Bernanke urges consumer stimulus
TEXT OF STORY
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.
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