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$150 billion needed for economic stimulus package, former Treasury official tells Congress

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Posted: January 16, 2008 2:57 p.m.
Updated: January 31, 2008 5:00 a.m.
    WASHINGTON — The economy has worsened to the point where Congress should pass an economic stimulus bill of up to $150 billion, former Treasury Secretary Lawrence Summers told lawmakers Wednesday.
    Summers, an economics professor at Harvard University, had previously said $50 billion to $75 billion in tax cuts and pump-priming government spending is needed to boost the sagging economy. Now, his recommendation is double that — though perhaps employing a ‘‘trigger’’ that would release the money only if the economy worsens further.
    He said the advantage of employing a trigger to release a second stage of fiscal stimulus that could take effect without the need for new legislation is to avoid delays that could deliver an economic boost too late.
    ‘‘The risks here of ’too little, too late’ are far, far, far greater than the risk of ’too much too soon,’’’ Summers said.
    Wednesday’s Joint Economic Committee hearing was the first of several slated in coming days and weeks as Congress is barreling toward action on a stimulus bill. House Speaker Nancy Pelosi, D-Calif., and Minority Leader John Boehner, R-Ohio, held an afternoon meeting to explore options for a stimulus measure.
    Pelosi and Boehner have little history of working together on substantive legislation, but both have promised bipartisan cooperation on a potential stimulus bill.
    ‘‘It’s appropriate that Congress respond and I’m hopeful that we can come together in a bipartisan way to address the needs of the American people,’’ Boehner said at the onset of his meeting with Pelosi.
    Majority Leader Steny Hoyer, D-Md., said he hopes Congress and President Bush can adopt a stimulus measure within 30 days.
    There is no shortage of ideas about how best to try to boost the economy, though consensus seems to be developing in favor of a tax rebate.
    Democrats are coalescing around ideas such as extending unemployment benefits, boosting food stamp payments and doling out aid to ailing state governments. Republicans are promoting business tax breaks such as incentives for investments in new plants and equipment and lowering the corporate income tax rate. They also say extending tax cuts slated to expire at the end of 2010 would give small businesses greater confidence to make investments now.
    Panel Chairman Charles Schumer, D-N.Y., said he had spoken with Federal Reserve Board Chairman Ben Bernanke on Monday and that Bernanke is ‘‘generally supportive’’ lawmakers and Bush passing a stimulus bill.
    ‘‘He said that while he wasn’t going to endorse a specific plan, if an economic stimulus package was properly designed and enacted so that it enters the economy quickly, it could have a very positive effect on the economy,’’ Schumer said of Bernanke’s views.
    Bernanke testifies before the House Budget Committee Thursday.
    Sen. Edward Kennedy, D-Mass., said home heating subsidies and new job training programs should also be considered for a stimulus package. Such ideas have drawn a chilly response from Republicans.

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