10/21/2009
http://online.wsj.com/article/SB123249646698200289.html
In normal recessions - the argument goes - an increase in discretionary government spending is unnecessary and even counterproductive. But in the event that a recession becomes a depression, a Keynesian stimulus package might work.
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Transcript of Pelosi, House Democratic Leaders, and Economists' Press Conference Following Economic Forum
http://www.speaker.gov/newsroom/pressreleases?id=1414
Speaker Pelosi.
"I am pleased that we had the benefit of the thinking of Dr. Mark Zandi, Dr. Alan Blinder, Bob Kuttner, Heather Boushey, Bill Hambrecht, and Allen Sinai."
Former Federal Reserve Vice Chairman Alan Blinder
"...But what I want to say is this: the Congress and the Administration and the Federal Reserve have done already an enormously heavy lift in limiting what could have been a much worse economic outcome. That said, it's pretty bad as it is right now.
On the consensus forecast, I'm a little bit more optimistic than Mark. My personal view is a little bit above consensus, but that's a quibble. On the consensus forecast, the GDP is already growing, but jobs are still shrinking and are likely to shrink for a while yet and that makes it very hard for political leadership or for just economists to the extent that we talk to the public to persuade people that things are getting better because they don't look like they are getting better when jobs are a) still so scarce and b) are even shrinking rather than arising. So for that reason, despite the fact that we're looking at an absolutely horrendous long-term fiscal outlook, I, like Mark, and I think most of us around the table, believe that at least a modest, now this is where people will disagree, but at least a modest increase in the deficit is targeted very strongly on job creation. Not a scatter shot, but targeted very strongly on job creation would be appropriate.
I think this is a case where it is both good policy and good politics which you know is not always the case but in this instance it is the case. That said, we do have to be mindful of the long-run deficit problem. I have been taken recently in a number of venues to be quoting not quite correctly, paraphrasing St. Augustine who said something like, "Lord, make me chaste, but not just yet" We do need to become more chaste about the budget deficit, we do need to pay attention to the long-run fiscal hole, a lot of attention but in the short term, this is not the time to do it. 2009 and probably 2010 are not the times to do that.
One thing I spoke to the Members about knowing that it is very, very difficult to do, is to try to get some long-run commitment to greater fiscal responsibility while we are still trying to alleviate the job problem. I know this is a very, very difficult thing to do, I don't think it is quite an impossible thing to do. I think it is really quite remarkable that this many Members of the congressional leadership show up and spend several hours with the likes of us, talking seriously about the economy. This little session we're having right now notwithstanding, this was not a media event. We were behind closed doors and talking very, very frankly over a range of issues. I think that happens too little in Washington and it is a tribute to the Speaker and to the other Members that they took so much time out of their schedules to do this. I thank them. "
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More (Democrat's) Economist that sold optimism about government stimulus...
Christina Romer, Paul Krugman, Jared Bernstein, Tim Geithner, Larry Summers, Austan Goolsbee
And yet FOXNEWS Saturday Morning Business block can usually only find Juan Williams, probably not a financial expert, for ‘fair and balanced’ Economic discussions on the Democrat side...
10/21/2009, same Press Conference Following Economic Forum as above, just to see what Zandi says after the meeting;
Mark Zandi. “Thank you, Madam Speaker. I want to thank you for the opportunity, and all the House leaders, for the opportunity to be here today. I thought it was a very fruitful meeting, and I made three points in the meeting. First, I think the fiscal stimulus, the recovery package, is working. I don’t think it is any accident that the recession has come to an end just about the same time that the stimulus is providing its maximum economic benefit. I think it has been very successful, most importantly the benefits to unemployed workers, as well as to help state government. I think that has been key, along with the other aspects of the stimulus.
The second point is that the recovery is still very fragile and still very tentative. I think the risks to the recovery are quite significant and the possibility of the economy slipping back into a recession next year are uncomfortably high for a number of reasons - most important of which is what is going on the job market, the fact that businesses while they are curtailing their layoffs, they have not begun to hire more aggressively. I think that is a function of a number of things, a lack of confidence, a lack of credit, and therefore I think, this gets to point number three, which is that it is very important for policy makers to remain aggressive and continue to do more, and I listed a number of things which I think would be very helpful.
Most obviously, I think extended unemployment insurance benefits should be extended through the end of 2010. Right now under the current stimulus they expire at the end of 2009, and they need to be extended. I think the first-time homebuyer tax credit should be extended into mid-next year to help support the housing market which is still incredibly fragile. I think accelerated depreciation of net operating loss carryback, which also expires at the end of this year should be extended into the 2010 and the conforming loan limits that are temporarily higher through the end of 2009 should be extended through the end of 2010. So a number of things should be extended through 2010 to make sure that the economy, the recovery is going to evolve into a self sustaining economic expansion.
And let me say this: I think our focus on the fiscal situation and deficit is very important in the long run, but I think it is also very appropriate to run a larger near term budget deficit to make sure that this economy gets out of this situation and gets on a self sustaining economic track. Thank you.”