U.S. must be open to second economic stimulus: Hoyer
WASHINGTON – U.S. leaders should be open to the possibility of a second stimulus package to jolt the economy out of a recession still causing job losses, House of Representatives Majority Leader Steny Hoyer said on Tuesday.
But in the Senate, Majority Leader Harry Reid was more skeptical of the need for more stimulus spending — an idea that rattled markets fearful that the economy is far from well and corporate earnings could suffer.
Reid said he saw no evidence another stimulus was needed, saying the “shoots” of economic recovery “are now appearing above the ground.”
President Barack Obama led the charge for a two-year $787 billion stimulus package that his fellow Democrats who control Congress pushed through the House and Senate in February and he has argued it would help create or save up to 4 million jobs.
Despite continued large job losses, both Reid and Hoyer — who spoke at separate news conferences — said not enough time had passed since first package was approved for it to have the full impact on the U.S. economy, which has been in a recession since December 2007.
“It’s certainly too early right now … to say it’s not working,” Hoyer said of the initial stimulus package. “In fact we believe it is working. We believe there are a lot of people who otherwise would have been laid off, lost their jobs, who haven’t done that.”
The rate of job losses was slowing, but “it’s not where it ought to be,” he added. Some areas of the economy were still in trouble, he said, “housing being the leading sector.”
“I think we need to be open to whether we need additional action,” Hoyer said. Last month employers shed some 467,000 jobs, which sent the unemployment rate up to 9.5 percent, the highest in nearly 26 years.
However, the jobs outlook is expected to get worse in coming months, with Obama and many economists predicting it will surge past 10 percent.
In the Senate, Reid said only a little over 10 percent of the initial stimulus money had been spent so far. The rest, he said, is “going to move more quickly now.
“As far as I am concerned there is no showing to me that another stimulus is needed,” Reid told reporters.
Suggestions of a second stimulus have been bubbling up amid criticism by Republicans who have argued that the first package was misdirected and wasted money on programs that so far have not sufficiently boosted the economy and created jobs.
To that end, a Government Accountability Office report due out on Wednesday found that while the Department of Transportation has committed $15.9 billion of the $26.7 billion set for highway and other projects, only $233 million has been paid out.
“States are just beginning to get projects awarded so that contractors can begin work,” according to a copy of the report obtained on Tuesday by Reuters.
Senate Republican Leader Mitch McConnell poured scorn on the very idea of another economic stimulus package.
“I think a second stimulus is an even worse idea than the first stimulus, which has been demonstrably proven to have failed,” he told reporters.
“And we’re — we’re spending $100 million a day on interest on the first stimulus,” he added. “Rush and spend is what this administration is about, rush and spend. This needs to stop.”
Debt prices dropped on Tuesday in part because of concerns about further federal borrowing and appetite by investors. The deficit is expected to hit an eye-popping $1.8 trillion in the 2009 fiscal year, which ends September 30.
U.S. stocks also fell sharply to a 10-week low on Tuesday amid talk of a second stimulus.
Laura D’Andrea Tyson, an economist who advised Obama during the 2008 campaign and a member of his economic advisory panel, said on Tuesday in Singapore that the United States should be planning for a possible second round of fiscal stimulus and focused on infrastructure investment.