Published on December 17, 2009
Slide 1: Pumping Life Back into the U.S. Economy Why a Stimulus Package Must Be Big and Targeted Presentation by Scott Lilly, Senior Fellow Center for American Progress Slide 3: Balanced Growth Slide 5: Very Different Outcomes for Middle Income Families 1994-2000 compared to 2000-2006 Easy Credit : Easy Credit Credit expansion by the Treasury & Federal Reserve did not solve the problem! : Credit expansion by the Treasury & Federal Reserve did not solve the problem! After injection of credit, productivity was even higher, output greater and income had stayed the same. Easy credit did not simply delay the day of reckoning, it made it much worse. “Not your Father’s Business Cycle” : “Not your Father’s Business Cycle” Dec ‘08 How much will consumers and businesses cut back on spending? : How much will consumers and businesses cut back on spending? Some crystal ball gazers say more than 10% 10% X 14.5 trillion (U.S. GDP) = $1.45 trillion How Do You Fill a $1.45 Trillion Hole? : How Do You Fill a $1.45 Trillion Hole? Government Spend as Much as Possible Provide Tax Cuts Restore Consumer Confidence Possible Pump Priming Plan : Possible Pump Priming Plan Fed Spending $450 b X 1.6 = $765 billion Tax Cuts $250 b X 1.0 = $250 billion Boost Consumer Confidence? = $400 billion Impact of Package $1.465 Trillion CBO Scoring of H.R. 7110 : CBO Scoring of H.R. 7110 Capacity? : Capacity? Annual Figures : Annual Figures $1.4 trillion is probably the amount needed each 12 months for the next 18 to 24 months $825 billion for the next 3 to 4 years is probably half the amount needed How is the $820 Billion in the House Stimulus Package Divided? : How is the $820 Billion in the House Stimulus Package Divided? How is Likely Senate Package Divided?(Approximately) : How is Likely Senate Package Divided?(Approximately) Macro Economic Impact of Senate Changes? : Macro Economic Impact of Senate Changes? $70 billion shift from domestic spending to taxes: $70 billion x 1.40 = $98 billion $70 billion x 0.49 = $35 billion Slide 23: Can We Afford It? Slide 26: Questions?