Wall Street Journal
21 November 2008
Strimbeck comment! Hopefully, in early 2009, the stimulus package will include the Pittsburgh District projects submitted by Jim McCarville, Ex Dir, Port of Pittsburgh Commission!! My guess is that these Pittsburgh District projects for our locks and dams will have a good chance of being included in whatever stimulus package then President Obama and members of Congress agree upon!! AND!! The Upper Mon River Assocation, and, the Mon River Recreation & Commerce Committee, Morgantown Area Chamber of Commerce, will track all this and urge our WV members of Congress to support this effort! CONGRESS POSTPONES STIMULUS PLAN TO '09
WASHINGTON -- Lawmakers postponed work on a sweeping stimulus package until the new Congress and administration take over next year.
Democratic leaders said Thursday they may return to Washington in December to consider aid to the auto sector. But even as the economy deteriorates sharply, they don't appear to have enough support for a major stimulus program before January.
President-elect Barack Obama has said his first priority in office will be to craft a fiscal-stimulus plan that may well be the largest since World War II, WSJ's Sudeep Reddy reports. The key questions are: how much and what to include. (Nov. 21)
Congress on Thursday granted smaller-scale relief by passing an extension of unemployment benefits. The move came after the Bush administration said it would support the proposal.
"Because of the tight job market, the president believes it would be appropriate to further extend unemployment benefits, and he would sign the legislation now pending in Congress," White House spokeswoman Dana Perino said.
The administration's backing followed a report Thursday that new claims for jobless benefits rose 27,000 to 542,000 last week, the highest level in 16 years. Continuing claims topped four million, a 25-year high, as the unemployed find new jobs elusive amid a weakening labor market. Thursday's measure extends unemployment benefits by seven weeks, or by 13 weeks in states with jobless rates above 6% in the past three months.
Without a substantial fiscal stimulus plan, the nation's economy is expected to worsen through January, when President-elect Barack Obama takes office. Ten days after the inauguration, the government is scheduled to release the first estimate of fourth-quarter economic output, which many economists forecast will contract at a 4% annualized rate. That would follow a third-quarter contraction of 0.3%, placing the nation in recession, which many economists define as two consecutive quarters of declining output.
A stimulus package next year would come after what is likely to be the worst of the downturn in terms of output. The economy also is expected to contract in the first quarter of 2009. After that, economic activity is expected to remain weak, with elevated unemployment into 2010, giving the new administration a chance to argue for a variety of measures.
Rahm Emanuel, Mr. Obama's chief of staff, said this week that a stimulus plan would be Mr. Obama's "first order of business" next year.
Democrats in Congress have indicated support for measures such as increased food stamps and a tax cut for middle-income workers, along with longer-term initiatives such as spending on roads, bridges and public works that could also prop up the economy in the short term -- for projects ready to get started. They also want direct aid to local and state governments, many of which are struggling with declining revenues and facing requirements to balance their budgets.
Republicans remain resistant to some infrastructure spending and aid to local governments, saying the money would boost the deficit unnecessarily, while going to projects that wouldn't boost the economy soon enough.
Tax rebates to consumers no longer appear to be in favor. The $168 billion stimulus package that passed in January, which included more than $100 billion in direct payments to consumers, proved disappointing, because many consumers saved the money instead of spending it. The package appears to have offset economic weakness only slightly in the second and third quarters.
Many economists are calling for tax cuts -- if implemented by lowering tax withholding rates -- along with other aid likely to be spent quickly to support the economy.
When an economy faces weak demand, "you either want to get money into the hands of people who will spend it right away, or you want the government giving people jobs sooner rather than later," said Peter Hooper, chief economist at Deutsche Bank Securities.
The size of a package remains a key question hanging over the $14 trillion U.S. economy. Through this month, Democratic leaders were discussing a package of as much as $150 billion, even as some private economists urged them to consider one twice that amount.
Mr. Obama has indicated a willingness to set aside concerns about deficit spending in the short run to restore the economy.
"I think you have to get very, very bold here -- $500 billion or $600 billion would be just fine," said Lyle Gramley, a former Federal Reserve governor now at Stanford Group Co. "The problem is that we need the stimulus tomorrow -- the sooner the better. It's most unfortunate we're in this interim period between presidencies."
Write to Sudeep Reddy at sudeep.reddy@wsj.com