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Sunday, June 13, 2010

Obama To Ask for More Stimulus

Saying that the economy is in a fragile state, President Obama will ask the Congress for $80 billion in more stimulus funds.

President Barack Obama and his aides are stepping up a push for further government spending to boost the economy as signs grow of the recovery's fragility.

The White House is calling for Congress to urgently pass measures to extend jobless benefits, aid cash-strapped states and provide targeted tax breaks to encourage research and development by businesses.

There's a few things of interest here. First, the president is claiming that teachers and cops will be laid off without this stimulus. That's been the M.O. of the president every time he's asked for money. In fact, the first action of Governor Quinn in Illinois was to hike the income tax and he made a similar argument. In Cook County, the President Todd Stroger said that without his massive sales tax hike there would be serious cuts to Cook County Hospital. It seems that whenever a politician wants to spend money or raise taxes they trot out teachers, cops, and doctors to justify.

Second, wasn't this what the original stimulus was for? If $787 billion wasn't going to keep cops, teachers, and hospitals working, how can an extra $80 billion do the job? In fact, estimates put the unspent portion of the stimulus between $300 and $450 billion and another $200 billion in TARP. So, why is it necessary for there to be a new stimulus?

Third, and more importantly, this will test the clout of President Obama. Already, there are high ranking Democrats that are pouring cold water on the idea. Here's what Steny Hoyer said about it on ABC's this week.

I have asked the White House to look at the package we already passed. I personally believe if we have dollars not yet expended in the recovery act we could apply to this immediate need.

Hoyer said the country is suffering from "spending fatigue". Hoyer understands that the deficit will be a major issue in the fall and more spending will continue to paint the Democrats as out of control. Obama has called this package "critical" and so if his own party doesn't support him, that will be an indication that his clout is seriously waning.

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