Bernanke's Gone Nuclear, But Will Obama?

Deep tax cuts still seem to be off the table.


The econpundits are telling us Ben Bernanke has "gone nuclear" in his efforts to stave off a mini-depression. Economist Mike Feroli puts the Fed's actions in this context:

At last year's December meeting rates were cut to 4.25% and no bias of risks was given by the committee.  In the twelve months since then, the Fed has travelled the distance that the BoJ covered in over a decade -- getting to zero interest rates and more explicitly engaging in quantitative easing.

So we are moving way faster than Japan did in the 1990s when dealing with a banking/real estate crisis. Fine.  But will Obama go all in? Will Obama go nuclear? Yes, he will be pushing for a $1 trillion stimulus package. But the infrastructure path didn't work for Japan, and Obama economist Peter Orszag has in the past been skeptical of such a stimulus plan.

Two big questions: 1) Will Obama push for a taxpayer-financed homeowner bailout via lower mortgages rates, especially if the Fed's actions can't push them deep into 4 percent territory?; and 2) Will Obama push for expanded tax cuts? I think "yes" to the first, "no" to the second.

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