White House Council of Economic Advisers Chairman Edward Lazear on Thursday said the Bush administration opposes moves to provide a new stimulus to the economy, saying the $700 billion financial market bailout bill signed into law this month should turn the sagging economy around.
We dont believe thats the right way to go, Lazear said in answer to a question asked at a White House briefing about whether it is time for a second stimulus to follow the package passed earlier this year. Lazear said the bailout bill, designed to spur banks to lend to businesses and individuals, deals with the cause of the economic crisis, while a stimulus measure would address only symptoms of the problem.
Lazear acknowledged that with $700 billion in the pipeline and the federal funds lending rate nearing zero, the government has limited ammunition left to bolster the economy. You want to make sure you dont waste the taxpayers money, he said, adding that the government cannot effectively react to every minor problem that comes along. He said money from the earlier stimulus did temporarily boost the economy, but he added that people spent their tax rebates quickly and the benefit was shorter-lived than expected.
The White House has said that it is open to suggestions on a stimulus package, and while putting the administration on record as opposed to a stimulus, Lazear did not necessarily rule one out. The White House has its own priorities for the lame-duck session coming up next month particularly a free-trade deal with Colombia.
Lazear appeared at the White House to address news that the economy contracted by 0.3 percent during the third quarter of the year. We are going to see a few tough months ahead, Lazear said, but he refused to opine on whether the United States is in a recession. Money from the $700 billion fund has started trickling out to banks, he noted, and the White House believes credit markets are starting to loosen.