Ryan J. Donmoyer and Scott Lanman
Tuesday, Oct 21, 2008
Lawmakers and officials moved toward forging a second fiscal stimulus bill after Federal Reserve Chairman Ben S. Bernanke endorsed the idea and the Bush administration dropped its opposition.
Bernanke warned legislators yesterday the credit crunch is “hitting home,” with Americans unable to get auto loans and companies denied cash, and recommended measures to help borrowers. White House Press Secretary Dana Perino said President George W. Bush was “open to the idea” of a new stimulus.
Momentum for fresh measures built after an earlier stimulus package failed to prevent a jump in the unemployment rate to a six-year high and the longest slump in retail sales since at least 1992.
Bernanke “had to do what he did” in supporting a further federal stimulus measure, said Lyle Gramley, a former Fed governor who is now senior economic adviser at Stanford Group Co. in Washington. “If he went up there and said, `Well, I’m indifferent to a stimulus package, I’m opposed to it,’ he would be sending the wrong signal.”
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House Budget Committee Chairman John Spratt said a new push would be patterned after earlier proposals made by House Speaker Nancy Pelosi that extend jobless benefits, fund infrastructure projects such as road and bridge construction, and help cash- strapped state and local governments.
Bernanke told the Budget Committee yesterday that the danger of a “protracted slowdown” and a “weak” outlook for the U.S. economy into next year convinced him to support a new round of economic stimulus. A similar endorsement by Bernanke earlier this year helped clear the way for a $168 billion measure enacted in February.