Risk of waiting for Obama to boost economy
There's a good chance the lame-duck Congress will punt the big decisions about economic stimulus to next year.
NEW YORK (CNNMoney.com) -- Mass layoffs. A dismal outlook for retailers. The prospect of state budget cuts. An economy in contraction, and forecasts that the decline will accelerate.
If lawmakers are going to pass measures to boost the economy, time is of the essence. Congress began what is scheduled to be a one-week lame-duck session, but it is not precluded from coming back before the end of the year.
Despite lawmakers from both sides of the aisle agreeing that something must be done, Congress may not pass a substantial stimulus package for another two months at the earliest given all the disputes over what kind of stimulus is best, how much is needed and how to pay for it.
"The lame-duck session of Congress will earn its 'lame' label and pass only a grab-bag of modest stimulus, leaving the heavy lifting until early 2009," said Greg Valliere, chief political strategist for the Stanford Group, a policy research firm based in Washington, D.C.
And the delay could mute the impact of any package - or parts of it - and affect how states are likely to fare as a result.
Democrats are pushing government spending to boost state aid and food stamps, extend unemployment benefits and fund infrastructure projects. A leading Republican proposal pushes for greater tax relief for businesses and individuals and energy reform measures.
At a Wall Street Journal conference on Monday, Lawrence Summers - who is considered to be a leading candidate for Treasury Secretary in the Obama administration - said he believes stimulus measures will need to be "speedy, substantial and sustained over a several-year interval." He said estimates for how much stimulus is needed in aggregate went as high as the $500 billion to $700 billion range.
Another economist - fiscal conservative Martin Feldstein, who served as President Reagan's chief economic adviser - didn't put a price tag on how much stimulus would be needed but said a big effort was needed.
"The nation needs a program of government spending for at least the next two years to offset the large decline in consumer spending and business investment," he said at a congressional hearing Tuesday. "To be successful, it must be big, quick and targeted at increasing production and employment."
While it's very possible lawmakers might push through an extension of unemployment benefits before the year is out, it's likely that this Congress will punt the big stimulus decisions to the next Congress, which would aim to have a package ready for President-elect Barack Obama's signature when he's sworn into office on Jan. 20.