News item in the Financial Times:
Mr Bernanke told Congress that a well-designed and swiftly implemented stimulus "could be helpful". He said: "Fiscal and monetary stimulus together may provide broader support for the economy than monetary policy actions alone."
The Fed chairman said a stimulus plan of $50bn-$150bn would be "reasonable" adding that the right stimulus plan would have a "measureable" effect on growth.
However, Mr Bernanke warned that a stimulus plan that kicked in too late or worsened the structural budget deficit could be "quite counterproductive."
So, we need to find $150bn in a hurry without increasing the deficit. Where can we find a $150bln spending that can be cut right away and directed to the US economy?
Hmmmm.... let me think....
How about this:
The total war budget of $163 billion, sought in the 2007 fiscal year, is projected to be $141 billion in 2008 and just $50 billion in 2009, far enough in the future that the estimate is little more than a place holder.
Ms. Jonas said that the 21,500-troop increase Mr. Bush recently ordered for Iraq was not financed beyond the end of the 2007 fiscal year, when it is assumed for the sake of making a forecast that American troop levels will drop back to 140,000. Military officials say that the duration of the reinforcements will depend on security conditions, but that they could well last into next year.
The administration’s overall request for $481.4 billion for 2008 for Defense Department costs excluding military operations represents an increase of about 11 percent in spending. It reflects the beginnings of what could be a long, costly increase in the size of the military
We could pull out of Iraq and get our stimulus package without increasing the debt one bit. Bernanke would be thrilled.
Instead, we get this
The president said that the package must be "big enough to make a difference in an economy as large and dynamic as ours – which means it should be about one per cent of gross domestic product".
He said it should be "built on broad-based tax relief" and "not the kind of spending projects that would have little immediate impact on our economy". Mr Bush insisted that it should include "tax incentives for American businesses" as well as "direct and rapid income tax relief for the American people".