“If we look back and think this plan was too big, that would be a regret that would be fine to live with,” Jason Furman, one of the architects of the 2009 stimulus plan, told CNN Business.
Furman, a former top economic aide to Obama, recalled that the team wanted a $1 trillion stimulus package in 2009 — or roughly 25% bigger than the record-setting legislation that ultimately got through Congress.
“The recovery was slower from the financial crisis because the stimulus wasn’t bigger,” said Furman, who served as one of Obama’s top economic advisers.
By contrast, economists say the Biden plan should help the US economy ride out the next six months or so of the pandemic, which has killed more than 400,000 Americans.
Mark Zandi: 8% GDP growth if enacted
The $1.9 trillion plan includes $1,400 stimulus checks, a $15 federal minimum wage, $350 billion in state and local aid, enhanced unemployment benefits, help for the hungry and $25 billion in rental assistance.
“One of the lessons of 2009 was that the argument that you could start modestly and then keep adding if the economy did not improve ran into a political reality,” Austan Goolsbee, a former Obama economic adviser, told CNN Business. “President-elect Biden was there. You can already see they’re not going to repeat that scenario.”
If enacted — and that’s a huge if — the US economy would grow by a sizzling 8% in 2021 and the job market would return to nearly full employment by the fall of 2022, according to projections by Mark Zandi, chief economists at Moody’s Analytics.
However, Biden’s stimulus plan will face opposition in Congress. Zandi expects Biden’s American Rescue Plan will get whittled down to just $750 billion. That in turn would leave US GDP growth at about 5%.
Janet Yellen: Act big now
One vexing problem for Biden is how to convince lawmakers — and the public — to add to America’s $27 trillion pile of debt. Republicans cast aside their debt concerns to pass the Trump tax cuts and bipartisan spending surges, but deficit hawks are going to make their voices heard again — as they did during the Obama era.
There’s no doubt that the United States faces an unsustainable…
Go to the news source: US economy: Joe Biden wants to avoid the Obama era’s biggest economic mistake