Second Stimulus: Laura Tyson, Obama Adviser, Says Economy Needs Boost

bloomberg.com:

July 7 (Bloomberg) -- The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was "a bit too small" said Laura Tyson, an adviser to President Barack Obama.

"The current plan will have a positive effect, but the real economy is a sicker patient," Tyson said in a speech in Singapore today. The package will have a more pronounced impact in the third and fourth quarters, she added, stressing that she was speaking for herself and not the administration.

Read the whole story: bloomberg.com

Comments

[econ1]

Much of the current stimulus hasn't been spent. Perhaps we should see how that works before saddling what is left of the private sector with even more debt.

[brownstoness]

We are borrowing the stimulus money. More stimulus is equivlent to throwing gasoline on the fire. We can't possible pay the debt back... legitemately. The government will use inflation to cheapen the debt. Unfortuneatly, this will hurt the poor, the working class, and the elderly on fixed income. Reckless government spending is not a Liberal value.

Stimulus is a joke of a concept; it doesn't end up with real economic growth in the long term. Even the New Deal failed to increase private investment. It wasn't until 1941 that domestic private investment reached 1929 levels. The fact that the first stimulus has failed to stop the bleeding yet isn't surprising. Our government deficit for the year which is over 20% of GDP (when the omnibus bill, first stimulus, bailouts, and on-budget deficit are summed) is unsustainable and something's gotta give, whether it be the lenders or the interest rates.

[LunaPark]

We are borrowing the stimulus money. More stimulus is equivlent to throwing gasoline on the fire. We can't possible pay the debt back... legitemately. The government will use inflation to cheapen the debt. Unfortuneatly, this will hurt the poor, the working class, and the elderly on fixed income. Reckless government spending is not a Liberal value.

[vagabondvet]

Stimulus is a joke of a concept; it doesn't end up with real economic growth in the long term. Even the New Deal failed to increase private investment. It wasn't until 1941 that domestic private investment reached 1929 levels. The fact that the first stimulus has failed to stop the bleeding yet isn't surprising. Our government deficit for the year which is over 20% of GDP (when the omnibus bill, first stimulus, bailouts, and on-budget deficit are summed) is unsustainable and something's gotta give, whether it be the lenders or the interest rates.

[LunaPark]

You are right. There is no private investment, and the private sector is where the real jobs and growth come from. Jobs in the private sector are in freefall, government jobs are increasing. It's a bad sign.

[drkazmd65]

Maybe,... but if a second round of stimulus is pushed through - then it needs to be structured in a fundamentally different way than was the first one.

Any further money needs to be injected directly into the population, NOT into banks, Big Companies, or Wall Street. It needs to be directed in such a way that it gets spent locally, on local goods & services. Where local taxes get paid and collected. Where those tax dollars get reinjected into the local communities and NOT into Wal-Mart, Or a big bank somewhere.

I read a blog by here yesterday that pointed out one way to do that. A voucher system - that can ONLY be used to pay for services like car repairs, childcare, home repairs,... where the money mostly likely will be spent paying somebody to build or do something locally. Jobs will be created & local businesses supported.

No more corporate bailouts in hopes that the money trickles out to us peons.

[drkazmd65]

Sorry - the name of yesterday's blogger got dropped from my post -

Credit (to my knowledge anyway) for the idea goes to - charleshugh

[vagabondvet]

Those activities you mentioned are consumptive in nature and don't create real economic growth. Nothing is being produced or sold, and while they can help people do productive work, they don't increase the capital stock of the nation. What needs to happen is a painful short term: people need to save, incompetent companies need to fail, and companies with competent management need to be allowed to take over the assets of the bad companies. This will create stronger fundamentals for the economy.

[drkazmd65]

I would argue against your point vagabondvet,

Automotive repairs require parts, part suppliers, tool suppliers, and such. These require somebody somewhere to make the tools & such.

Housing repairs / upgrades require paint, provide lumber, hardware, provide wiring & fixtures, tools and such.. As above - somebody somewhere has to make these & provide these items.

As far as more true 'service' jobs. No, nobody is making something when providing child or home care,... but these people earning income can then pay taxes, and purchase further goods & services.

Infrastructure, manufacturing capacity increase, and energy production are all good aims for stimulus,... just don't belittle the recycling power of money within local economies to stimulate those economies.

[leduck]

how about building high speed rail
to link up big cities
light rail
for inside big cities
and reversing urban sprawl?

sound like a good idea in the new age of expensive energy?

[vagabondvet]

If the main cause of the depression were infrastructure, then sure. But it really has nothing to do with infrastructure, so once the stimulus is done stimulating transportation projects we'll be left with a whole bunch of nice roads and railroads and no one that needs to use them.

[Totto]

And lots of people employed to service and maintain them.
God forbid that the US have an infrastructure that begins to be the equivalent of that in the rest of the industrialized world, right?

[SangZe]

I guess she means that the remainder of our tax dollars should be given to the big banks and corporations. You know how it works. It's called trickle down economics, the kind of policies that created the depression we're in. Change, indeed.

[fairdebate]

There is no such thing as trickle down Economics...in ANY ECONOMIC book...thats a fact.....Bank Deregulation is what caused the Crisis(government again)...You can trace any Crisis back to the Government......GET THE GOVERNMENT OUT OF THE MARKET

[Brett1981]

OK, so you're argument is:

Bank deregulation caused the crisis, government's deregulated, so we need to get the government out of the markets.

Who do think REGULATES the markets?

[Tom95134]

The major problem is that it is taking so long to get the stimulus money into circulation. I head that only about 5% of it has been allocated for various reasons. Many of them had to do with delays due to State processing. I know for a fact that some of the stimulus money that could have been applied to shovel ready projects in California will never arrive now because the State no longer has the matching funds needed to qualify for the stimulus funds.

[SangZe]

The stimulus is a joke. By the time a workable portion reaches anyone except big business and the banks, Obama will be looking for a new job. Stimulus is a term kind of like calling an escalation of war and surge. Meaningless.

[jeanruss]

It has to be obvious by now that the administration and Congress belong to the corporations. How much more do we need to see to understand this? Americans are sleeping in tents and we are fighting wars with borrowed money. Obama is just a figurehead to appease us while the looting continues.

[petridish]

Too true... people still want to believe in Obama. If you read, research and learn the truth becomes self evident.

The game is rigged and both parties are to blame. All we have now is a system that allows money to flow to whoever happens to be in power, they all can be bought.

Bernie Sanders, Ron Paul and Dennis Kucinich stand out as honorable men in their respective parties, suprisingly they are the most ridiculed as well...... really not all that suprising.

[Samalabear]

You're right. I don't even listen to the double-speak of most of Congress. If Sanders and Kucinich won't sign a bill then I know it's a bad bill. Here's Bernie telling it like it is. Watch Dodd stop listening. This is all about corporate fraud of insurance and pharmaceutical industries.

Stimulus? Pass single-payer and get the U.S. on a solid footing to being able to create real jobs. It's all connected. Many more billions of dollars in another badly-compromised stimulus bill is not going to do much.

http://www.youtube.com/watch?v=MYIPrIn8wTg

[billw8017]

Just thinking of Roosevelt's advice to some activists: "I do agree with you. Now, go out there and make me do it!"

Politicians who can't get elected are called "ineffectual cranks." Sanders, Paul and Kucinich are surely a mixed bag: a socialist, a libertarian, and a populist: This is a little like an "axis of good." The one thing you know is that if you put them in charge of everything, they wouldn't agree. Taking on the weakest of the axis of evil, the country that had already been defeated and disarmed, we became so bogged down that our military is said to be at the breaking point. Perhaps, we have the power to do good. Nobody knows. It's never been tried.

[Tom95134]

Look to your State government as to why it is taking them so long to get the stimulus money flowing. If there is a matching funds requirement on the projects and the State has no money then you don't get the stimulus money.

[fairdebate]

OK....I hate Obama,but I have to stick up for him....Obama doesn't understand how our Economy works....He is not giving your money away,,,,he is spending it wrong....He would of been better off letting ALL the bad Companies fail,and cut each worker a $10,000 check....The Stimulus plan was nothing more than a wealth transfer....218 billion went to the 50 million who pay NO TAXES...this doesn't help the working class..It doesn't help the poor either...Why would they work..The money will run out..the growth will cease.,and the poor will actually be worse off....We have to create Wealth as a Nation to be able to help the poor...Now we are just moving money around...Instead of letting the companies create more wealth..Obama is giving it to someone else....I hate to call him a Socialist..but...what do you think...the problem with Socialism is"sooner or later..you run out of other people's money

[petridish]

I will also add the really bad news.....

Other countries are seeing the corruption, greed, graft and incompetence.

We are now in the process of losing the MOST IMPORTANT facet of our nation......

Trust and faith.

[hellboundtrain]

You can fool some of the people some of the time,
until everybody has an awakening!

[petridish]

I have never heard of an alcoholic being cured with more and more drink.

Face it folks EVERYONE is responsible for the greatest debt based spending spree in history. Republicans and democrats, american idol consumers, bankers, realtors, brokers, lawyers.

Our elected officials have miserably failed us, they continue to allow the banks to HIDE garbage paper off the books. Meanwhile we shovel money into their coffers at an alarming rate, while citizens lose jobs, homes and dignity.

The country is lost. The empire is in decline. The wealthy are cashing it all in, harvesting our lives, wiring it all into offshore accounts.

Of course too big to fail means too big to regulate, otherwise they would have gone into receivership and would have been broken up.

Instead, the opposite happened. They got bigger through bargain basement firesales and the Treasury was emptied into their coffers.

Now we learn that they have a monopoly over the stock markets and regulation has been shut down.

Wow! All that is missing is ... well, I can't think what else could be compromised, they control everything now.

[hearmeout]

Bravo petridish, well said. The sooner we stop deluding ourselves that this is a mere recession rather than the end of an era - the Age of Debt finally run aground - the sooner we can pull the plug on our old ways and start building something new. Of course the reason we will not stop deluding ourselves is because it would require acknowledging that we're essentially screwed, that there's no easy way out of this mess and that it will take at least a decade to even begin to see the dawn of something new. We won't adjust to circumstances, in other words, until circumstances make it impossible not to. Until the stock markets crash (for real, think 1932) AND long-term interest rates rise significantly because our deficits can no longer be funded by a Social Security Trust Fund that has reached the tipping point (happening as we speak). I'm guessing October of 2009, but we might limp along for another six or eight months perhaps. Either way, real change - not the rhetorical kind preferred by our fearless leader - looms ominously on the horizon.

[petridish]

You are correct, no one wants to admit how severe the problem is and the drastic action needed to stop the tsunami. We will change when all other futile options have failed miserably.

My only hope now is after the whole thing goes down the corrupt 2 party system will be destroyed as well.