Congress May Need to Fund Another Stimulus, Pelosi Says
Wednesday, March 11, 2009
House Speaker Nancy Pelosi said yesterday that the federal government may have to spend even more money to shore up the nation's ailing economy, on top of the more than $1.6 trillion so far approved by Congress.
With the jobless rate rising and the economy continuing to slow, Pelosi (D-Calif.) told reporters: "We have to keep the door open to see how this goes."
Pelosi's remarks came after senior House Democrats met behind closed doors with four prominent economists, who praised the actions taken by Washington to ease the effects of a recession that threatens to be the most severe since the 1930s. The $787 billion stimulus package, a $700 billion bailout for the U.S. financial system and President Obama's proposal to stem the tide of residential foreclosures are all sound policies that should begin to make a difference in the coming months, they told lawmakers.
Still, all four told lawmakers that there is a high probability that more money will be needed later this year to stabilize the banking system and, perhaps, to stimulate economic activity more generally.
"Policymakers need to do more. I don't think we're done," said Mark Zandi, chief economist at Moody's Economy.com, who has been advising House Democrats. "I think another stimulus package is a reasonable probability, given the way things are going. I think more money for financial stability to shore up the banking system is likely. That's very likely. And I think more money for foreclosure mitigation may also be necessary at the end of the day."
Several economists have said the stimulus package will not meet the administration's goal of saving or creating 3.5 million jobs by the end of next year because the final package was smaller than expected and contained several provisions that they say are unlikely to be particularly effective. Yesterday, Allen Sinai, chief economist of Decision Economics, joined Zandi and other independent forecasters in predicting that the package will create or save only about 2.5 million jobs by the end of 2010, offsetting a little more than half of the 4.4 million jobs lost since the recession started.
"Initially, the jobs created may be a little disappointing," Sinai said. But "over time, over a three-year period, I think 3 million new jobs is not unrealistic at all."
White House press secretary Robert Gibbs told reporters yesterday that the president's economic team remains confident that the stimulus package "will have a concrete impact on getting our economy moving again and putting people back to work."
Gibbs declined to comment on the likelihood that the president will request additional stimulus spending. Administration officials, however, have previously said they may seek up to an additional $750 billion to prevent the collapse of the banking system.