Biden: We 'Misread the Economy' - George's Bottom Line
"The truth is, we and everyone else misread the economy," Biden told me during our exclusive "This Week" interview in Iraq.
Biden acknowledged administration officials were too optimistic earlier this year when they predicted the unemployment rate would peak at 8 percent as part of their effort to sell the stimulus package. The national unemployment rate has ballooned to 9.5 percent in June -- the worst in 26 years.
"The truth is, there was a misreading of just how bad an economy we inherited," said Biden, who is leading the administration's effort to implement it's $787 billion economic stimulus plan.
"Now, that doesn't -- I'm not -- it's now our responsibility. So the second question becomes, did the economic package we put in place, including the Recovery Act, is it the right package given the circumstances we're in? And we believe it is the right package given the circumstances we're in," he told me.
The vice president argued more time is needed for the stimulus to work.
"We misread how bad the economy was, but we are now only about 120 days into the recovery package," he said. "The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having to distribute the bulk of money."
Biden didn't rule out a second government stimulus package, but downplayed calls from Nobel Prize-winning economist Paul Krugman this week that a second stimulus will be needed.
I pressed the vice president, who is also leading the administration's middle-class task force, on whether he'd rule out a second stimulus package.
"So, no second stimulus?" I asked.
"No, I didn't say that," Biden said, "I think it's premature to make that judgment. This was set up to spend out over 18 months. There are going to be major programs that are going to take effect in September, $7.5 billion for broadband, new money for high-speed rail, the implementation of the grid -- the new electric grid. And so this is just starting, the pace of the ball is now going to increase."
Obama Adviser Says U.S. Should Mull Second Stimulus (Update2) - Bloomberg.com
July 7 (Bloomberg) -- The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small,” said Laura Tyson, an outside adviser to President Barack Obama.
The current plan “will have a positive effect, but the real economy is a sicker patient,” Tyson said in a speech in Singapore today. The package will have a more pronounced impact in the third and fourth quarters, she added, stressing that she was speaking for herself and not the administration.
Tyson’s comments contrast with remarks made two days ago by Vice President Joe Biden and fellow Obama adviser Austan Goolsbee, who said it was premature to discuss crafting another stimulus because the current measures have yet to fully take effect. The government is facing criticism that the first package was rolled out too slowly and failed to stop unemployment from soaring to the highest in almost 26 years.
Obama said last month that a second package isn’t needed yet, though he expects the jobless rate will exceed 10 percent this year. When Obama signed the first stimulus bill in February, his chief economic advisers forecast it would help hold the rate below 8 percent.
Unemployment increased to 9.5 percent in June, the highest since August 1983. The world’s largest economy has lost about 6.5 million jobs since December 2007.
Worse Than Forecast
“The economy is worse than we forecast on which the stimulus program was based,” Tyson, who is a member of Obama’s Economic Recovery Advisory board, told the Nomura Equity Forum. “We probably have already 2.5 million more job losses than anticipated.”
Republicans, including House Minority Leader John Boehner of Ohio, seized on the latest labor numbers to attack the Obama administration’s handling of the economy.
Even Democrats have bemoaned the pace of the package’s implementation. House Majority Leader Steny Hoyer, a Maryland Democrat, said on “Fox News Sunday” June 5 that congressional Democrats are “disappointed” stimulus funds weren’t distributed faster.
“The money is just really starting to come out in more significant amounts now,” Tyson said. “The stimulus is performing close to expectations but not in timing.”
Tyson, 62, later told reporters that the U.S. can afford to pay for a second package, even as the fiscal deficit soars. She said the budget shortfall is “likely to be worse” than the equivalent of 12 percent of gross domestic product that the administration forecast for 2009 and the 8 percent to 9 percent it projected for next year.
The professor at the University of California’s Walter A. Haas School of Business downplayed worries from China and other countries with dollar reserves that the U.S. will let inflation soar as the deficit expands.
“The concern is that the U.S. will have to inflate away its debt. I do not think that is a valid concern,” she said. “The Federal Reserve is not going to let the U.S. government inflate away its debt.”
The U.S. needs to communicate its determination to reduce the annual shortfall once the economy recovers, she said.
While unemployment is worsening, other data have shown the economy is improving. U.S. manufacturing shrank last month at the slowest rate since August, according to the Institute for Supply Management’s factory index, and a measure of pending home sales advanced in May for a fourth month.
Tyson said the U.S. should shift away from its dependence on consumption to grow, and promote expansion through investment and exports. The dollar will need to weaken in the longer term to promote export-led growth, she said.
Last edited by jessi; 07-07-09 at 07:45 PM.
Destiny rides again!
Heck...Even Buffet knew the first one was some water down joke.... Really makes me wonder though why he didn't speak up when the first bill was being introduced.
Warren Buffet Supports Second Stimulus for Economy - ABC News
As debate grows about a possible second stimulus package for the flagging American economy, at least one legendary investor is giving the idea his guarded approval.
I think that a second one may well be called for," Warren Buffett, the CEO of Berkshire Hathaway, told "Good Morning America" today. But, he added, "you hope it doesn't get watered down in many ways."
Buffett cautioned that a second stimulus package, like the first, won't be "a panacea," because stimulus packages take time to work. He criticized lawmakers' work on the first stimulus package, which contained $787 billion in spending.
"Our first stimulus bill ... was sort of like taking half a tablet of Viagra and having also a bunch of candy mixed in ... as if everybody was putting in enough for their own constituents," he said. "It doesn't have really quite the wall that might have been anticipated there."
Buffett also criticized the government's public-private investment plan, through which private investors are supposed to buy so-called toxic assets off the balance sheets of ailing banks that received billions in government aid.
"I do not like the idea of any kind of a plan involving the government where Wall Street makes a lot of money. My plan provided that they would make no money whatsoever, and the American public would make the money. I just think that Wall Street owes the American people one at this point," he saidNebraska native Buffett, known as the "Oracle of Omaha" for his long history of prescient stock picks, said that despite the talk of recent economic "green shoots," he couldn't predict when the flagging economy would bounce back.
"We are not in a freefall, but we are not in a recovery either," Buffett said. "We were in a freefall really in the last quarter of last year, starting in the financial markets and spreading to the economy, and we had this huge change in behavior. That change hasn't changed."
The U.S. unemployment rate, which currently stands at 9.5 percent, still "has a ways to go" before it peaks, he said. His own company, he said, had to lay off 500 people.
"We didn't want to do it, and if we saw things coming back we wouldn't do it," he said.
Buffett said he's never seen a recession affect consumers the way the current one has.
"I have never seen it quite happen like this, but what happened was in late September, the American public … saw money market funds break the buck. They saw commercial papers stop, they saw all kinds of things that they hadn't seen before," he said. "It was a shock to the system."
Still, Buffett remains optimistic.
"I want to emphasize, we are going to come out of this better than ever," he said. "I mean the best days of America, by far, lie ahead. But not next week or next month and then, I don't know exactly when we will come out, but we will come out big time."
Yeah, that's what we need. The government to be even more in debt and the chance of overinflation even higher.
"Hello. My name is Inigo Montoya. You killed my father. Prepare to die. "
- Inigo Montoya
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