Moody's Chief Economist says Congress may be forced to undertake another stimulus plan

[Better Believe It]

Trim to Stimulus Carves Into Goals For Job Creation
By Lori Montgomery
Washington Post
February 13, 2009

.... congressional negotiators have since trimmed billions of dollars from the package to satisfy Senate Republicans, diminishing its potential for job creation along with its overall cost. With the House poised to vote as early as today on the measure, analysts are slashing their estimates of its ability to counteract a deepening recession, with several prominent economists now saying the package will save or create fewer than 2.5 million jobs by the end of next year.

At $789 billion, the final package "is just not going to pack the same jobs punch" as some earlier versions, which cost as much as $100 billion more, said Mark Zandi, chief economist of Moody's Economy.com, whose analysis have been cited by White House officials as well as congressional Democrats. Zandi estimates the measure will create only about 2.2 million jobs by the end of 2010, leaving unemployment hovering around 10 percent and probably forcing lawmakers to undertake another stimulus plan.

Many analysts had been more optimistic about the House version of the stimulus bill. At $820 billion, it was not much bigger than the final package agreed to Wednesday by a House-Senate conference committee. But the House version contained about $50 billion more in direct government spending -- such as payments to state governments and cash for school construction -- which economists say is spent quickly and ripples broadly through the economy. The final package, by contrast, is weighted more heavily toward tax cuts, which have a less powerful effect, according to many economists, because taxpayers tend to save a portion of the money.

Because the AMT (Alternative Minimum Tax) fix was built into many economic models, its presence in the package amounts to "phantom stimulus," said Nigel Gault, chief U.S. economist at Global Insight, a private forecasting firm. In part because of the AMT provision, Gault said his models show the $838 billion Senate bill would only have created about 2.5 million jobs. Because the final package is even smaller, he said, "our number would come down a little bit."

Another prominent forecasting firm, St. Louis-based Macroeconomic Advisers, this week cut its estimate for the House bill to 2.3 million from 3.3 million jobs after the CBO reported that only about two-thirds of the money could be spent by the end of next year.

Please read the complete article at:

http://www.washingtonpost.com/wp-dyn/content/article/20...

[Thrill]

1. Stupid Senate Democrats letting Grassley get that AMT in knowing full well

he wasn't going to spend it

[Better Believe It]

2. David Gergen: "This package will not be big enough. Look for more stimulus down the road"

I don't especially like Gergen but he's right on this.

David Gergen
AC360° Contributor
CNN Senior Political Analyst
February 17, 2009

In winning passage of the stimulus package, the President managed his way successfully through his first storm but he and his team recognize there are darker, more treacherous ones ahead. The economy has been deteriorating at such an accelerating rate in recent months that the administration had to expand the size of the stimulus package far beyond what they originally envisioned. If the economy continues to sink - and signs around the globe point in that direction - even this package will not be big enough. And economists of almost every stripe complain that its impact was weakened during the political wrangling.


For now, administration insiders believe that the package will begin to help quickly in saving jobs that might have been lost (e.g., with infusions of fresh money, state governments will not have to fire as many people). But insiders are not really expecting the stimulus to start creating many new jobs — or at least those that will show up in statistics - until early next year. Moreover, they recognize that they may have to come back for additional installments of stimulus in the months ahead. No future package should be as large, but there is likely to be a clear need to expand unemployment benefits again. So, look for more stimulus down the road - we just don’t know how much.

http://ac360.blogs.cnn.com/2009/02/17/obama-faces-growi...

[alsame]

3. Krugman said the same thing on 'Countdown' - this current

package only has about $600b of real stimulus and we'll need a lot more. I think he said we'll need almost 2 trillion in total.

[Better Believe It]

4. These two stimulus/recovery plans would do the job for about 250 billion

The first is: "America's Mayors Report to the Nation on Projects to Strengthen Metro Economies and Create Jobs Now".

This "Ready to Go" Public Works Plan Will Cost 149 Billion And Create 1.6 Million useful public works Jobs in 2 Years

The Republican and Democratic mayors released a report on January 17, 2009. It lists 18,750 local infrastructure projects in 779 cities costing 149 billion dollars that will create 1.6 million jobs. All of these projects can be quickly started and be completed by the end of 2010!

Find out exactly what "shovel ready" stimulus projects are ready to be built in your city, how many jobs would be created and how much they would cost under this plan.

It's in PDF format.

Go here:

http://www.usmayors.org/mainstreeteconomicrecovery /

And click on:

Option 1: Download a PDF version of the full report, including the executive summary, list of participating cities and then projects, sorted by project type or by city.
+ Click to download the report (5 MB)

The second plan Is: "The American Institute of Architects Plan For Restoring Our Economy and Greening Our Communities"

As the global financial crisis continues to threaten the livelihood of American businesses and workers, the American Institute of Architects (AIA) strongly urges Congress to support policies that will stimulate and restore confidence in the U.S. economy.

Rebuild & Renew: The AIA Plan
America’s architects believe that this economic crisis presents an opportunity not only to build, but to build better.

Read the Complete AIA Plan at this link:

http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aia ...

[Orsino]

5. Duh.

You don't repair a decade of damage in a month, and it doesn't take a chief goddamned economist to realize that recovery will be a matter of years or decades. Bush and his apologists have dangerously weakened the nation.

[Better Believe It]

6. Your observation is just a wee bit simplistic. Check out the history of deregulation

"Bush and his apologists have dangerously weakened the nation".

Not without a lot of help from Democrats!

The deregulation of the banking and financial services industry in 1999 and 2000 was the single biggest cause of this economic crisis.

Unfortunately, the Democrats joined Republicans (bi-partisanship) in the deregulation scheme.

Are you familiar with the history of how that was accomplished?

[Orsino]

7. I don't exempt Dems...

...but it would be naive not to assign most of the blame to the "leadership" of the most corrupt and secretive Administration in history.

Any explanation of less than a hundred pages can be derided as simplistic.