Second Stimulus: How Would It Go Down?

Slate Magazine:

Rumblings about a second stimulus package began over the weekend, when Vice President Joe Biden told George Stephanopoulos on This Week that the administration "misread how bad the economy was." Speculation spiked again when Laura Tyson, an Obama adviser, suggested in a speech in Singapore on Tuesday that the first $787 billion stimulus was "a bit too small." President Obama then refused to rule it out: "I don't take anything off the table when unemployment is close to 10 percent and a lot of Americans are hurting out there," he said.

Read the whole story: Slate Magazine

Comments

[marijam]

The first stimulus hasn't all been released yet. I can't have failed yet because it hasn't all been released.

[pastpartisan]

Stimulus is a joke of a concept; it doesn't end up with real economic growth in the long
tem. 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.

hat tip to http://www.iamned.com

[research]

Stimulus is good, tarp banker bailouts is bad. see my profile for proof.

[research]

Just offer everyone with the appropriate roof a Fed type 1% loan for rooftop solar up to 20k$, enough for the average home. Let the market then select the best solar companies. see my profile for details and links.

[fairplaystacy]

WHY??!!!?? we haven't even gotten the first one out of the door.
http://www.recovery.gov/?q=content/report-progress

If by second we mean another parallel stimulus that has different stimulus targets, then maybe we should discuss what those different targets should be.

MORE UNEMPLOYMENT BENEFITS ARE NEEDED!!!!

[joecoolconservative]

The Centre for Labour Market Studies (CLMS) in Boston says US unemployment is now 18.2%, counting the old-fashioned way. The reason why this does not "feel" like the 1930s is that we tend to compress the chronology of the Depression. It takes time for people to deplete their savings and sink into destitution. Perhaps our greater cushion of wealth today will prevent another Grapes of Wrath, but 20m US homeowners are already in negative equity (zillow.com data). Evictions are running at a terrifying pace.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5742937/The-unemployment-timebomb-is-quietly-ticking.html

[cmaukonen]

I really do not think throwing money at this problem will fix it. Sure I'm all for repairing the infrastructure, building new schools, rial etc. But that will have a short term effect. Our current mess is the result of decades of business and manufacturing being outsourced or just drying up.

In order to have jobs we need to have a new manufacturing base to create them and that takes time. Tax holidays and rebates won't work either. That is just an attempt to spend our selves out of recession and spending money we don't have is part of what got us into this place.

I'm thinking a more grass roots approach is needed. Making life a bit easier for inventors and researchers to come up with the new technology and approaches to our problems.

Fast track new energy sources. Help getting new, more efficient products to market. Find ways to remove the middle men and road blocks. Cut the red tape.

It took a long time to get here and will need a long term approach to get out.

[frantaylor]

"But that will have a short term effect"

Really? Think about the long term effects of NOT repairing our infrastructure.

[cmaukonen]

I was not suggesting not doing this. I was attempting to point out that a longer term solution was needed as well.

Geesse...you sound like Bill O

[MIKEBC]

It's funny how they expect Barack to fix 8 years of lousy GOP economics and not spend any money doing it.

[iblogleft]

We are actually replacing fake GDP numbers. This is a vast sum of money by itself.

[cmaukonen]

It's not the amount or even what the stimulus is being spent on. It's that this country - even the private sector - has become so bureaucratic that it takes a very long time to start any project. Far, far more bureaucratic than in FDR's time.

To expect anything to be done quickly and efficiently anymore is silly at best.

[Mildmannered]

Any stimulative effect of the first stimulus package has been or will be cancelled out by the draconian cutbacks by the states and local governments. See, e.g., Ten Most Broke States http://abcnews.go.com/Business/Economy/story?id=8016634&page=1

Thus, a second stimulus package is needed or the U.S. will be mired in a very long recession, like Japan was in the 90's.

[buckeyedave]

Yes lets talk about Japan and lost decade shall we. No less than nine government stimulus packages, highways to nowhere, high unemployment, insurmountable government debt and nowhere near out of woods yet.
Is that really what you want for America? Do you not learn from others mistakes? You can never spend your way to prosperity, the very concept is inconceivable.

[frantaylor]

Unless you actually study American history and see that we have done it several times.

[MBAdaycamp]

We can't borrow our way out of a debt crisis...leverage got us into this mess and businesses­/consumers are acting rational by cutting back spending/borrowing. So economic growth is going to take a hit. But in time, prices will fall to the point where individuals will want to invest and launch new businesses.

A 2nd or 3rd Stimulus puts off the hard choices that need to be made and drag out the process. The 1st stimulus and bailouts served a purpose...avoided a total 1920s meltdown. But now we have to ride this out.

http://itunes.com/apps/mba101
www.mbadaycamp.com

[Mildmannered]

"leverage" got us into this mess? or was it the indiscriminate use of toxic financial instruments?

[hulagirrrl]

Too much money was dumped into saving the banks, who in return now are hording the money and not making loans...
The responsible banksters were not removed, and the saga continues.

If they are releasing another stimulus, where is the money coming from, out of thin air, the printing press or from China?

[hearmeout]

I'll tell you where it ain't coming from, it ain't coming from the Social Security Trust Fund because after using the "fund" to purchase two trillion in debt over the last couple of decades it's reaching the tipping point where there's no more in the kitty; Social Security will soon be paying out more than it takes in. But no problem, the Fed can always create virtual money - it's so nice when a private entity responsible to no one prints your money! - to purchase the staggering amount of debt that's coming down the pike. The moral of the story? The only conceivable way to pay down a $15 trillion dollar debt when it's as large as your GDP and (official) unemployment has reached double digits is by devaluing the currency in which the debt is held. Farewell, U.S. dollar.

[undecidedaboutPOTUS]

-0013 states:
"Here's the simple answer to that question: The first stimulus ain't working!!"
-----------------

Do you have any data to support that statement?

The first stimulus appears to be working, but slowly. As Krugman said, it was too small.

Please read the most Conference Board Report on Leading Economic Indicators, which states:

"The Conference Board LEI for the U.S. increased sharply for the second consecutive month in May. In addition, the strengths among its components continued to exceed the weaknesses this month. "

http://www.conference-board.org/economics/bci/pressRelease_output.cfm?cid=1
http://www.conference-board.org/pdf_free/economics/bci/hooded.pdf

Also look at the graph. It shows visually significant increase in the LEI, one month after passage of the Stimulus.

[joecoolconservative]

No the Porkulus Plan is not working. Since Obama's Porkulus (a.k.a) stimulus package was passed over 16,000 jobs per day are being lost and continued unemployment claims keep rising. In fact, continuing claims for jobless benefit rose to 6.883 million, a new record. This equates to an unemployment rate of 9.7%. Not good for the dems.

[marijam]

INFRASTRUCTURE. and nothing but.

[hulagirrrl]

Yes, exactly.

[Rickfors]

ditto!

[Hitchcockcameo]

I agree 100%. A massive infrastructure outlay: Bridge building/repair, highway building/repair, high speed rail, sewer repair, high speed internet to rural homes, power grid upgrade, levee and dike repair, hydro-electric dam refurbishments, air traffic control modernization. One might even build solar and wind farms reminiscent of the dam building projects in the early part of the 20th century.

[rationalpolice]

Well if the Dems want to gaurantee a slaughter in 2010 then they should go for it. The bank bailout, Auto bailout and the first stimulus might gaurantee their demise anyway. You don't borrrow more money to get out of debt. You cut back on programs and lower taxes. Lower taxes is the only way to truly stimulate the economy. Thank you Dems for your short run of power. You better get cap and trade, and the health insurance bills passed, because this will be your only shot for a long time.

[Hitchcockcameo]

Yes, we tried that for 8 years. Sorry the Republican Party of Failure proved this approach doesn't work.

However, we do have proof that spending on the scale of WWII DOES pull the economy out of deep economic trouble.

[Rickfors]

Exactly!
It isn't like the Republican party is coming up with any solutions.
They have been the problem since Nixon.

And the Ron Paul movement is just too wierd!

[iblogleft]

This my friends, is what we mean when we say "alternate reality".

[polybius]

Stop pouring money into the Wall Street Black hole and a big YES to second, real stimulus bill.

Deficit? Please. The rethugs have been running huge deficits for YEARS for their pals in big industry. God for bid we have just a year or two of deficit spending to help out the little guy.

Jobs in the US > Jobs in the far east. Hello???? Stop p;issing away our country to help ppl who already have way way too much money.

STIMULUS BILL #2 NOW AND IGNORE LYING RETHUGS IN CONGRESS. ty

[hypnotoad72]

I agree; at this point America has got to help itself. The world would depend on it too, since all our economies are inevitably linked. "Macroeconomics" are not irrelevant, and neither is the American middle class.