WASHINGTON (Reuters) - U.S. House of Representatives Speaker Nancy Pelosi on Tuesday left the door open to another stimulus bill to boost the ailing economy, although economists were split over the need for one.
Last month, Congress approved a $787 billion spending plan that included money for roads and bridges as well as tax cuts for individuals and small businesses, all aimed at reversing the economy’s sharp downward spiral.
After meeting behind closed doors with prominent economists, Pelosi said that at the moment she would adopt a wait-and-see approach to a further economic stimulus, but noted that job losses would likely increase over the coming months.
“It will take a little time to get going, some of it’s already in the works, but we must give it time to work,” Pelosi told reporters flanked by economists and fellow Democrats who met to discuss the struggling economy.
“You have to keep the door open to see how this goes,” she said.
Mark Zandi, chief economist of Moody’s Economy.com, said that more funds would likely be needed to boost the economy as well as shore up the banking system, and potentially for the program to mitigate home foreclosures.
“We are going to need more taxpayer money up front,” Zandi told reporters. “I think another stimulus package is a reasonable probability given where things are going.”
He argued that spending the money up front could head off a larger economic catastrophe down the road which could be significantly more expensive. Already several million jobs have been lost since the recession began in December 2007.
“If we don’t stem the crisis quickly, the economy will continue to slide away and cause more problems with respect to our deficits and budgets, and ultimately will cost us more,” Zandi said.
However, another economist who participated in the briefing with House Democrats offered an different perspective.
“I don’t necessarily think we’re going to need more stimulus funds, I think we have to see how things go,” said Allen Sinai, chief global economist at Decision Economics Inc. “Remember, a tremendous amount of stimulus is working in the economy.”
He warned that the stimulus effort would probably fall short of creating or saving 3.5 million jobs within two years, saying it would instead probably take three years.
But one prominent Senate Democrat, Senator Ben Nelson of Nebraska who helped negotiate the smaller $787 billion package last month, said it was “way too soon” to be discussing another stimulus effort.
Editing by Anthony Boadle