Released: October 21, 2008

Second stimulus plan gains traction

Source: Neil Irwin, Lori Montgomery,& Dan Eggen, Washington Post (Free Registration)

An effort to boost the economy with a massive injection of public funds gained momentum yesterday, as Federal Reserve Chairman Ben S. Bernanke tentatively endorsed the idea of a new stimulus package and the Bush administration softened its opposition.

The remarks by the nation’s economist in chief were a boon for congressional Democrats, who have argued for weeks that the government should authorize billions of dollars in additional spending. But Bernanke, who generally resists inserting himself into political debates, made clear that any new package must be narrowly focused to quickly provide a shot of relief to the economy.

Congressional Democrats, led by House Speaker Nancy Pelosi (D-Calif.), are looking to craft a stimulus package of up to $300 billion, and could attempt to push it through Congress soon after the Nov. 4 election. The package would likely include a fresh injection of cash for road-building projects that have been postponed but that advocates say could create jobs. Democrats also are pushing to expand unemployment benefits, aid cash-strapped state governments and increase spending on food stamps—provisions that supporters say would provide a big bang for the buck because the money would flow directly into the economy. 

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