Macroeconomics question

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Should the president have proposed a higher stimulating package for the economy?The question on whether or not a stimulation package for the United States economy will be effective depends on so many different factors.  The first criterion that must be examined is whether or not there really is a recession and therefore the need to introduce a new economic stimulus package.

As shown in recent reports, the United States economy has indeed taken a hit from the collapse of the subprime market.  This has led to a loss of jobs and a slowdown in economic growth.  This shows that there indeed may be a basis for the introduction of a stimulating package.The second, and perhaps more essential question, is on whether or not the stimulus package is enough.

In order to address this question, it is relevant to examine the limitations and effects of the introduction of such a package.  At present, the economic slowdown has resulted in loss of jobs and ultimately lower revenues for the United States government.  The reduced demand for US backed treasury bills and securities also means that the Government is constrained with respect to the size of the economic stimulus package that it will release.The projected loss of jobs and increase in unemployment rate is not necessarily affected by any economic stimulus package.

This is the reason why the question on whether or not the package should be higher is not really relevant.  Loss of jobs can be attributed to the economic fundamentals of the United States economy such as the shift in production facilities to other countries.  This is not necessarily a function of the current recession that the United States economy is experiencing but instead a result in the lack of solid economic fundamentals over the years.Assuming that the package will indeed have the intended effect, the hands of the United States government are also tied down by budget constraints.

The treasury department can only allocate and release so much funds and this may or may not be the amount needed to effect that changes that many have proposed.

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