Larry Summers Backs Second Stimulus
I think he's right:
Real Time Economics: Former U.S. Treasury Secretary Lawrence Summers Tuesday said a second fiscal stimulus program is “the right response” to the current turmoil facing the U.S. economy but the plan shouldn’t raise projected deficits beyond a year or two. “Beyond this horizon it is essential that any new spending or tax cutting be offset by measures that reduce projected deficits,” said Summers, a Harvard University professor who has advised Democratic presidential candidate Barack Obama.... “I believe the balance of risks suggest a compelling case for a significant fiscal stimulus program that increases the deficit in the short run” but not over the medium to longer term, he said. The program may be most beneficial if it includes new measures for food stamps, unemployment insurance and other policies aimed at supporting low-income families, said Summers. He also argued in favor of new infrastructure investment as well as changes in Medicaid reimbursement rules and new funding to help low-income residents pay their heating bills.... Summers highlighted strong exports, falling commodity prices and the government’s takeover of Fannie Mae and Freddie Mac as “welcome developments.” But he predicted that a return to strong U.S. economic growth is probably “a year or so away.”
