Washington
20 October 2008
Officials in Washington are openly discussing the possibility of another federal stimulus package to boost the troubled U.S. economy. As VOA's Michael Bowman reports, the discussion comes as leading U.S. economic indicators edge slightly higher.
This year has already seen two aggressive steps by the federal government to prop up the economy.
In February, as the economy was slowing down, Congress passed a $150 billion stimulus package that featured rebate checks for middle- and lower-income taxpayers.
Earlier this month, amid a worsening credit crisis, President Bush signed a $700 billion financial rescue bill, $250 billion of which is being used to boost capital for troubled American banks.
Now, U.S. officials are openly discussing the merits of a third government economic intervention.
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| Ben Bernanke testifies before Congressional committee, 20 Oct 2008 |
Testifying on Capitol Hill Monday, Federal Reserve Chairman Ben Bernanke said Congress should consider another stimulus package.
"The uncertainty currently surrounding the economic outlook is unusually large," said Ben Bernanke. "Any fiscal action inevitably involves trade-offs - not only among current needs and objectives, but also because commitments of resources today can burden future generations and constrain future policy options. That being said, with the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate."
The central bank chief added that any stimulus should be crafted to boost economic activity in the short term without significantly adding to America's fiscal deficit in the long term. Despite being prodded repeatedly by legislators, Bernanke declined to say how much money should be spent or specify what the package should contain.
The White House says President Bush is "open to the idea" of another stimulus package, but that it would have to see how Congress formulates it.
Fed chief Bernanke expressed confidence that the current financial rescue package will help unfreeze credit and allow businesses and consumers to secure loans that will boost economic activity.
Meanwhile, Treasury Secretary Henry Paulson provided an update on how the rescue package is being implemented. He stressed that, while huge amounts of public funds have been allocated to save troubled financial institutions, ultimately there should be no cost for taxpayers.
"This is an investment, not an expenditure, and there is no reason to believe that this program will cost taxpayers anything," said Henry Paulson.
Paulson says funds are being used to purchase assets that will be sold at a later date, allowing the government to recoup money spent.
After months of relentlessly negative economic news, Monday brought an indication of a slight uptick in U.S. economic prospects. The New York-based Conference Board's forecast of future economic activity edged higher by a third of a percent after two months of steep declines. The better-than-expected forecast helped spark gains on U.S. markets. Wall Street's main stock index closed with triple-digit gains Monday, about 400 points or nearly five percent.