The financial system is recovering, say the economists, but Washington lawmakers look at consumer sentiment and job losses and see tough times ahead, leading to questions about whether there will be another round of stimulus spending.
The financial system is recovering, say the economists, and the stock market seems to have found some energy. But Washington lawmakers look at consumer sentiment and job losses and see tough times ahead unless the labor market picks up some steam. Which leads to questions about whether there will be another round of stimulus spending aimed at job creation. The answer, say political analysts, seems to be “maybe.”
In addition to a massive increase in federal spending, the first stimulus featured a tax cut and several tax incentives, such as a first-time home buyer’s credit and a car buyer’s tax deduction. It also eliminated the income tax on the first $2,400 of unemployment benefits and gave laid-off workers help with COBRA health insurance premiums. Don’t look for a similar package, says Treasury Secretary Timothy Geithner, noting that the original $787 billion stimulus has done the job of righting the economic ship.
What many observers are calling a “stealth” stimulus package, which could cost as much as $90 billion, may still be in the works, however. The House has already passed a bill that would extend unemployment benefits for an additional 13 weeks, and the Senate will begin debate on the measure shortly. Also on the table is an extension of both the home buyer’s credit and the COBRA subsidy, as well as a tax credit for employers who add to their payrolls. Congress will also consider a one-time emergency payment to seniors, who will not see an increase in their Social Security checks next year for the first time in three decades.