Obama advisor Laura Tyson suggests another stimulus plan

Laura Tyson is adding her voice to those calling for more economic stimulus spending.

The UC Berkeley economics professor, a member of President Obama’s Economic Recovery Advisory Board, said in Singapore today that the $787-billion plan Congress passed in February "will have a positive effect, but the real economy is a sicker patient."

The plan turned out to be "a bit too small," she said.

From Bloomberg News:

"The economy is worse than we forecast on which the stimulus program was based," Tyson told the Nomura Equity Forum. "We probably have already 2.5 million more job losses than anticipated."

"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."

Billionaire Warren Buffett also recently suggested that the U.S. may need more stimulus spending.

"It looks like we’re going to need more medicine, not less," Buffett said June 24 in a Bloomberg TV interview. "We’re going to have more unemployment. The recovery really hasn’t got going."

The administration so far has rejected calls for more spending, saying the current plan needs time to work.

But as long as the Treasury has no trouble selling mountains of new debt, the temptation to launch another stimulus plan may well grow.

Government bond yields have declined in recent weeks from eight-month highs despite Uncle Sam’s continued record borrowing.

Today, however, bidding was weaker than expected at an auction of $35 billion in new three-year notes. The notes were sold at an annualized yield of 1.52%, higher than the 1.49% forecast in a Bloomberg survey of bond dealers.

The Treasury will sell $19 billion in 10-year notes on Wednesday and $11 billion in 30-year bonds on Thursday.

-- Tom Petruno

Photo: Andrea Tyson. Credit: Munshi Ahmed / Bloomberg News

Comments

[Jim]

I think Tyson should quit coming up with these bright spending ideas. Only 10% of the first one has been spent now she is calling for another one and the sad part there are enough stupid democrats out there to buy into it. What in the heck is wrong with our leadership(or lack of) in this country? People, vote these liberals out of office the next chance you get.

[JS]

An economist, for all practical purposes, is one who paints over the windshield, then tells you how to drive by looking through the rear-view mirror, with occasional glances to the side.

I would argue that the sovereign independence of the US is being leveraged in this debt binge, and will be a much tougher problem long-term. Witness the calls for a new reserve currency. Witness the boldness of bully nations like Russia, North Korea and Iran.

As the economic gangrene spreads, Dr. Obama and his clutch of interns run about looking for bigger pills and stronger drugs. Unfortunately, amputation is required, and the problem only worsens with delay. You cannot borrow an economy to health.

Yes, the ‘rest of the world’ is compelled to see the US resolve its problems. But at some point, absent a solution of greater depth than “borrow from tomorrow”, these creditors will eventually give up – and seek relief in the form of higher interest rates, which will crush the entire Obama economic agenda, including health care, pensions, poverty relief, education, and restoring infrastructure.

I fear the specter of a very short lived 60 seat majority will force the Dems into desperate measures to make the economy appear better come 2010 elections, and they’re prepared to gamble our futures to make sure of it.

Welcome to Amerika, comrades.

[Zack]

Where was Laura Tyson while the economic house of cards was being built? She and the rest of her Keynesian colleagues (Ben Bernanke, Larry Summers, etc.) did not predict the crisis, and in fact endorsed the very policies that led us into this mess. These fools really believe the government can take money from the producers and spend it efficiently and productively in the economy.What a farce!

Stop listening to the propaganda being shoveled out by these clowns, and check out the Austrian economists that predicted this crash and explain why it happened. I recommend looking up Crash Proof by Peter Schiff (written in 2007 and predicting this crisis) and Meltdown (written afterward and explaining the crisis) by Thomas Woods.