Obama advisor Laura Tyson suggests another stimulus plan
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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