Economic Recovery Measures
Bob Rubin, former Clinton Treasury Secretary, had an opinion piece in the Financial Times on Monday that made a lot of points we certainly agree with. Some of his major points (emphasis ours):
“Virtually all advanced economies are likely to conduct fiscal consolidation at some point in the future to put their fiscal positions back on a sustainable footing.” - International Monetary Fund, World Economic Outlook, October 2010, p.21
The United States, like a number of other countries, needs to figure out how to best design a fiscal recovery package that will not derail a lackluster recovery, while at the same time, phases in debt reduction policies soon enough and aggressively enough to reassure credit markets.
In an op-ed in today’s Wall Street Journal, Alan Blinder discusses his frustrations with what he dubs the “fiscal policy paradox”: that the economy-boosting “policies that might work won’t be tried,” due to partisan infighting, and the “policies that will be tried might not work.” He laments that fiscal policy has largely been on the sidelines while monetary policy undertaken by the Federal Reserve has done most of the heavy lif
Update: This blog has been updated to reflect additional information.
On Stimulus.org, we have been tracking the number of bank failures by FDIC-insured institutions since the beginning of 2008. As we have mentioned before, due to the financial crisis, the number of bank failures and their cost in each of the past three years has completely dwarfed the numbers from the prior eight years.
Right on the two-year anniversary of its enactment, the Troubled Asset Relief Program's (TARP) authority to disburse new money ended on Sunday. The program still has stake in a variety of institutions, so it will continue to be operational, but it will make no new loans or capital infusions.
Not Much Worth Remembering – As September closes this week, it is clear that lawmakers already have one foot out the door; anxious to return home to campaign in an election season unlike any other. The only accomplishment that Congress can point to this month is the passage of a small business package that had been stalled for months. The one item remaining for legislators is a must-pass continuing resolution to fund government when the new fiscal year begins.
Today, the House passed HR 5297, the small business bill that had been stalled in Congress for weeks. It is expected that President Obama will sign it into law right away. Meant to provide capital for banks to loan to small businesses, the bill will establish a $30 billion lending fund that will buy equity in community banks and have them pay varying dividends based on how much they increase lending (CBO actually expects this provision to raise $1 billion over ten years).
With Congress back in session, the mid-term election right around the corner, and a looming expiration, the debate of the 2001-2003 tax cuts is getting hotter and hotter. Up until now, the debate over the tax cuts, which are set to expire at the end of the year, has mainly centered on whether or not to extend all of them or let them expire for the highest income earners. We believe that this type of debate is missing a key component: each plan’s specific and relative deficit impact.