Do We Need more Fiscal Stimulus?

From Greg Mankiw’s blog, the pros and cons of more fiscal stimulus:

Pro and Con.


8 Responses to “Do We Need more Fiscal Stimulus?”

  1. 1 Abby July 13, 2009 at 1:10 PM

    While economists and politicians alike can hypothesize all they want about the US economy’s future, it is inherently unpredictable. We may have an accurate idea how Obama’s stimulus plan should play out, but the variables in any economy (especially ours) are infinite, so ultimately the stimulus plan will need time to give us feedback on its efficacy.

    Levy notes the inefficient spending of the $787 billion of the first stimulus package–too little money paid out early on in the recession. So, perhaps because of timing, the plan has already failed and we won’t need to wait and find out. But when an $787 billion plan is still in action, why would Obama initiate another plan while the first one’s effects may not even be felt for years to come? At this point, there is no timely escape from the economic rut, and piling on billions of more debt now will just aggravate the lack of consumer spending, and possibly the lack of faith in the Obama administration.

    For now, it seems like Congress will wait to spend more on fiscal stimulus, and in the meantime the Democrats aim to push the health-care bill to slow health-cost growth. Maybe down the road more money will be allocated for a second stimulus plan, but it seems like waiting for the effects of the first $800 billion investment to occur would be wise.

  2. 2 Dave Crider July 13, 2009 at 8:55 PM

    Wow I hope the president does not jump the gun and put out another stimulus. I think Abby made some good points above, most of all give the first one time to work. Another reason I would hate to see a second stimulus is Joe Biden making comments already that they are not able to track some of the first stimulus funds to make sure they went where they were supposed to.

  3. 3 Sanamjit Bains July 13, 2009 at 9:24 PM

    There is a need of more fiscal stimulus for building more infrastructure when it comes to public transport, bridges, schools and universities which are all investments in the future. It can be used in maintaining existing facilities. This spending needs to be in a form of investment which provide a return in the future. People will be able to move from point A to point B more efficiently, this will create more business opportunities. Investment in schools and universities provide more skilled work force.

  4. 4 Evangelina Alvarez July 15, 2009 at 1:30 PM

    I do feel there needs to be more fiscal stimulus for building and infrastructure as well which will create more jobs for skilled workers. This is important in getting our economy moving and it will be beneficial to our future however it is a difficult to support in considering the debt we are already in due to our first stimulus package. I do think we need to give some more time for the effects of the first stimulus package to take effect and be able to access its effectiveness and then decide what step to take next.

  5. 5 Kendall July 23, 2009 at 8:54 AM

    There was a need to stimulate the economy but it had to be done in the right way. Obviously the astronomical amount of $787 billion, that we the tax payers will have to pay, has not helped much. But the funds have been poorly managed. It doesn’t matter if you misread the economic status as Biden said earlier this month. The money should have gone towards small businesses who as a collective employ more workers than the auto industry. Taxes should also have been reduced in order for more businesses to employ people. True that Obama’s plans of building projects goes back to FDR’s WPA, NRA and AAA programs, which did keep unemployed busy but it was WWII that actually lifted the U.S. out of the Great Depression.
    If mismanagement is the most to expect from this stimulus then a second stimulus is certainly not necessary. The pro and con articles make good points of Obama first not being able to admit that he has made some mistakes and in the other article pointing out that only about 10 billion of the money had been paid out when the plan was to spend most the money by 2010 or 2011. Unfortunately we have only to wait and hope.

  6. 6 Joseph Garcia July 23, 2009 at 7:49 PM

    Yes, for now all we can do is wait and see what becomes of the first stimulus. I think we’d be risking too much investing more money on another stimulus now. I agree with what the pro argument is saying. The policy makers shouldn’t stress too much about minor or even negative growths in the coming months. The stimulus will take time to work.

  7. 7 Lauren Swartz July 27, 2009 at 8:07 AM

    It seems that the first step in improving the nation’s economy is to make sure the money from the orignal stimulus package is being spent as intended. Unfortunately, as several commentators noted above, we are not able to accurately trace the dollars spent and their current function. As much as I supported Obama and his decision to implement a stimulus, his promises of transparency and tracebility have not come to fruition.

  8. 8 Alejandro Cortez August 4, 2009 at 12:23 AM

    This blog points out the inherent weaknesses in our current economic and social systems. Democrats and Republicans alike have the same solution to our problems: blindly throwing money at them and hope for a speed recovery. We should think in the long-term, by investing money in education, training programs, and injecting funds into research and development for new technologies. Doing this we could begin to build a stronger infrastructure that will create jobs and turn many unskilled workers into skilled workers. I am not saying that the money for the stimulus packages will fund all of the things I proposed, but these funds will go a long way. Instead of creating stimulus packages for sustaining the same general policies and ideas that got us into this mess, the United States could actually show signs of maturity and invest in the future and not in the right now.

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