The dismal fourth quarter, and the likelihood of more of the same through the spring, are fueling discussion among policy makers and politicians over the best way to spend the soon-to-be-authorized federal money.
Some caution that President Obama’s proposals try to achieve too many objectives — for example, broader health care coverage and energy efficiency — at the expense of focusing tax dollars on the core issue of job creation. By this argument, more should be spent on things like infrastructure repair, either directly or by channeling money to the states for projects now delayed for lack of adequate tax revenue.
Others argue that the best bang for the buck would come from a stimulus package devoted mainly to tax cuts rather than public investment. The breakdown in the $819 billion bill that the House approved on Wednesday and the Senate will take up next week is two-thirds spending, one-third tax cuts.
The president took a different approach in a press conference on Friday. Seizing on the damaging fourth-quarter figures and the prospect of an even weaker first quarter, he called the contraction “a continuing disaster” for working families and pushed Congress to act quickly to provide relief.
Even with the help of swelling inventories, the 3.8 percent contraction, adjusted for inflation and representing all of the nation’s economic activity, was the largest quarterly drop in the nation’s output since the 1982 recession.
Business investment, commercial construction, home building and exports all fell steeply, most of them doing so for the first time since the recession began 13 months ago. Data released this week suggested that the decline had continued. As for consumer spending, in only one other quarter since records were first kept in 1947 have final sales of goods and services produced in America fallen so much.
Read the entire article from the New York Times: