Deficit Tops $1T for First Time

Fast, temporary stimulus would buoy flagging economy, Fed chief tells Congress

(NEWSER) - The country needs a federal stimulus package ASAP, Federal Reserve Chairman Ben Bernanke told the House Budget Committee today, advocating immediate legislation designed “so its effects on aggregate spending are felt as much as possible within the next 12 months.” But he said the package should be “explicitly temporary,” to avoid unwanted long-term stimulus and an undue deficit bulge, CNNMoney reports. More»

Ariz., Fla., Ill., Mich., and NJ among others facing crises

(NEWSER) - California has by no means cornered the market on enormous financial problems at the state level, with a report out today saying Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island, and Wisconsin are also at tremendous risk. The Pew Center sees widespread unemployment, huge budget deficits, and the ongoing foreclosure crisis as common factors—plus various constraints that keep many of the states from raising taxes. More»

(NEWSER) - Economists think the US unemployment rate will stay above 9% through 2010, the Wall Street Journal survey finds. Accordingly, those in the know believe the Federal Reserve will hold interest rates down at least through spring. “For real people, there is no recovery until the unemployment rate stabilizes,” one economist said. “If the Fed starts raising rates in the face of continued job losses, it could abort a recovery.” More»

Now is no time to require balanced budgets

(NEWSER) - When the economy goes south, the government has no business aiming for a balanced budget. But all 50 governors are faced with slashing spending to do so, and “at the expense both of their most vulnerable constituents and of the nation’s economic future,” Paul Krugman writes in the New York Times. More»

We need massive fiscal expansion, not budget restraint: Krugman

(NEWSER) - As the incoming administration prepares a massive fiscal stimulus to jolt America's floundering economy back to life, some are worrying about what billions in spending will do to the budget deficit. On the contrary, writes Paul Krugman in the New York Times: Deficit spending now will help, not harm, the country's long-term prospects, and worrying about the deficit during a crisis is both misguided and dangerous. More»