Stimulus!
By Pejman Yousefzadeh Posted in Economic Stimulus Package | Economy — Comments (0) / Email this page » / Leave a comment »
Here are the details of the White House stimulus package, which will likely serve to influence whatever final package emerges as a result of cooperation/confrontation between the White House and Congress:
President Bush, acknowledging the risk of recession, embraced about $145 billion worth of tax relief Friday to give the economy a "shot in the arm. "
Bush said such a growth package must also include tax incentives for business investment and quick tax relief for individuals. And he said that to be effective, an economic stimulus package would need to roughly represent 1 percent of the gross domestic product--the value of all U.S. goods and services and the best measure of the country's economic standing.
"There is a risk of a downturn," the president said in his remarks at the White House.
White House advisers say that in current terms, 1 percent would amount to around $145 billion, which is along the lines of what private economists say should be sufficient to help give the economy a short- term boost.
The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the nation into its first recession since 2001.
Bush said that Congress and the administration need to settle on a temporary economic package that could be implemented quickly to "keep our economy growing and create jobs."
"Letting Americans keep more of their money should increase consumer spending," he said.
As I have written ever so recently, standard political stimulus packages rarely do any good and mostly do a fair amount of harm. (More on this issue here.) Of course, I will emphasize again the fact that since we are in an extremely political season, calls for masterful inaction will be ignored. But this does not mean that in an ideal world, masterful inaction will not likely be the right policy to follow.