Last December I said that a $1 trillion stimulus looked appropriate but that the incoming administration should get a second stimulus into the budget resolution, with appropriate triggers so that it would be sprung if things turned out to be worse than we then expected.
If the Obama administration had done so, right now we wouldn't be trying to persuade a political system that a stimulus designed for an 8% peak unemployent recession is too small for the 10% unemployment recession we have--let alone the 12% peak unemployment recession we fear.
I wish I weren't so smart...
Laura Tyson adds her voice to the good guys:
naked capitalism: Submitted by Edward Harrison of Credit Writedowns. Laura Tyson, an advisor to President Barack Obama, said in a speech to day in the lead up to the –8 conference that the ground work for a potential second stimulus bill must be laid now. To be sure, the G-8 leaders are expected to recommend continued policy accommodation worldwide. However, Vice President Joe Biden recently suggested that the Obama Administration has no plans for a second stimulus bill on the political TV show Meet the Press (transcript here). So, which is it – stimulus or no stimulus?
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.
Tyson’s comments contrast with remarks made two days ago by Vice President Joe Biden and fellow Obama adviser Austan Goolsbee, who said it was premature to discuss crafting another stimulus because the current measures have yet to fully take effect. The government is facing criticism that the first package was rolled out too slowly and failed to stop unemployment from soaring to the highest in almost 26 years.
Obama said last month that a second package isn’t needed yet, though he expects the jobless rate will exceed 10 percent this year. When Obama signed the first stimulus bill in February, his chief economic advisers forecast it would help hold the rate below 8 percent.