Economist: Obama Stimulus Not Enough

(CBS)  Speaking on CBS News' Face the Nation, Obama senior White House advisor David Axelrod noted that he wants Congress to work with "deliberate speed" on an economic stimulus bill in the new year. "We've talked about a package from 675 billion to 775 billion," Axelrod said, adding "one thing we, I think everyone, agrees on, economists from left to right, is that we have to do something very large." He said a stimulus package by January 20th "would be great" but would not commit to whether that is a realistic goal.

However, Nobel-winning economist Paul Krugman said he is concerned that the stimulus package is not big enough.

"I'd like to see it bigger." Krugman said. "I understand that there's difficulty in actually spending that much money, and I--they're also afraid of the--of the T word. They're afraid of a trillion dollar for the two-year number. But you know, the back of my envelope says it takes roughly 200 billion a year to cut the unemployment rate by 1 percent from what it would otherwise be. In the absence of this program, we could very easily be looking at a 10 percent unemployment rate. So you do the math and you say, you know, even these enormous numbers we're hearing about are probably enough to mitigate but by no means to reverse the slump we're heading into. So this is--you know, I--they're thinking about it straight."

"I liked what Larry Summers wrote in The Washington Post," Krugman added. "I think he was getting it right that the risks of being too small are much bigger than the risks of being too big. Nonetheless, I am actually concerned that this thing is not going to be really big enough."

Krugman chimed in on comparisons between the present economic situation and the Great Depression and said, "the only reason that we're not headed for Great Depression II -- at least I don't think we are -- is that we think we learned a few things since then." He then added, "but this is big stuff. This is the worst thing, you know, in two life times."

[VegasResident]

I saw an interesting article today on CNN that the problem with the economy is that the govt is treating it like the Depression, which was a problem with liquidity and continue to pump in cash. However liquidity in Banks has risen from 7 billion to over $750 billion because they refuse to lend the money to each other or consumers, businesses, etc.

This is a crisis in confidence and not liquidity.

this is why as consumers and businesses, even though banks are getting tons of cash we are still seeing our credit card interest rates go up, the inability to get small business or personal loans, etc.

Until confidence is restored at the bank level and they start loaning out this horded liquidity, we will not see an end to the recession.

If they start loaning, then businesses can hire. If businesses can hire, then people will spend and the economy will be in the right direction.

[alarchdu]

If Obama just gave $1000 to everyone in the US, a few who didn''t need it would get it. But the $300 billion would be spent, on mortgages or consumer goods, but not on investments. It would trickle upwards to the banks, most would come back to the IRS as taxes within a year. It would boost employment faster than Krugman''s suggestions. Of course, it would reduce the control of the money people. That is why it will not be done.

[wardoglrs]

Masterful and arrogant wealth, created largely by Government protection of its profits, not content with its domination and influence within a single party, had sought to corrupt them both, and to that end had insinuated itself into the primaries, in order that no candidates might be nominated whose views were not in accord with theirs." %u2018Colonel%u2019 Edward Mandell House in ''Philip Dru: Administrator'', circa 1912

"When one gets in bed with government, one must expect the diseases it spreads." %u2013 Ron Paul

The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. %u2013 Winston Churchill

[noloyalisti]

TheMajority1 - Ah, another line of wisdom from the not-so-silent minority. You were most likely a King George Butch supporter. And would have supported King George against the American patriots during the Revolution.

[noloyalisti]

As I have been saying for years, we should organize boycotts and general strikes before we have NO LEVERAGE left. This who economic system for, by and of the big corporations is out of control. I mean, what did we expect to happen. Fascism happens!

[samthetvcat]

---"The best option might be similar to the technology boom"---
Posted by homespunlady

Or maybe it''s more like somebody who dreams of ''making it big'' with a rock band who plays for tips every night in smoky bars off the beaten path, convinced he''s magically going to make it big one day and prove all those naysayers wrong. Only it''s been 8 years and he''s a dad now with family responsibilities and it''s an awfully big gamble to forego ''settling'' for a better paying job to instead buy on credit in the hopes that the deficit spending''ll all pay off once he has that breakthrough.

Team Barack doesn''t say enough that I can''t tell what their thinking is - is it that they''re just focused on turning the numbers around and THEN they hope to make more substantive changes, do they think it''s more politically advantageous to not make substantive changes, or are they just holding on to a pipe dream because they don''t want to give up hopes of glory?

I''m assuming it''s the latter, but hopefully that''s a mistaken assumption - I think most people would rather have the good paying manufacturing jobs in the here and now then keep buying on credit and holding out hopes for lightning to strike in the future . . .

[assemblyofso]

Did the media help pick up the tab on the Boeing 767 Obama chartered to take his familiy to the islands?
The reporters slammed Palin for her wardrobe. Where is the outrage over this type of wasteful spending. Is he going to send Gore a check for carbon credits?

Obama has one hell of an ego.

Ronald Reagan had a vision of America. Franklin Roosevelt had a vision of America. Barak Obama has a vision of Barak Obama.

[samthetvcat]

---"The best option might be similar to the technology boom"---
Posted by homespunlady

I think that''s like hoping to win the lottery, or waiting for Godot . . . people even after 8 years of declining incomes seem to still be holding out hope for the next ''technology boom'' that''s going to prove that our free trade relationship with China was ''progress'' because we''ve evolved into an economy of information service workers . . . is the thinking that Bush just didn''t allow that to happen and that Barack can make it happen, because that seems to me an awfully big expectation for him to fill . . .

[samthetvcat]

---"Wow! I''''m impressed with all the well thought through ideas and the polite lack of personal attacks and name calling."---
Posted by homespunlady

A lot of people have analogized support for unchecked deficit spending without a plan to reform to being in denial about a problem with alcohol - you know how alcoholics apparently can deny that they''ve been drinking even when they''re surrounded by empties because they''re delusional . . .

Great observations punlady! :D

[themajority1]

getting away with it before their puppet W leaves office.
--------------------------------------------------------------------------------Posted by homespunlady

And YOUR puppet remains that of ignorance and intolerance.