Second Stimulus Inevitable?

By Jennifer Parker

Mar 9, 2009 11:00am

No one bit when I raised the prospect that a second stimulus might be necessary at the top of "This Week" yesterday. But this morning’s news offers more evidence that it might be necessary, with the World Bank predicting that 2009 will bring the first global recession since World War II , Warren Buffett observing that the economy has "fallen off a cliff", and New York Times columnist Paul Krugman opining that the administration will soon "realize that more must be done." Harvard economics professor Martin Feldstein has argued a second fiscal stimulus package is likely. "It will need to be much better targeted at increasing demand in order to avoid adding more to the national debt than the rise in domestic spending," Feldstein wrote last week in the Taipei Times. Administration officials tell me that it’s just too early to push for another stimulus, pointing out that only about $3-billion of the first one has gone out the door so far. (The pace is expected to pick up in the next couple of weeks).  But pay attention to what Larry Summers told the Financial Times. If Summers believes that world leaders have to pump more money into the economy, won’t the U.S. have to lead the way?  Officials are analyzing the question of what kind of stimulus might be necessary and what form it would take. Crunch time for a decision could be as early as the first week in April when President Obama attends the G-20 global summit in London. More to come… — George Stephanopoulos UPDATE: Obama economics adviser Christine Romer, chair of the Council of Economic Advisers, hinted today that more stimulus money may be needed.

"Beware of cutting back on stimulus too soon," Romer said Monday at the Brookings Institution in Washington, DC. "We will need to monitor the economy closely to be sure that the private sector is back in the saddle before government takes away its crucial lifeline." Asked directly by ABC’s Matt Jaffe about a second stimulus, Romer said, "[We] feel we need to let this one work," she said, "I feel very strongly we need to let the medicine work to see if it does the trick." No doors closed. Will news between now and G-20 raise or lower pressure? UPDATE: White House Press Secretary Robert Gibbs Monday when asked if the administration is planning a second stimulus: "The focus right now in this White House is to ensure that the money that taxpayers — that taxpayer money has gotten out quickly, that jobs are created," he said. "You’ve seen the president make many announcements. And you’ll see more, in order to ensure that money is spent wisely and quickly, to get the economy moving again."

You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus