Please, Not a Second Stimulusby Tim Manni
Discussion is swirling in the Obama camp and among pundits of the possibility of a second stimulus package. Laura Tyson, an adviser on the president’s Economic Recovery Advisory Board, said in a speech in Singapore yesterday that the $787 billion stimulus package was too small and that the White House underestimated the economic downturn:
“The economy is worse than we forecast on which the stimulus program was based,” Tyson, who is a member of Obama’s Economic Recovery Advisory board, told the Nomura Equity Forum. “We probably have already 2.5 million more job losses than anticipated.”
Fortunately, recent remarks by President Obama, Vice President Biden, and economic adviser Austan Goolsbee suggested that talks of a second stimulus were premature. Tyson reiterated yesterday that she was speaking on behalf of herself, not the president:
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.
Obama said last month that a second package isn’t needed yet, though he expects the jobless rate will exceed 10 percent this year.
Even if Tyson wasn’t speaking on the president’s behalf, we find it troubling that one of his advisers is of the opinion that the country is not only ready for a second stimulus, but that we can afford it:
Tyson, 62, later told reporters that the U.S. can afford to pay for a second package, even as the fiscal deficit soars. She said the budget shortfall is “likely to be worse” than the equivalent of 12 percent of gross domestic product that the administration forecast for 2009 and the 8 percent to 9 percent it projected for next year.
How in the midst of bailouts, bankruptcies, stimulus packages, and so on can the country afford another stimulus? If $787 billion wasn’t enough, what is — a trillion? Since the biggest criticisms of the current stimulus are how slow the administration has been to get the money spent, and feelings that the economy will have worked itself out of the downturn by 2012, when the administration expects it to kick into full gear, how could a second package be implemented any faster and more effective? Furthermore, if Tyson can even answer that question, why hasn’t the answer been incorporated into the first stimulus?