$775 Billion Dollar Stimulus May Not Be Enough Says Nobel Prize Winning Economist
The next economic stimulus package may be between $675 billion to $775 billion according to Obama’s senior White House advisor David Axelrod when he was on Face the Nation. However some economists think that this will not be enough to stimulate the economy toward recovery such as Nobel Prize winning economist Paul Krugman who won a Nobel Prize this year for his work on how economies of scale can affect trade patterns and the location of economic activity.
“I’d like to see it bigger.” Krugman said. “I understand that there’s difficulty in actually spending that much money, and I–they’re also afraid of the–of the T word. They’re afraid of a trillion dollar for the two-year number. But you know, the back of my envelope says it takes roughly 200 billion a year to cut the unemployment rate by 1 percent from what it would otherwise be. In the absence of this program, we could very easily be looking at a 10 percent unemployment rate. So you do the math and you say, you know, even these enormous numbers we’re hearing about are probably enough to mitigate but by no means to reverse the slump we’re heading into. So this is–you know, I–they’re thinking about it straight.”
While it may be hard to imagine another trillion dollars to be added onto our national debt, not spending enough may end up costing much more in the end and result in hundreds of billions wasted. There is also a concern that the stimulus will take too long to take effect if it is invested in infrastructure and clean energy. If the goal is for long term stability of the economy, then that might explain why they are not looking to spend as much right now. However, America may not be able to wait much longer for some good news.
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