The politics and economics of a second stimulus plan
I would doubt whether the WH thinks a second stimulus works for them politically or economically:
1) It’s clear they are closely watching interest rates to see if the”bond vigilantes” are getting spooked by all the debt. The surge in yields from mid-March to mid-June forced Team Obama to start talking about deficit reduction. Would they want to risk a further backup in rates by announcing a $500 billion package to aid cash-strapped cities and states? Higher rates would be recovery killer.
2) It’s one thing to admit that you, like pretty much everyone else, underestimated the depth of the recession. But why didn’t the WH push for a package that was more front-loaded or had more tax cuts or, as liberals wanted, just much bigger in case the bears were right? Those questions go to the heart of the administration’s economic competence.
3) What if the WH pushed for a second stimulus package and lost? Or what if the effort drained energy away from getting healthcare and climate change passed? Those are big risks for a plan that might not help much before the 2010 midterms anyway.
4) With 90 percent of the dough yet to be spent, the whole thing makes the WH look panicky.