$700B For Main St.?

Democratic leaders in Congress are discussing an emergency economic stimulus package nearly as large as the Wall Street bailout:

America needs another large stimulus package of up to $700 billion to pull the economy of its current slump, Senate Democrats are saying.

Appearing on ABC’s This Week, Sen. Chuck Schumer told George Stephanopoulos that if Congress considers an additional economic recovery package, it must be “pretty big” in order to be effective, Reuters reported.

“It’s a little like having a new New Deal, but you have to do it before the Depression. Not after,” said Schumer.

Speaking to CBS News on Sunday, House Speaker Nancy Pelosi echoed Shumer’s statements, calling for a broad stimulus that would be aimed at creating jobs and could contain a tax cut, BBC News reported.

“Something of several hundred billion would have to be some investment into the future, plus creating jobs immediately, and a tax cut,” she said.

Schumer added that the bill could be ready by the time President-elect Barack Obama takes office on January 20.

“Most economists say to make this work you need about 5 percent of GDP, which would be 700 billion dollars,” Schumer said. “I think we need a large one.

Republican Sen. Richard Shelby appeared on the show with Schumer and said he would support his suggestion “if it would accelerate appreciation, things like that; tax incentives for people to hire, to retool and things like that.”

[Emphasis mine]

To some extent, I balk at the high cost–this stimulus package and the economic rescue bill together will cost somewhere near $1.4 trillion.

On the other hand, I support the idea of the American people–not just banks and corporations–getting a hand up.  And I agree with economists like Nobel laureate Paul Krugman, who say that the best way to fix this mess is more government spending; at this point, the federal government is the only entity large enough and with enough resources to right our wayward economy.

I don’t know the details of the legislation, but as it stands I say it’s a good idea.  We’re not going to get out of this crisis incrementally; we’re going to need to take some bold moves with the potential for significant payoff in order to pull ourselves out of the pit that free market fundamentalism dug for us.