Deeper Recession Prompts New Direction in Stimulus Debate
Bernard Kerry
New York Times
July 7, 2009
Unemployment last month hit a twenty-six year high and American gross domestic product is falling swiftly. The White House, fearful of a political backlash due to the sagging economy, has finally determined its Plan B.
February's $787 billion stimulus plan was described by President Obama in February as "exactly what the economy needs right now." However, it appears that in some sectors of the overall economy, the stimulus plan is either too small or being counterproductive.
Take North Carolina, where $330 million in stimulus funds were dispersed to construct an addition to Interstate-40. The North Carolina Legislature earmarked funds for the task in 2008, planning to contract private companies. Instead, the 2009 stimulus money is strictly used to employ government employees. According to a Raleigh, N.C. economist, 12,000 private sector jobs in construction were lost due to the plan, while North Carolina and local municipalities are only hiring 6,000 for the new construction.
This comes when Obama adviser Laura Tyson has called for a second stimulus plan. Tyson stated that the economy is worse than previously anticipated. “We probably have already 2.5 million more job losses than anticipated.” Tyson told the Nomura Equity Forum Monday.
Tyson, among others in the Obama Administration, have been calling for a second stimulus package since May. Tyson is among those calling for the largest expenditures, some approaching $2 trillion in new spending in 2009 alone.
President Obama is currently favoring a smaller package, meant to be passed through Congress by the end of October. According to Lester Junge, PhD, an economic expert at Stanford University, this package will likely approximate $1.5 trillion.
"It's really a matter of economic growth." Junge said, "Without these new funds, the President is fearful of a massive depression. With Senator Franken being seated, the Democrats should be able to block any possible filibusters."
Unlike the first stimulus plan, which disbursed many funds to state governments, the plan currently in draft stages will be spent entirely by the federal government. While most of the money budgeted will go to public works, up to $30 billion may be spent on President Obama's "Community Action Committees." These organizations will bring together groups of citizens, especially those under 25, for community service and other similar activities, directed from the White House.
This addition to the federal deficit is concerning many outside the US, including China. The People's Republic is reportedly considering a deal to exchange over $1 trillion of holdings in American dollars to Euros by the end of this financial year.
The President has not finalized any plans for a new stimulus plan, but Press Secretary Robert Gibbs has stated that any decision will be announced to the nation by mid-September.
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2 comments:
LOL!!
The administration says they "underestimated" the seriousness and depth of the economic woes.
What rot! They took the exact action necessary to drive our economy further down the tubes. If they had not forced the first batch of irrational, abusive, irresponsible borrowing and spending, we would already be recovering.
But, apparently, our economy isn't tanking fast enough so they want to give it another dose of destruction.
Please call and write and visit your Congressmen and Congresswomen and demand that they not only vote against any additional stimulus, but that the original stimulus, omnibus spending and budget are all rescinded.
Please visit my blog at http://backyardfence.wordpress.com
and help me to refine and implement a Conservative Action Plan to Restore our Republic.
Best regards,
Gail S
instead of giving the money to the business, to have vacation and whatever give it to the real people. Families trying to survive and lets put a cap on the companies that make drugs. We all know that the drug companies are making a fortune on the meds that everyday people need. We pay $148 a week for a health plan, and still when we go to the doctor we cant afford the meds we need. Give every family in the united states that are citizens and that are true americans a big fat check and see what happens. It is the families that need the money not the ceo's and high paid employees of companys. Now because of minium wage going up people are getting their hours cut so why pay more if they cant get the hours of work. Noone should have to pay this kind of insurance prices and still have to put out the money like they do to get a prescription filled. Ok Obama tried, so move over and let someone else give it a shot.No wonder people cant get credit after all the layoffs,foreclosures, and grocery prices, how can people afford anything else. Its a vicious cycle for everyone. Quit giving all the foreigners over here grants and free medical care and see how fast they leave.
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