WASHINGTON (Reuters) - The United States needs a new economic stimulus plan that pumps billions of dollars into infrastructure projects and budget relief for cash-strapped state and local governments, Democratic lawmakers said on Sunday.
U.S. Rep. Barney Frank, chairman of the House Financial Services Committee, told ABC television he will put together an economic stimulus bill when Congress returns to Washington after the November 4 elections, while a key Republican said he would support an effort that “makes sense.”
Rep. Roy Blunt, the Missouri Republican who serves as House minority leader, said he would support a stimulus plan if it did not include massive public works spending and budget bailouts for states that overspent on health care and other social programs.
“A stimulus plan that makes sense is something that I’ll be helpful with,” Blunt said, also on ABC television.
U.S. House Speaker Nancy Pelosi last week said a $150 billion economic stimulus plan was needed to help counteract a faltering economy shaken by a paralyzed banking system and steep stock market falls.
On Monday, Pelosi and House Democratic leaders will meet with key economists to discuss a jobs creation and recovery plan that will complement the recently passed $700 billion rescue legislation for financial institutions. Participants will include former U.S. Treasury Secretary Larry Summers, former Securities and Exchange Commission chairman Arthur Levitt and former Federal Reserve vice chairman Alice Rivlin.
The Congress earlier this year passed a $152 billion stimulus package that provided tax rebates of up to $600 per adult to support consumer spending at a time of rising energy and food costs.
Most of that money has already been spent, and many economists say financial turmoil will squeeze the economy into recession in the fourth quarter.
“Not only is Wall Street frozen, but Main Street is in real trouble. A stimulus aimed at Main Street makes sense,” New York Sen. Charles Schumer told CNN.
He said the plan should “get into the guts of the economy” by boosting spending on infrastructure such as roads, sewer and water projects.
Former Treasury Secretary Robert Rubin, who served under President Bill Clinton, told CNN that an infrastructure plan that could quickly pump money into the economy was the most important action that U.S. authorities could take to help deal with the current economic crisis.
“I would put in place an infrastructure piece... bridges, water systems roads, highways, but not new projects that are going to take a long time to set up,” Rubin said. “There are a lot of existing projects where states and cities are having a hard time finding a lot of financing where you could funnel that money right into existing activities where you would be able to act very very quickly.”
Schumer also urged the Treasury to move quickly on its plan to buy equity stakes in banks.
“I am hopeful that tomorrow the Treasury will announce that they’re doing it. And they have to do it quickly,” said Schumer, a New York Democrat.
“This cannot be two, three, four weeks. The markets are waiting, the country is waiting, and we’re beginning a downward spiral, not just in finance ... but in the whole economy. We need quick action,” he added.
Reporting by David Lawder, Editing by Andrea Ricci