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Ben Bernanke Agrees With Congress: Second Economic Stimulus Package Would Help

This article was written by in Economy. 44 comments.


Back in June, Senator Barack Obama called for a second economic stimulus package. The idea has been tossed around Congress, but a stimulus package in which the government sends checks directly to taxpayers has not passed yet. Even following the bailout of the financial industry, the government is not yet satisfied with the economy. Today Ben Bernanke, chairman of the Federal Reserve, spoke to Congress to call for passage of tbe second economic stimulus.

Most of Bernanke’s nearly 90-minute appearance focused on economic stimulus. He said that Congress should consider another measure but nonetheless declined to say how much money should be spent. He said that’s a decision for Congress, not the Federal Reserve.

Bernanke suggested Monday that any stimulus program should be activated as quickly as possible to boost the economy when it is facing its greatest period of weakness.

Would a second stimulus boost the economy? What were the results of the first economic stimulus earlier this year? Did it have an effect on your financial situation? Many people I talk to would like to receive a second check, but does it help the economy or just make people feel better? And if all it does directly is make people feel better about their finances, will that have a positive effect on the economy?

Bernanke: It’s time for stimulus plan, Chris Isidore, CNN Money, October 20, 2008.

Updated September 17, 2011 and originally published October 20, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 22 comments… read them below or add one }

avatar Mr. ToughMoneyLove

Absolutely the wrong plan. First, can someone explain to me what sustained benefit the economy received from the first stimulus package? Second, US consumers already know how to spend to excess. Giving them another stimulus is like giving a drink to a drunk. Third, what will they spend it on? More stuff they don’t need. The plan will boost the stock of retailers in the short term, then right back to where we are now.

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avatar Wes

I am truly convinced these guys have failed in diagnosing the real problem here. They continue to think that tossing money out, flooding cash into the system, is how to get things working. This is doing more harm than good and prolonging the healing process we need to endure to get financially healthy again. Congress is picking away at the “scab” of their own mistakes, and of Wall Street’s mistakes. It is not the government’s job to provide this kind of welfare to Americans. It is their own responsibility to go out and seek their income.

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avatar Ginger

If we’re being honest I think if we are going to bailout the consumer then it should be around credit card and mortgage debt. Forgive some mortgage debt through loan modifications and help some consumers by paying down credit card debt because some of them are using it to make ends meet. With fixed incomes and rising/fluctuating gas and grocery costs, I think this would be prudent on the part of the government.

It’s way too easy to talk about bailing out the corporations and not the common citizen. It’s cororate welfare and they are begging for more. AIG just came back for 12 MORE million in addition to the 85 and 32 billion they got in the last few weeks.

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avatar Caleb Nelson

I think that it is important to explore the true effects of the first economic stimulus package to see if it actually helped. I think that it made people feel better, knowing that they were getting something back, but I don’t know if it made any real progress economically. Most people spent their checks on debt.

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avatar Jason

Bailout this Bailout that…Where does the money come from in the so called global financial crisis. Have you looked into who owns the U.S. debt?

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avatar Taylor

I for one look forward to receiving a stimulus check. Selfish? Yes. Wasteful? On the whole, yes, but not on my part. It would be an added weapon in my battle against credit card debt. It would absolutely NOT reach the hands of any retailers who need to boost revenues in a painful year; it would go right to Citibank in my case.

Case closed. I won’t push for one; but I’d definitely welcome it. And I wouldn’t aid the poor retailing behemoths one bit. I would feel worse for local small businesses; but nothing is more important to me than knocking down my debt.

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avatar KC

Most people will use this second round of checks to pay off debt. In fact many people I know used the first one for that. It won’t have the same economic effect as if people just went out and spent it.

I really think government is mis-diagnosing the problem here. Although I’m glad gov’t is taking steps towards doing something (unlike in 1930), enough has been done already, at least for the time being. The market is reacting to news now, not true indicators of the economy. This is just creating more bubbles and not really looking at the fundamentals of the economy and what is really going on.

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avatar Yana

If this stimulus coincides with the Christmas season, yes, it will boost the economy. The first stimulus improved out financial situation, as would an additional payment, but neither dispensed to us would likely help the economy. It represents additional savings to us, and doesn’t effect our spending.

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avatar Apex

So I am not that old yet but old enough to have gone through 3 recessions (1990-91, 2001, 2008). I do not recall any talk of giving checks to people to help us through either of the other two (I know there were rebates with the tax cut in 02, but that was just a pre-rebate of the tax cut that people would have normally gotten at the end of the year from the tax cut). I know it might be argued at this point that this is different because of the credit crunch but when the first check was being discussed and passed in early spring there was no credit crunch and the mortgages hadn’t started unwinding yet and the DOW was still flying high at 13K (wow thats a big number now huh). So what compels us to hand out free money now when we haven’t done this in the past or atleast not that I recall. And now we ask for round two because its apparently worse than expected.

So I am less interested in if its the right thing and more interested in what changed in Washington that made them decide this is how they should respond when we simply muddled through recessions in the past?

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avatar Aaron

Yeah let’s just write a bunch more checks and hope people waste money on something… all the while the national debt soars even more…

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avatar Writer's Coin

Seriously, where is the data on the first stimulus? I haven’t read a single thing about that. Is it still too early? And what if people suddenly turned responsible and decided to save/invest a subsequent stimulus package? Wouldn’t this totally mute any intended benefit? I mean, I for one didn’t spend the first one, but does that mean I’m part of the reason it didn’t work as well as it could’ve? As you can see, I have more questions that answers.

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avatar Andy

I am a supporter of fiscal stimulus to drive growth, but the government has got so many initiatives on hand with a seemingly myopic view that I question how many of these programs will actually work. For example an earlier direct to consumer $50 billion stimulus package, provided a lift to consumer spending of 0.4 percent in May, but dried up after that. Similarly the 2008 housing relief bill did not save the housing market or GSE’s – Freddie and Fannie. Despite being politically popular, both examples of fiscal action failed miserably. With the floodgates of government spending opened, it is likely that our financial chiefs and lawmakers will keep on coming back for more. We are essentially spending away our futures to save the political and financial backsides of those people who got us into this mess in the first place.

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avatar 1badhairday

I for one think there should be a second check. For one reason, us little people have to work and earn every little penny we can . Just to make ends meat, some of us has not inherited a bunch of money! We work for it. Some of us used it wisely and had enough to get back and forth to work without have to worry will I or will I not have enough left out of my check. Then our children bennifits to by getting to do sports that they normaly could not have done!!!!!!!!! So my answer is yes!!!!!!!

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avatar dorannmwin

Do I think a second check to the general public is necessary? In short, no I don’t. Would I welcome it? Of course I would.

We are the little people. The people who live from paycheck to paycheck. We are the people who are really struggling today.

With our first check we purchased new windows for our new home. Yes, we were lucky enough to get a conventional mortgage on a house this year before the bottom fell out. However, it needed and still continues to need a lot of improvements done.

If we were blessed with another check, it would also go into something for our house. So, yes our money would benefit the economy in the short run, but it would also benefit our family in the long run in that eventually the housing market will have to turn around and we will have established equity in the house in so much as the work that we’ve put into it.

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avatar Mary

I have an emergency fund and no debts and I would definitely use the next stimulus check on much needed items such as a replacement side view mirror I’ve been holding off buying. I’ve been so frugal this past year! I’d probably go buy myself and my daughter something fun, perhaps go have a dinner w/ my hubby–save any thing left over. So yes I guess my check would help stimulate the economy.

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avatar Mary

i would also consider buying more shares in my mutual fund depending on the size of the stimulus check.

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avatar Moneymonk

I’m like dorannmwin

I don’t think it will help, but I would be glad to cash it :)

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avatar Mike

Chairman of the Federal Reserve suggesting the Goverment take out another multi Billion dollar loan from his bank which is privately owned, thus ensuring even more debt and slavery to the banking cartel? Gee, what a shocker.

Don’t allow these crooks to continue to steal from the population any longer, read the economic theories of Ludwig von Mises at his site.

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avatar Donny Gamble

I really don’t know how much the stimulus check will help. Does anyone know if the first one did anything to improve the economy? I just don’t it as a benefit because people don’t know how to actually buy things that they need, instead they buy what they want. Society has grown accustom of spending the little money that they have instead of putting that money towards their retirement account.

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avatar Sherri

I think the second stimulous payment would help the economy, but I also think it needs to be sent out long about the end of Nov. beginning of Dec. w/ Christmas coming I think it would help the economy.
Gas prices or down now and I think that is helping tremendously. I live in Nebraska tho where the housing problems, unemployment and debt problems so far really hasn’t hit us yet. I am a stay at home mom and my husband works 45 hours a week and we live paycheck to paycheck, so would really help for Christmas if they got them out sooner then later.
Although, I thought I heard something about it not going directly to people (all that is) more so towards people who are unemployed or don’t work and to city things and the food stamp program. Which will do absolutly nothing to us little people. (middle class people as Obama puts it)

If they don’t want people paying bills w/ it then send it some sort of credit card that has to be spent at stores only. If that is what they want they can sure make sure that happens.

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avatar Evelyn Stark

In reviewing Ben Bernanke’s bail-out plan, I do not agree altogether.
Britian tried this bail-out stimulas a year or two ago and it does not work! I would like to know the ramifications of letting our economy bottom out! Is this bailout because of the global status of our companies or does it include concern of the ripple effect in Europe and the rest of the world? I would like to know the positive effects of the bail-out also. Unlike the first bail-out “We the People” would like a report every month of what is being done with our long term debt after it has been distributed. The follow-ups can be placed on the internet for “We the People” to follow and research.

Sincerely, Evelyn Stark

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avatar J Bacevicisu

just as i thought all along OBAMA is a nightmare waiting to happen he has not experience the senate and congress are running him …. oh and bailing out banks who take our money and GM insteead of giving us a rebate check, you ididots that agree with that are obviously the ones hiding your money from the irs and overseas,

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