Paul Krugman talked about the same issues I addressed yesterday, but much more effectively (go figure he won a Nobel and is an Op Ed writer for the New York Times).
Here was my post http://www.dailykos.com/...
Here is Paul Krugman http://www.nytimes.com/...
His basic point is the Federal Reserve is the first line of defense against a recession. The Fed gradually adjusts short term interest rates until there was a recovery.
Unfortunately, the Fed is out of Bullets with an interest rate = 0%.
Krugman is arguing persuasively in my opinion that the same experimental tactic should be used for Fiscal Stimulus.
The situation is worse than expected so a 2nd stimulus package is in order. I agree with Krugman (I am sure he is comforted that I agree with him).
Unfortunately, this 2nd stimulus is problematic:
• Republicans who have been pounding Obama since his election will have another propaganda point. "Obama is incompetent. The 1st stimulus was completely wrong. Tax cuts. Tax Cuts. Tax Cuts (did I say Tax Cuts)" (Note: This is what I believe Republicans would say. I do not believe it to be true.)
• Obama is a politician and very cautious. He will be extremely hesitant to propose another stimulus with Healthcare on the plate. There is no time...
• The public is ignorant on economic issues. Propaganda works.
Hopefully, Obama is able to have the will to get another stimulus together.