ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, host:
And I'm Melissa Block:
It was another rough day for investors in the stock market. The Dow Industrial's lost more than 300 points, nearly 2.5 percent. The White House, Congress and the chairman of the Federal Reserve all agree the U.S. economy needs a boost right now. The question is how to provide that boost in a way that will be acceptable to everyone.
SIEGEL: Today, President Bush and congressional leaders talked by telephone about what steps the federal government can take to fend off a recession. One idea is a package of quick tax rebates worth a hundred billion dollars or more.
Federal Reserve Chairman Ben Bernanke appeared today before the House Budget Committee, and he said that a stimulus of that size could make a difference.
Mr. BEN BERNANKE (Chair, Federal Reserve): Let's say for the sake of argument that 60 or 70 billion of that was actually spent by, say, early 2009 and that was added to the GDP that the effects on the growth rates in the second half of the year, in early 2009, would be significant.
BLOCK: Bernanke said the current slow down could turn out to be brief, and if government officials take too long deciding what to do, that help may come too late. So he said discussions about whether to extend the Bush tax cuts, which expire in 2010, are pretty much beside the point.
Mr. BERNANKE: Just in terms of the next few months, I think that the evidence suggests that measures that involve putting money in the hands of households and firms that will spend it in the year term will be more effective.
SIEGEL: NPR's Jim Zarroli is following the economics side of this story, and NPR's Brian Naylor is covering the political side, and both join us now. Welcome, guys.
BRIAN NAYLOR: Hello.
JIM ZARROLI: All right.
SIEGEL: And, Jim, Mr. Bernanke clearly endorsed the idea of Congress doing something, but he also seemed to be concerned that it not be done the wrong way.
ZARROLI: Yeah, that's right. I think he sang, you know, tax cuts, the budget deficit. These are important issues, but if you get too caught up in these long drawn out ideological wars over them, you know, time will - too much time will have passed, and then you might as well not even have bothered. I think he's also saying, you know, we don't have - and that much time because the economy is growing weaker. I mean, if you were to compare his words today with what he said last August when this credit crisis began, he just sounds more alarmed. He doesn't say there's a recession, but he says there are downside risks to growth.
SIEGEL: Yeah, what kind of reception did he get on Capitol Hill, Jim?
ZARROLI: Well, Congress is usually pretty deferential to him, which he is probably grateful for. He has faced a certain amount of criticism recently that the Fed hasn't acted quickly enough to address the problems in the economy. The longer this drags out, the louder the criticism gets. He's in a difficult position. He came into office, and a year ago, right away, he faced this mortgage crisis. The Fed has cut rates; it hasn't really worked. The stock market is down; the economy has slowed. The Dow was down more - another triple digit loss today, so he's in a really tough spot.
SIEGEL: Yeah. Brian Naylor, let's hear about the lawmakers' proposed solutions to the economic slowdown. First, what do the Democrats want to do?
NAYLOR: Well, it's interesting, Robert. There's been so much talk about bipartisanship. I think both parties see Congress's low approval ratings and a likelihood of a recession, and let's not forget it's an election year. All of the House and a third of the Senate is up for reelection, so they're pretty much all on the same page. The Democrats mentor has been targeted timely and temporary. They want to see most of the benefits going to low and middle income Americans. And they're talking about some sort of tax rebates, extending jobless benefits, and increasing eligibility for food stamps. There's also some talk about making some money available for infrastructure improvements, not big, new projects, but repairs on existing roads and bridges, projects that don't have long lead times.
SIEGEL: And President Bush - what does he make of this? Or do we know yet?
NAYLOR: Well, in 2001, the president supported individual tax rebates, and I think that we can expect a similar proposal from him this time around. And the congressional Republicans I've heard from don't have much trouble with the idea of tax rebates, though they also - they want to see some tax cuts as well and help for small businesses. And it's likely they'll get some of those. What they're not likely to get is an extension of the Bush income tax cut set to expire in 2010. Democrats are strongly opposed, and as we heard earlier from Chairman Bernanke, he's not so keen on the idea either.
SIEGEL: Jim, I've heard that other politicians actually love this moment because all the things you do in times of a recession are also good. You cut taxes; you throw money out to the economy. Do economists actually agree that a stimulus, properly done, can make a real difference in the economy?
ZARROLI: Well, I, you know, there are - some conservative economists, I think, oppose this kind of government intervention just on principle. I think most economists would say, yeah, it has a value if it's done right; if it's targeted in a way that has a maximum benefit for the economy. You know, at the same time, you don't want to do this in such a way that it's going to make the deficit really worst long-term. But if you do it in the right way, it can give the economy a kick. And, you know, certainly, the Bush administration says - or has long contended - that it was because of the stimulus package - the tax rebates after 9/11 that the last recession wasn't worse than it was.
SIEGEL: Yeah. Well, Jim Zarroli, Brian Naylor, thanks to both of you.
ZARROLI: You're welcome.
NAYLOR: Thank you.
SIEGEL: And you can read about some proposals in the mix for stimulating the economy at our Web site, npr.org.