The following editorial appeared recently in the Chicago Tribune:
For months, congressional Democrats have been arguing that the economy needs another federal stimulus package, on top of the $787 billion appropriated last winter. Such action is allegedly needed to keep the economy from stagnating and unemployment from rising. And whatever it costs in more federal deficits, they say, it's cheaper than doing nothing.
So the latest economic news presents a real inconvenience. It suggests the turnaround is taking place even without all that new spending they propose.
The recession apparently ended in the third quarter, with the nation's gross domestic product increasing for the first time since the first half of 2008. Normally, unemployment keeps climbing long after the official end of a downturn. But last week came the heartening news that the jobless rate, which hit 10.2 percent in October, dipped to 10.0 percent last month.
This is not exactly paradise. But it indicates that the worst of our troubles are behind us and that the economy is returning to health. A survey by the Institute for Supply Management found that manufacturing companies have reported improving business for four straight months — an indicator that historically points to falling unemployment.
The Obama administration and other Democrats attribute the incipient rebound to the American Recovery and Reinvestment Act, a collection of tax cuts, expanded unemployment benefits and new outlays for transportation, health care and energy conservation. Many economists beg to differ. John B. Taylor, a macroeconomist at Stanford University's Hoover Institution, says the stimulus has "had virtually nothing to do with the improvement."
That isn't hard to believe. What generally gets overlooked is that the Federal Reserve and the Treasury Department were taking bold steps to boost the economy last year, long before the stimulus was passed — slashing interest rates, rescuing major financial institutions and generally preventing a total seize-up of lending.
What also gets overlooked is that most of the stimulus funds haven't accomplished anything, because they haven't left the vault. Fed Chairman Ben Bernanke told a congressional committee last week that only 30 percent of the money has been spent so far.
Nevertheless, President Barack Obama on Tuesday called for a new jobs program. He didn't set a price tag, but various estimates in Washington put it at $75 billion to $200 billion. Some would be directed to tax cuts to encourage hiring by small businesses, but much of it would go to government infrastructure spending.
What is the logic of charging another package to the national credit card? If the previous stimulus is working, it should work even better as the lion's share of the money finds its way into the economy. If it is not working, however, then there is no reason to think another round would pay off — and besides, the recovery is taking hold in spite of its failure.
The downside of a second stimulus is that it would further enlarge the deficit, piling more burdens on current and future taxpayers.
In the current economic climate, that's a deal Congress should pass up.
Distributed by McClatchy-Tribune Information Services.