James Pethokoukis

Politics and policy from inside Washington

Obama and a second stimulus package

June 23, 2009

Actually, it would the third stimulus, counting the one from Bush. The president at his new conference this afternoon:

QUESTION: Do you think you need a second stimulus package?

MR. OBAMA: Well, not yet, because I think it’s important to see how the economy evolves and how effective the first stimulus is. I think it’s fair to say that, keep in mind the stimulus package was the first thing we did, and we did it a couple of weeks after inauguration.

At that point, nobody understood what the depths of this recession were going to look like. If you recall, it was only significantly later that we suddenly get a report that the economy had tanked. And so it’s not surprising, then, that we missed the mark in terms of our estimates of where unemployment would go.

I think it’s pretty clear now that unemployment will end up going over 10 percent, if you just look at the pattern, because of the fact that even after employers and businesses start investing again and start hiring again, typically it takes a while for that employment number to catch up with economic recovery. And we’re still not at actual recovery yet.

So I anticipate that this is going to be a — a difficult — difficult year, a difficult period.

QUESTION: What’s the high-water mark, then, for unemployment?

MR. OBAMA: I — I am not suggesting that I have a crystal ball, since I — since you just threw back at us our last prognosis, let’s not — let’s not engage in another one.

(CROSSTALK)

MR. OBAMA: But — but — but what I am saying is that here are some things I know for certain: In the absence of the stimulus, I think our recession would be much worse. It would have declined. Without the Recovery Act, we know for a fact that states, for example, would have laid off a lot more teachers, a lot more police officers. and a lot more firefighters.

Every single one of those individuals whose jobs were saved as a consequence, they are still making their mortgage payments. They are still shopping.

So we know that the Recovery Act has had an impact.

Now, what we also know is this was the worst recession since the Great Depression. And — and people are going through a very tough time right now. And I don’t expect them to be satisfied.

I mean, one thing that — you know, as I sometimes glance at the various news outlets represented here, I know that, you know, there is sometimes reporting of, “Oh, the administration’s worried out this,” or “their poll numbers are going down there,” or this is.

Look, the American people have a right to feel like this is a tough time right now. What’s incredible to me is how resilient the American people have been and how they are still more optimistic than — than the facts alone would justify. Because this is a tough, tough period.

And I don’t feel satisfied with the progress that we’ve made. We’ve got to get our Recovery Act money out faster. We’ve got to make sure that the programs that we put in place are working the way they’re supposed to.

I think, for example, our mortgage program has actually helped to modify mortgages for a lot of people, but it hasn’t been keeping pace with all the foreclosures that are taking place.

I get letters every day from people who say, “You know, I appreciate that you put out this mortgage program, but the bank is still not letting me modify my mortgage, and I’m about to lose my home.”

And then I’ve got to call my staff and team and find out, you know, why isn’t it working for these folks and can we adjust it, can we tweak it, can we make it more aggressive?

This is — this is a very, very difficult process. And what I’ve got to do is to make sure that we’re focused both on the short term — how can we provide families immediate relief and jump-start the economy as quickly as possible — and I’ve got to keep my eye on the long term.

And the long term is making sure that by reforming our health care system, by passing serious energy legislation that makes us a clean-energy economy, by revamping our education system, by finally getting the financial regulatory reforms in place that are necessary for the 21st century, by doing all those things we’ve got a foundation for long-term economic growth and we don’t end up having to juice up the economy artificially through the kinds of bubble strategies that helped to get us in the situation that we’re in today.

Comments

$800B, $1.6 Trillion…let’s tweak it a bit.

How about some transparency on what’s already signed off on?

Better yet; stop the hemorrhaging of cashola!

Posted by Hank Reardon | Report as abusive
 

“Without the Recovery Act, we know for a fact that states, for example, would have laid off a lot more teachers, a lot more police officers. and a lot more firefighters.

“Every single one of those individuals whose jobs were saved as a consequence, they are still making their mortgage payments. They are still shopping.”

What about the people who lost jobs because high taxes reduced private business? What about the people who lost jobs because savings and investments were eroded by inflation (and couldn’t be used to create jobs)?

We know the Recovery Act has had an impact. But we certainly don’t know if they impact was positive. Nobody bothered to measure the negative side effects. They were too busy congratulating themselves on the positive side effects.

Posted by paul | Report as abusive
 

“don’t know if they impact” should be “don’t know if the impact”

sorry

Posted by paul | Report as abusive
 

Dear James,
re: your info

Does China have plans for the USA?
She appears to have plans for Australia as NEW SOUTH CHINA.
For revelations about both nations see
http://noradwarningchina.blogspot.com/

http://doeschinanukegrainharvest.blogspo t.com/
and

http://whatwillbecomeofaustraliajackburr ell.blogspot.com/

God bless.
G.Gibson
Sydney Australia

 

James.

Here is what I wrote about the first stimulus.

Bailout News Stimulus Edition: Generational Rape with a trillion dollar Shovel

http://dailybail.com/home/bailout-news-s timulus-edition-generational-rape-with-a -trill.html

I have been following you on Twitter for a few weeks now. I appreciate your point of view.

steve

 

Really? OMG BREAKING NEWS!

Spending almost a trillion dollars creates a positive impact on the economy – who would have ever guessed?

I wonder what the impact on the economy will be of all the additional interest we will pay on this debt – and what the impact will be when (if) we ever try and pay it back.

Hint – that will require a large increase in taxes – or a cut in gov spending.

How hard is it to understand you can’t create long term prosperity by borrowing money – if the money is wasted on worthless projects –

You think some of the people who took out adjustable rate sub prime home equity loans that they could not afford to pay back would even be smart enough to figure this one out.

Obama is a bigger tool than Bush -

Posted by z71bill | Report as abusive
 

The president has no clue what he’s up against with the economy. Spending has to stop – not increase. He also might want to take a quick look at N. Korea and blow them out of the water and stop catering to their stupid threats. If Reagan were president today, they would be insignificant and we could then focus on the economy by not increasing social spending and bolstering the auto and banking businesses with tax dollars. Every other country in the world thinks his economic stimulus plan is ridiculous in that it doesn’t do anything for the everyday American. Continuing to allow millions of dollars in bonuses using tax dollars makes me proud. Not.

Posted by Frank | Report as abusive
 

1930s New Deal policies did not work then and won’t work now. High fixed wages and price controls in conjunction with rationing during World War II allowed for vast savings to be accrued in the U.S.. After the war people could by cars with cash and in some cases homes.

I am not advocating another war. However a massive works project producing solar panels, electric generators, natural gas conversion kits for automobiles would be a start. Getting people off the grid would translate into reduced power grid improvement. At the same time a public works project developing Geo thermal power generation is paramount. Once an excess energy infrastructure and personal savings by the middle class has been built, economic restrictions can be lifted.

There is every reason to believe a free market economy can prosper again. The essential component will be to limit the use and need for credit.

Posted by Anubis | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •