Nation’s worsening economy justifies aggressive stimulus

If there was any doubt about the need to pump billions of dollars into the economy, consider this report from the Federal Reserve: A survey of business conditions nationwide, collected between November and Jan. 5, shows the nation’s economic picture has darkened over the last two months.

And, says the Fed, recession-shocked Americans went into a deeper funk, forcing retailers to ring up fewer sales and factories to cut back production.

The bottom line: “Overall economic activity continued to weaken across almost all of the Federal Reserve’s districts.”

In terms we can all understand, the economy is going to get worse before it gets better.

Since the federal government is the only source of the amount of money needed to be circulated to trigger a recovery, fast action by Congress is demanded.

We fully understand the reluctance on Capitol Hill to give the executive branch hundreds of billions of dollars more after the way the Bush administration managed the first $350 billion of the $700 billion Congress authorized in funds to bailout the financial institutions. The fact that senators and representatives cannot get details on how the first installment was spent justifies their refusal to give the White House carte blanche on the second $350 billion.

President-elect Barack Obama, who will sworn in on Tuesday, has been negotiating with congressional leaders and has pledged full transparency in how the rest of the money is spent. Financial institutions are still in need of a boost, while the nation’s housing industry, which has been plagued by record foreclosures, has become a priority for members of Congress.

Legislation to release the remaining $350 billion in federal bailout funds was approved by the Senate this week.

Stimulus package

But it is the massive economic stimulus package — a blend of federal spending on public works projects, health care programs, school construction and other initiatives and tax cuts that could reach $1 trillion in size — that needs to moved through Congress quickly so Obama can sign it into law and the money can being flowing to the states.

Democratic leaders in the House and Senate hope to have the bill on the new president’s desk by mid-February. Indeed, the decision by the president-elect to include tax cuts has won over some Republicans.

While all this government spending in the midst of record federal budget deficits and exploding debt might seem foolhardy, economists are generally agreed that current economic crisis that has roiled the stock market and caused massive dislocations in the workplace will not simply end. Job losses have had a ripple effect, resulting in the bleak retail picture painted by the Federal Reserve.

Indeed, most state governments, which are required to balance their budgets each year, have been forced to make major spending cuts. Governors are urging fast action by Congress on the stimulus package.

The president-elect, in a move designed to focus Americans’ attention on what he wants to accomplish, visited a factory Friday in a suburb of Cleveland.

His message was clear to the employees at Cardinal Fastener & Specialty Co. in Bedford Heights: Stimulating the economy will help companies like yours.