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Bernanke Calls for More Stimulus

October 20, 2008 - by Donny Shaw

Federal Reserve Chairman Ben Bernanke helped build momentum for Congress to come back after the November elections and pass a second economic stimulus package. Breaking from the Bush administration’s ambivalence up to now on the issue, at a hearing today on Capitol Hill, Bernanke came out with a strong, but vague, endorsement of another stimulus.

Bloomberg:

>Federal Reserve Chairman Ben S. Bernanke endorsed additional fiscal stimulus, saying the credit crunch is “hitting home” as Americans find it harder to get loans, threatening a prolonged economic slump.
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>Lawmakers “should consider including measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers,” Bernanke said in testimony to the House Budget Committee. “Such actions might be particularly effective at promoting economic growth and job creation,” he said, calling consideration of a stimulus “appropriate.”
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>[…]
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>"Any fiscal action inevitably involves tradeoffs" that may “burden future generations,” Bernanke said. Yet “with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate.”

Wall Street and Democrats in Congress reacted favorably. And White House press secretary Dana Perino said that the Bush administration is “open” to a second stimulus.

One of the priorities for Democrats in a second stimulus package is increasing funds for transportation infrastructure projects in order to create jobs. Economist Paul Krugman, who won some big award last week or something, explains why he think this is a good time to invest in infrastructure:

>And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

It might not even take too long to get the new infrastructure projects up and running:

>The $150 billion plan unveiled last week by House Speaker Nancy Pelosi of California – which has been endorsed in its broad outlines by both Senate Majority Leader Harry Reid of Nevada and the party’s presidential nominee, Sen. Barack Obama of Illinois – is expected to pour federal funds into “ready to go” infrastructure projects that could be up and running within 90 days.
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>The American Association of State Highway and Transportation Officials has compiled a list of more than 3,000 projects that states say are just waiting for funding so they can begin work.

UPDATE:

Politico:

>Federal Reserve Chairman Ben Bernanke’s tentative endorsement of a stimulus package raised Democrats’ hopes yesterday, but Bush spokeswoman Dana Perino threw some cold water on that notion today.
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>Perino says President Bush is “open to good ideas” on a second economic stimulus package — but so far he hasn’t heard any.
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>“We will listen to people if they put anything forward that we think would actually stimulate the economy,” Perino told reporters. “So far, we have not seen that. We’ve seen a lot of campaign talking points.”

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Comments

  • Anonymous 10/21/2008 2:47pm

    He wants a job from Obama too. That’s why Powell endorsed(right).

    His stimulus is Obama’s ‘keep the poor poor’ tax breaks like Bill’s EIC. The jobs dems are supposed to get us? Poverty wages with promises of education, 1 year limited federal employment and no real federal job for 20 years. We need to open up federal employment and get people out of poverty instead of giving them poverty options. The answers for the bailout are the same. they are dem answers that just keep the poor poor and the rich rich.

    Federal employees have no mortgage problems and make lots of money. We need to get the poor these jobs by limiting how long the job can be kept. Five years at 50,495 would pay my mortgage.

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