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Stimulating the Economy

January 22, 2008 - by Donny Shaw

As the Senate convenes today for its first full session back from recess, it seems like the policy makers in D.C. have only one thing on their minds: designing and enacting an economic stimulus plan to help the country through an impending recession. You might have caught some of the front-page features on this in the papers over the weekend, or some of the chatter on blogs, and you’ve probably seen today’s news that the Fed made a serious cut to the interest rate. Here’s what people are saying about what’s coming down the pipe.

As discouraging economic indicators keep coming in faster and faster, the Bush Administration and most in Congress have come to agree that some kind of quick and targeted fiscal plan is needed to inject money into the economy and give it a boost. But there is disagreement over many of the details: how big the overall package should be, if there should be an upper income limit on who can receive the benefits, if lower-income benefits such as unemployment insurance and food stamps should be extended, and more.

Economic uncertainty has been evident for the past several weeks by following visitors on OpenCongress, especially their investigations into the “subprime” lending crisis in the housing market and its affects on the greater economy. For example, the “”http://www.opencongress.org/bill/110-h3648/show">Mortgage
Forgiveness Debt Relief Act of 2007" has been the most-viewed bill on the site for the past few weeks, and users have made tax
rebates
the fourth most-viewed issue area on the site. Also, the latest five bills in the Economic
Policy
issue area contain two bills marked as “hot” by OpenCongress bloggers.

We have put together a collection of some of the recent news and blog coverage that has accompanied the initial talks in DC about what should be in the economic stimulus package. Check them out to get a sense of all the different factors, theories and politics shaping the debate. It seems to me that bloggers from both sides of the aisle agree on at least a couple of things: that for this to be effective, it has to happen fast; and that lawmakers should resist the requests of special-interest lobbyists.

The package is expected to be formally introduced into Congress as a bill sometime soon, but until it is, consider this the space for sharing your thoughts on it. Check out some of the links below and then feel free to leave a comment discussing how you think the stimulus should be designed, or highlighting an overlooked provision, or prognosticating how you think it will eventually be passed. We figure that, since the problems in the economy are affecting all of us, we should all be able to have our say on what can be done to help the situation.

Pictured above is President Bush, VP Cheney and US Treasury Secretary Henry Paulson talking about the economy at the White House.

News Coverage from the past week:

  • Bloomberg:
    “Fed Cuts Rate 0.75 Percentage Point in Emergency Move” (Jan. 22, 2008)
  • AP:
    “White House Flexible on Stimulus Plan” (Jan. 22, 2008)
  • AP:
    “White House Mulls Stimulus Plan”
  • AP:
    “Schumer: Expand Those Helped by Stimulus”
  • NYT:
    “Tax Rebate or Payment? A Policy Debate Begins”
  • Slate:
    “Stimulating Problems” (in “Today’s Paper’s” feature, Jan. 17 2008)
  • Bloomberg:
    “Bush Stimulus Plan Includes $1,600 Rebate, People Say”
  • NPR
    Commentary
    : “Economist: Don’t Jump the Gun on Stimulus Plans”

Blog coverage from the past week:

  • TaxVox: “Stimulus: Who Should Get a Rebate?”
  • BloggingStocks:
    “An economic stimulus package in March will be too late”
  • Kiplinger
    Business Resource Center
    : “Economic Stimulus: Bush and Congress
    Agree It’s Needed – A rare bipartisan mood is putting wind in the sails
    of a stimulus package.”
  • Senatus:
    “Economic Stimulus Package By Early March?”
  • RedState:
    “‘Stimulus’ = More Big Spending”
  • OMBWatch:
    “The CAP Plan: Stimulating Debate, not Spending”
  • The
    Hill
    : " Stimulus Package May Be Answer to Declining Economy (Rep.
    Mike Conaway)"
  • Crooks
    and Liars
    : “CNN reports that Lobbyists are trying to influence the
    Economic Stimulus package”
  • OMBWatch:
    “Election Year a Stimulus for Bipartisanship?”
  • Townhall:
    “Mr. President, Don’t Stimulate Us”
  • Social
    Welfare Spot
    : “A Workable Economic Stimulus Plan from the Economic
    Policy Institute”

Have a tip? Let us know in the comments below … or paste in a link to other helpful articles.

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Comments

  • Anonymous 01/22/2008 7:26pm

    The Hill is a bit elitist. You have to be elected to blog. Isn’t that the opposite of this blog?

  • Anonymous 01/22/2008 7:32pm
    at Townhall…. seems like a blog about Wierd Science. Either that or he’s talking about people just don’t understand him……..
  • Anonymous 01/24/2008 6:51am

    http://blog.russnelson.com/economics/stimulus.html

  • donnyshaw 01/24/2008 7:05am

    OpenCongress Staff

    Bloomberg this morning released a description of what the stimulus package is shaping up to look like ::

    http://www.bloomberg.com/apps/news?pid=20601087&sid=atd7gXmX2POw&refer=home

    Krugman is not happy with it ::

    http://krugman.blogs.nytimes.com/2008/01/24/stimulus-disappointment/

  • donnyshaw 01/24/2008 8:03am

    OpenCongress Staff

    Alex Stenback has heard from “a very reliable source” that much of the FHA modernization bill (S.2338) will be included in the economic stimulus package:

    “Sources in the House, the Senate, and the White House are all indicating today that a tentative consensus has been reached that the economic stimulus bill that Congress will send to the President will include much of the FHA Reform Legislation including raising the FHA loan limit max to match the FHA conforming limit AND a one year raise of the conforming limit to $625,000 with the possibility of an additional one year extension at expiration. All sources also indicate Congress will deliver the bill to the President before their break in mid-February and that it should be signed by the end of February. Obviously this is not “done” but all of the sources I am using are very close to the action. This would mean that we could see at least the loan limit portions of the legislation we are hoping for within the next 6 weeks."

    http://www.behindthemortgage.com/behind_the_mortgage/2008/01/news-on-conform.html

    And below are some reactions to the “news”:

    http://calculatedrisk.blogspot.com/2008/01/were-all-jumbo-subprime-now.html
    http://www.chrishayes.org/blog/2008/jan/24/worst-stimulus-ever/

  • Anonymous 01/24/2008 1:28pm

    From OMB Watch, see

    http://www.ombwatch.org/article/articleview/4148/1/192?TopicID=5

    and

    http://www.ombwatch.org/article/articleview/4147/1/526

  • Anonymous 01/24/2008 1:29pm

    From OMB Watch, see

    http://www.ombwatch.org/article/articleview/4148/1/192?TopicID=5

    and

    http://www.ombwatch.org/article/articleview/4147/1/526

  • Moderated Comment

  • cocojambo 02/25/2008 8:43pm

    Well here’s the deal with the $150 billion stimulus package. As you already know, we are in a period of stagflation (where there is an impending recession + inflation) where commodity prices are going through the roof. And if the Bush Administration hands out this stimulus package of $150 billion or whatever, it will finance this via Ben Bernanke printing lots more money through his printing presses – more like throwing money off the helicopters flying high in the sky. What will happen from this? More inflation! This will lessen purchasing power of consumers and devalue the US dollar, thus I think this stimulus package is a short term problem to a long term problem.

    Visit my blog @ mortgage calculator www.2mortgageloancalculator.com if you want to learn more about my theories, thanks!

  • Anonymous 03/17/2008 10:24am

    There are simple ways to address and avert a recession. a major way to do so would be to provide jobs through construction of vital infrastructure in america, and moving towards sustainable homegrown energy for america. by investing in our fuel independance we will create many jobs as a country while consuming less oil from volatile countries. i think the government should pursue a bill that caps variable interest rates that are bankrupting many families and causing this recession at 7.85% which is alot lower than many mortgages are currently assessed at, but higher than the current interest rates. by setting an interest limit on variable mortgages more americans will be able to remain in their homes. I also believe cutting interest rates by a full percentage point will stimulate our economy further, it will correct the glut of housing inventory currently unsold, and provide stable and secure mortgages for families. I would suggest the government begin to transition out of the war in iraq and start using the funds to invest in american jobs, infrastructure, and overall betterment of america as a whole. although it will not happen under this president a major reform to lower healthcare costs and make sure all americans are insured will greatly remove a huge burden currently placed on society and will allow many more lower wage hardworking people to live better and remove a huge burden and liability from their balance sheet. energy costs are crippling for many americans, if as a society we move towards sustainability and reduced consumption of non renewable fuels it will have an overall beneficial effect to all americans, save money, the environment, and lead to stabilized costs. I believe there are solutions that can be funded without major costs to taxpayers to re-invigorate this economy. any package pursured should be a catch all and provde solutions from all corners to come together to support the low income americans being hit by the current crisis. combining a manditory refinance law to protect consumers, while passing huge conservation and environmental sustainability package, with a job creation and neccesary infrastructure package, we will see many net positive results and avert serious effects of a recession. if that then is combined with healthcare reform we will most likely reverse current job loss, attract new businesses in america, reduce large expenditures and liabilites for our low income residents and set ourselves down the path of job creation, a robust economy, and the ability for more americans to remain in their homes throughout this current brink of recession and mortgage crisis.

  • Moderated Comment

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  • Anonymous 01/05/2009 10:30pm

    Tracks residential housing contract activity of existing single-family homes. The Pending Home Sales report is an advanced read on trends in the US housing market. Housing is typically correlated to the overall state of the economy; particularly indicative of economic turning points. The recession has people in a frenzy to repair credit, especially since the mortgage market all but collapsed, but the lower prices in the Western U.S. have been driving prices up. There may be signs that the market is beginning to correct itself in a display of good, old fashioned, supply and demand. In the western U.S., home sales climbed 13%, whilst prices dropped 26%. It’s the most basic of economic principles – as the supply increases, with the increased number of foreclosures and the decreased availability of credit, the demand drops. Eventually, the decrease in demand drops the price to a point where it stabilizes against the supply, and the system equalizes itself naturally. The western states are beginning to normalize, but the overall American home sales are still down about 11% – as the eastern states have been a bit slower to equalize to the demand curve, but they ought to sort themselves out soon enough. To read more about the real estate market and tips on how to repair credit, check out this article.

  • 143 06/12/2009 12:16am

    Housing starts are down – which isn’t exactly a surprise, given that the housing market is in the tank. However, April saw fewer housing starts than the last few months, which IS surprising because April is when a lot of homes start to go up, more building permits are issued, and more people look into a fast loan for new housing. Slower starts were reported for multifamily homes, such as an apartment complex, as were multifamily unit sales and new home sales, and also military loans for new base housing. The housing market was incredibly hard hit by the recession, credit for housing has slowed dramatically, and mortgage loan modification has gone up as housing starts have gone down.

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