Senate Budget Committee Hearing on Economic Stimulus Package Before Floor Debate

 The Senate Budget Committee held a hearing this morning to once again discuss the economic stimulus package that will be debated and voted on the Senate floor this afternoon. Chairman Kent Conrad (D-ND) and ranking member Judd Gregg (R-NH) heard testimony from Dr. Alan Blinder of Princeton University, Dr. Mark Zandi of Moody’s Economy.com, and Dr. Daniel Mitchell, Senior Fellow of the Cato Institute.

The three T’s (timely, targeted, and temporary) once again led the conversation. The current Senate plan is costlier and broader than the bill the House has passed, including rebates for all taxpayers, regardless of income.

Dr. Blinder identifies himself with former Federal Reserve Chairman Alan Greenspan’s “school” in proposing transfer payments, as food stamps and unemployment insurance, and aid to states, tools left out of the House version.

Dr. Zandi pointed out that several states including California, Nevada, and Florida are already in recession, though the nation as a whole is maintaining slow growth. He recommends replacing the House’s business incentives with a version of the programs endorsed by Dr. Blinder.

Dr. Mitchell cited Monty Python, announcing “And Now for Something Completely Different!” Denouncing Keynesian economics flat out as “bad theory.” Reminding the committee that there are no “magic wands,” denies the efficacy of fiscal policy to stimulate the economy. Instead, he recommends that the Congress focus on long term practices to provide an environment conducive to business investment.

In closing, Senator Gregg described the whole stimulus process as a “feel good event” while acknowledging its potential benefits nonetheless. Speaking with me afterward, he stated that if the Senate is to do this, it must do it quickly.