Nation debates Obama stimulus package

January 21, 2009 3:52:13 PM PST
Should the government spend nearly a trillion dollars to rescue the economy? Some say yes. But others say there are better ways to stimulate financial stability and create jobs.

Several economists, even with diverse views on policy, agree the economy is in such bad shape that a multi-billion stimulus package is needed. But others fear government spending will leave a massive debt.

As for taxpayers, they want to make sure their money is spent wisely.

With a ton on his plate, there is no doubt, many taxpayers believe President Obama should tackle the economy first. Obama is hoping to push through an almost trillion dollar economic stimulus package.

"The reality though is without it the cost to taxpayers of 20 percent unemployment instead of 9 or 10 percent is huge. Do you want a depression or deep recession? I'll take a recession and be depressed about it than a decade-long depression," said Diane Swonk, chief economist, Mesirow Financial.

But others believe a depression can be avoided without so much government spending. Peter Photos with the libertarian Heartland Institute says tax cuts are the way to rescue the economy.

"We need something that's going to actually stimulate the economy long term and most of that is going to come in the form of tax cuts, whethe it be targeted to business so that they can create jobs, attract more capital to the United States so we can open up factories and employ more people," said Photos.

In addition, he is concerned about the huge debt that will be a result of such a stimulus package.

"We're just making our debt burden that much worse. We are pushing more and more on our kids and grandkids," said Photos.

Economist Diane Swonk admits Americans are likely to be stuck with higher tax bills in the future. But for now, Swonk says the only way to save capitalism from itself and create jobs is to spend money.

"We are talking about getting money to state and local governments where the low-hanging fruit is, where there's projects that are shovel ready that have been sidelined because the real estate taxes have dried up. The roads aren't being repaired, we all know this, we see it every day," said Swonk.

Some taxpayers say as long as it's spent wisely, they support a stimulus package.

Taxpayers ABC7 talked with say they are against a stimulus package if it is only short term fix. Many say it must include some long term jobs.

While the Obama administration is trying to convince congress it must act now, budget experts warn lawmakers they must look at ways to bring the federal budget under control.