By Phil Mattingly CQ Staff
Speaker Nancy Pelosi opened the door to the possibility of another stimulus plan or bank rescue following a Tuesday meeting with dozens of Democratic members that was attended by a panel of four prominent economists.
Mark Zandi the chief economist for Moodys Economy.com told reporters after the meeting that the $787 billion stimulus package signed into law in February might not be the last move by Congress to deploy taxpayer money to save the economy.
Another stimulus package is a reasonable possibility" said Zandi a key consultant for Democrats on the economic stimulus package (PL 111-5) signed into law Feb. 17. And he added more money for the banking system is likely very likely."
Asked by a reporter if she agreed with Zandis assessment Pelosi said: I do."
Pelosi said the initial actions of the 111th Congress have been effective.
I think its important not to lose sight that the policy response to date has been very good and very aggressive" Zandi told reporters.
But the administration has repeatedly warned that it will take time for the results to be felt. Unemployment hit 8.1 percent in February and the stock market continues to sink to multi-year lows on a seemingly weekly basis. Added to that is a growing fear that some of the largest nations largest financial institutions may be so-called zombie banks fundamentally insolvent but propped up by taxpayer cash.
Stocks surged Tuesday on news that Citigroup report profits during the first two months of this year and a renewed commitment by Federal Reserve Chairman Ben S. Bernanke to back a far-reaching overhaul of financial industry regulations including closer supervision of institutions deemed too big to fail." But that is likely to be a temporary uptick as investors continue to fret and demand greater clarity about the true financial status of major institutions.
Its tough for politicians to have patience but we have to have patience" said George Miller D-Calif. the chairman of the House Education and Labor Committee.
Democrats left the meeting much better equipped to make important decisions" Pelosi said.
Those decisions could involve another painful debate about whether more money is needed to aid the economy and if so how much. It has become fairly accepted in economic circles that the major banks are going to need significantly more government funding to clear off the toxic assets clogging up balance sheets.
The $700 billion Congress approved for a financial industry rescue late last year (PL 110-343) is almost entirely committed. A fiscal 2010 budget outline released by President Obama last month included a $250 billion contingent reserve" to leverage some $750 billion in unspecified asset purchases" though administration officials stressed no decisions have been made.
Several lawmakers have voiced concerns that Congress undershot on the stimulus package. Alan Sinai chief economist at Decision Economics Inc. told reporters after the meeting Tuesday that his estimates indicate the stimulus will create or save 2.5 million jobs over two years 1 million below initial estimates.
In response Democratic leaders appear to be making a strong push to address the concerns of wary members in an effort to bolster support for potential battles ahead.
Do they need to be adjusted potentially? Yes" Rosa DeLauro D-Conn. said of congressional actions thus far. But she added members cant be frozen in the sand where we cant turn the guns around."
GOP on Offensive
Republicans have been hammering congressional Democrats and the Obama administration over the surge in federal spending since Obama took office.
House Republican leaders said Tuesday that they will continue their offensive while offering their own plans to address public concern over loss of jobs.
What you will see in this House Republican conference over the next several weeks is our attempt to connect with American people to begin to provide comfort and build confidence that our focus will be about jobs" said Minority Whip Eric Cantor R-Va.
People are seeing their government is spending away their childrens future on bailout after bailout" he said without specifying how Republicans would address the jobs issue. In the past they have primarily promoted more tax relief for businesses.
Treasury Secretary Timothy F. Geithner went to the Capitol Monday night for a two-hour question-and-answer session with the House Democratic Caucus. Though members remained cautious as they streamed out of that meeting it appeared to go a long way toward reassuring skeptical members.
How refreshing it was to share whats happening in each of our districts" said Marcy Kaptur D-Ohio long a vocal critic of the administrations efforts who described the meeting as extraordinary."
Hes connecting with the caucus by being over here at 7:30 on a Monday night" said House Budget Committee Chairman John M. Spratt Jr. D-S.C.
Bennett Roth contributed to this report.
