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Bernanke urges consumer stimulus
Federal Reserve Board Chairman Ben Bernanke testifies during a hearing before the Senate Banking, Housing and Urban Affairs Committee.
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Tess Vigeland: With the government handing out all kinds of money to banks and brokers and insurance companies, you'll be forgiven for wondering -- where's mine? Well, it may be on the way. Today both the Bush Administration and Federal Reserve chairman Ben Bernanke endorsed the idea of a second stimulus package, following up on the rebate checks many people got earlier this year.
Of course, what they're hoping is that, unlike the banks which are basically hoarding all that cash from the government, you'll go out and spend yours. Our Washington bureau chief John Dimsdale tells us this injection into the economy could be as big, or bigger, than the $170 billion shot it got last spring.
John Dimsdale: After the election, Congress might push through a package of infrastructure improvements and unemployment benefits worth $150 billion or more. Bernanke told the House Budget committee he's sensitive about more deficit spending.
Ben Bernanke:
All that being said, with the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate.
But committee member Paul Ryan, a Wisconsin Republican, doesn't think the government can afford another stimulus while it's running a $750 billion deficit.
Paul Ryan:
That's before this kind of a stimulus package. Which with more government spending being shoveled out the door, at best would give us a little pop in GDP statistics. But not addressing the core problem, which is how do we grow the economy.
Ryan believes business tax breaks would be a better way to do that. But supporters of government spending say building schools and highways is a quicker jolt to the economy. Martin Baily is a former White House economist who favors another stimulus package. He told the committee he is worried about deficits in the long run but...
Martin Baily:
I'm more concerned about making sure we get enough money out there quickly that we turn this economy around because things are looking very ugly right now.
More deficit spending is a necessary risk, says Baily, to put the economy back on its feet. Then options include raising taxes and trimming government spending to bring the deficit down. Still, it'll take years to pay it all back, with interest.
In Washington I'm John Dimsdale for Marketplace.
Another Economic Stimulus to spend more will just end up going to pay debt, or to a new Blue Ray DVD player. This burst would just shortly increase consumption and end up increasing cost of fuel energy which in turn would make us more miserable in the long run. The price of oil rebound after Bernanke's remarks (a flush of money is more likely to have influence on the price of oil than the OPEC cuttings).
This purported stimulus would not fix our problems in the long run, how can we as a Country sink ourselves in more debt that will ultimately end up raising cost of energy and making us less competitive?
How about an economic stimulus to make us more energy efficient? Say for example, if I spent those $300 on appliances that saved energy and saved me money in the long run, what if I took that money and changed every bulb in my house for fluorescent compact bulbs? What if I took that money and converted my car so it could use Compressed Natural Gas, or Ethanol? What if I used a voucher as an initial for a hybrid vehicle? There would most certainly be a return on investment for households, energy savings that could drive energy costs down, a bit cleaner environment.
Lets try to think on how to survive on the long term for once! Can't the government think on the LONG TERM even for once?!
I believe that the two things that are making the US miserable at competing in the global economy are Energy and Healthcare costs. Is starting to think about fixing these problems too much to ask?!
The government should cut all existing interest rates in half. Credit card rates, mortgage rates, rates banks charge each other, the rate the government charges the banks and so on. It wouldn't cost the government nearly as much as the bailouts and would get to the core of the problem, people have no money.
Foreign ownership of the national debt is as of July 2008 $2.7 trillion. The balance is held by Intragovernmental Holdings and Debt Held by the Public. Where does the money for all these bailouts and stimulus program come from?
