and laughable. You fix the housing market, slash inventory and get construction cranking again, with added incentives to first time home buyers, the result will be a nice, happy, stable economy. To ignore this just thows up red flags about Obama and who he answers to (pelosi,Reid, Frank). And, I agree also, Obama will go down as one of the worst presidents in history, especially if he keeps this up. And that's not even mentioning his foreign policy skills, another joke.
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