"Geithner is realistically pessimistic about the economic crisis while the rest of Washington—even President Obama—hasn't caught on to how bad it is yet. From the rhetoric surrounding the stimulus bill, you'd think the American economy is already stabilized, able to breathe on its own, and ready to get up and start walking. [...] The takeaway: Things are tough and might get somewhat worse. But this plan is a plan for recovery and job creation.There are a number of things to be said about this. I see why not using the most pessimistic tone when talking about the economy is somewhat reasonable for the President: but on the other hand, following the black hole that was the TARP (Troubled Assets Relief Program) - one would be almost tempted to quote an old Libertines-song ("Where does all the money go / Where does all the money go? / Straight, straight up her nose"). The stimulus plan that will or will not pass, since the Senate has just voted on a slightly changed and more expensive bill from what the House passed weeks ago, (a questionable "compromise" between the Democratic Senators and two or three Republicans, to guarantee the filibuster-proof majority of 60 votes because they don't want to lose the time it would cost to actually force Republicans to filibuster the plan and showcase some more "stimulus is about cutting taxes" babytalk). An article by the "Center for American Progress" argues that the lighter plan that originated in the House actually creates more jobs than the more expensive Senate bill - and why? Because real stimulus means spending money, not cutting taxes, and the House agreed on cutting back on education spending(building new schools etc.)
Geithner struck a different tone in his speech. The patient he diagnosed is nowhere near ready for ambulatory care or physical therapy. Rather, it's struggling to breathe without life support. Worse, it is still in danger of infecting the whole hospital. The financial sector, pro-cyclical on the way up—easy money begat more easy money—is also pro-cyclical on the way down. "Instead of catalyzing recovery, the financial system is working against recovery," he noted."
Slate: More Gloom, Please, February 10, 2009
All in all, I prefer Dr Doom to "everything is going to be shiny as long as we continue this way". I see why the Administration is in a hurry to pass any bill, but compromising with Republicans who still insist that tax cuts are the solution to anything might end up being worse than just taking more time to pass the bill.
NY Times: Senate Approves Stimulus and Begins Intense Talks, February 10, 2009
NY Times: Bailout Plan: $2.5 Trillion and a Strong U.S. Hand, February 10, 2009
Economist: Still Seeking a Way Out, February 10, 2009
This is a very interesting and short paper on the effects various legislative measures have on employment.