Stimulus deal: Too little, too late?

Source: Exec Digital USA

Date :25/01/2008 11:27:39

A surprisingly swift bipartisan effort in Congress is likely to deliver a stimulus package soon, but even that may not prevent a downturn in the economy.

The White House and congressional leaders struck a deal yesterday on a quickly crafted stimulus plan of an estimated 150 billion dollars just days after President George W. Bush called for a growth package in the face of a rapidly deteriorating economic backdrop.

The deal with House of Representatives leaders and the Republican administration sets the stage for likely action. But talks were still ongoing with the Senate, where leaders predicted a bill may be sent to the White House by February 15.

Action

US Treasury Secretary Henry Paulson said the plan would allow the government to mail out tax rebate checks aimed at stimulating consumer spending within "60 days, more or less" of congressional passage.

"We're going to move very quickly," he added.

Yet some observers said it may take the government until May or June to get checks to consumers, making the economic boost somewhat questionable.

Peter Morici, economist at the University of Maryland, said the package was positive for a struggling economy but might not avert recession.

"Putting cash in people's hands is the best kind of stimulus," Morici said.

"It's a good thing, but it's not enough to head off recession. We're talking about 150 billion dollars, so this roughly offsets what the banks have lost" in soured housing investments.

January 25, 2008