For several weeks now, officials in Washington have been openly discussing the possibility of another federal stimulus package to boost the nation’s lagging economy.
The federal government already has taken two aggressive steps this year to prop up the economy. In February, Congress passed a $150 billion stimulus package of rebate checks for middle- and lower-income taxpayers. And in October, President Bush signed a $700 billion financial rescue bill, which included $250 billion for troubled banks.
Now, government officials are discussing the merits of a third economic intervention.
Federal Reserve Chairman Ben Bernanke, testifying on Capitol Hill late last month, said Congress should consider another stimulus package.
“The uncertainty currently surrounding the economic outlook is unusually large,” Bernanke said. “Any fiscal action inevitably involves trade-offs – not only among current needs and objectives, but also because commitments of resources today can burden future generations and constrain future policy options. 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.”
Bernanke added that any stimulus should be crafted to boost spending in the short term without significantly adding to America’s long-term deficit. Despite being prodded repeatedly by legislators, Bernanke declined to say how much money should be spent or specify what the package should contain.
They were right to question and push for a figure. And we all should wonder how a package could boost spending without adding significantly to our country’s long-term deficit. We are still paying debt associated with Franklin Roosevelt’s New Deal. Bush just signed the $700 billion bailout bill. And when Americans got their stimulus checks earlier this year, many people banked them, versus spending the money as the government had hoped.
Bush has said he is “open to the idea” of another stimulus package, but that the administration would have to see how Congress formulates it. And still to be seen is whether Congress will pass a package while Bush is still in the White House or will wait until Barack Obama takes office in January.
It is likely that Americans will get another round of economic stimulus checks – how much and which president gets to take the credit remains to be seen.
But consider this: While a check in the mail or an extra direct deposit is a welcome surprise, the stimulus money is like a cash advance on a credit card. When you go get quick cash and spend it, you are still saddled with paying it back over time.
This nation needs a jobs package to offset more than 2 million lost just this year. The only way to turn this economy around is to create new, lasting jobs, not to send $600 checks to citizens. And to force banks to loan again.
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