Experts agree the economic recovery is ailing, but there’s little consensus on a cure.

President Barack Obama and his allies want to continue stimulus efforts, but Republicans argue that continuing to throw money at the problem is only driving up the national debt.

An August survey of the National Association of Business Economists found that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to CNNMoney.com.

With fears about a double-dip recession growing, the survey of 84 NABE economists who work at private-sector companies and industry trade associations provides no clear answer on how to keep that from happening.

Nearly 75 percent of NABE members said they don’t think another stimulus package is necessary to get the economy back on track. At the same time, a majority believe policymakers should do more to boost job growth, said CNNMoney.com.

After rebounding from the most serious economic downturn since the Great Depression, the rate of continued economic growth has slowed significantly. Government figures released last Friday revealed that U.S. domestic product, the broadest measure of economic activity, grew at an annual rate of 1.6% in the second quarter; down sharply from the previously estimated 2.4% growth rate. And it’s a big drop from the 5% growth rate seen in the fourth quarter last year, said CNNMoney.com.

Just under half of the NABE economists said deflation is the main threat to the economy in the short term. Deflation occurs when both prices and demand fall, creating a downward spiral that can stifle economic growth for years, said CNNMoney.com. Responses were mixed whether inflation or deflation posed a greater risk to the economy over the next three years.

There was also little consensus among NABE members on when the Federal Reserve should raise interest rates and begin selling assets it bought during the crisis, said CNNMoney.com.

Only 38% of economists surveyed believe that the nation’s current financial policy is “about right,” but 64% of them supported recent legislation to extend unemployment benefits.

The economists did reach agreement on the issue of tax cuts. A majority of them said that none of the existing tax cuts on individual income, dividends and capital gains should be allowed to expire, said CNNMoney.com.

When Congress returns to session next month, they will have to determine the fate of more than 100 tax breaks that have expired or are set to expire soon.

President Barack Obama urged Congress on Tuesday to pass his $30 billion package to boost small business lending by pumping capital into independent banks. The plan, proposed in February, is an effort by the administration to spur job growth.

The banks that receive the money would pay the government a dividend, which would decline as their lending to small businesses increased, said Reuters.The president has also pushed for a number of small business tax credits as part of his economic agenda.

In his remarks to Congress, Obama said passing the measures “shouldn’t be a partisan issue.”

The House of Representatives Financial Services Committee approved its version of a bill to boost small business lending by a 42-23 vote last week, with no Republican support, said Reuters. The bill will be brought before the full House for a vote soon, said Speaker Nancy Pelosi.

The country’s unemployment rate is stalled just under 10 percent, and the president and other Democrats need to counter criticism from Republicans that they haven’t done enough to fix the economy before mid-term elections in the fall.

President Barack Obama and Congressional Democrats are laying out plans for job creation packages using some of the $115 billion in TARP money big banks have repaid to the government, said the Wall Street Journal.

One part of the legislation would authorize approximately $110 billion in emergency spending to extend unemployment insurance, fund food stamp increases and subsidize private health insurance for the unemployed.

A second “jobs” bill would cost up to $70 billion and be funded by the bank bailout, said the Wall Street Journal. That plan would funnel more money to municipal projects like highway and bridge building and school construction and repair. Other money would be given as direct aid to state governments that have been forced to cut services and raise taxes to balance state budgets.

And some repaid bailout funds would be lent to small businesses directly from the Treasury, said the Wall Street Journal.

Republicans oppose using the returned TARP money for a jobs bill. Instead, they want to the money to be used to reduce the federal budget deficit.

Real gross domestic product decreased at a better-than-expected annual rate of 1.0 percent in the second quarter of 2009, according to a U.S. Commerce Department report released July 31.

Before that number was released, many analysts predicted that the economy would shrink at an annual rate of 1.5 percent from April through June, said MSNBC.com.

The second quarter GDP is a huge improvement from the first quarter of the year, when the real gross domestic product shrank by 6.4 percent.

President Barack Obama said the country had “stepped away from the precipice” of an economic collapse akin to the Great Depression.

President Barack Obama rallied volunteers to fight for health care reform while momentum is still strong.

Lawmakers returned to Congress last week after a short break and are intent on producing health care reform bills before the legislative session ends in August.

The president said the largest threat to the economy right now is the cost of country’s $2.5 trillion health care system. He wants a reform bill that would extend affordable health insurance coverage to more Americans. Nearly 50 million Americans currently have no health insurance.

The president warned that if health care reform doesn’t happen by the end of this year, it may not happen at all.

“I think the status quo is unacceptable and that we’ve got to get it done this year,” Obama said, as reported by the Associated Press.

Obama volunteers are gearing up to run a grassroots canvass, similar to his presidential campaign, to drum up public support for the president’s health care agenda, the AP reported.

President Barack Obama lauded the contributions of small businesses to the American economy at a May 19 White House ceremony honoring winners of this year’s Small Business Administration awards.

The president said of the nation’s most successful businesses, such as Google and McDonald’s, began as small ventures.

Obama said small businesses are responsible for half of the nation’s private sector jobs and deserve support from Washington, the Associated Press reported.

His economic recovery plan would help small businesses pay off private loans, Obama said.

India is eager to enter into a social security pact with the United States, Meera Shankar, India’s new envoy to the U.S., said at a recent reception hosted in her honor by the US-India Business Council.

A Totalisation Agreement would exempt professionals of both countries from paying social security taxes when they go to work for a short period in the other country. India has similar agreements with some European countries.

While the U.S. may be reservations about a pact, Shankar said, “It should be possible for us to take this forward.”

Shankar spoke about the possible pact on May 22 in Washington, D.C., during her first public engagement as U.S. envoy. Shankar met with President Barack Obama on May 21.

“From the U.S. side, interests have been expressed in commencing negotiations on a bilateral investment treaty and we hope to do that as soon as the new government is in place,” she said.

Members of Congress are at odds over the “cash for clunkers” bill, proposed legislation that would give consumers a government voucher toward buying a fuel-efficient vehicle for turning in an older, gas-guzzling automobile.

Sen. Dianne Feinstein, D.-Calif., who authored the bill, said a compromise bill hammered out by the House of Representatives and President Barack Obama does not go far enough.

“Essentially what it means is that perfectly good vehicles would be scrapped, so that vehicles with below average fuel economy could be purchased,” Feinstein said to the Associated Press.

The bill is intended to boost the struggling auto industry and help the environment by putting more fuel-efficient vehicles on the road.
Under the House compromise bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting less than 18 miles per gallon for one getting at least 22 miles per gallon, reported the Associated Press. The value of the voucher would increase to $4,500 if the mileage of the new car is 10 miles per gallon higher than the old vehicle.

Owners of small trucks and SUVs could get a $3,500 voucher if their new vehicle gets at least 2 miles per gallon more than the old truck or SUV. The voucher increases to $4,500 for a difference of at least 5 miles per gallon. For larger trucks, the new truck only has to exceed the fuel efficiency of the old vehicle by 1 mile per gallon to generate a $3,500 voucher.

Feinstein called the compromise “unacceptable.”
“American taxpayers have already pledged $33 billion in bailout funds to this flagging industry — without any special considerations for achieving greater fuel economy,” Feinstein said to the AP.

The federal government is pouring cash into huge financial firms with very little oversight while even the slightest hand out to small business owners brings “we-need-scrutiny naysayers” out of the woodwork, says journalist JJ Ramberg of “Your Business.”

Ramberg, who anchors the MSNBC weekly show on small business, continued in her March 18 blog post:
“Maybe I’m missing something here, but small businesses are the lifeblood of the economy, and they are struggling right now largely through no fault of their own. They can’t get loans because the big boys messed up the system; and the faltering economy — caused in large part by the big financial firms — is also taking a big bite out of their sales,” Ramberg wrote. “All they want is a little bit of a break. So many entrepreneurs I’ve profiled in this blog — and many of the ones who post comments here — are struggling to keep their doors open.”

The impetus for her outrage came from a recent proposal by President Barack Obama to boost declining lending on Small Business Administration-backed loans. The idea was to do such economy-stirring efforts as directly purchasing up to $15 billion of securities backed by loans from the SBA, eliminating fees and increasing loan guarantees.

But it soon ran into criticism, she said, citing a Wall Street Journal story that worried the Obama administration could be creating incentives for another run on unwise credit and create a huge pool of unregulated money.

“I’m all for putting a lid on the bailout free-for-all with tougher standards and regulations,” she wrote, “but isn’t it odd that when small businesses want a helping hand suddenly the scrutiny reaches a fever pitch?”

Congress has reached an accord on a $789 billion package of tax cuts and new spending to help get the U.S. economy back on track.

President Barack Obama hailed the deal, saying it will help save or create millions of jobs and “get our economy back on track,” said a Feb. 12 article in Businessworld .

But that optimism came as the economic bad news kept pouring in, including a sharp fall in Chinese imports.

Some 35 percent of the compromise bill provides for tax breaks and the rest in government spending.
Senate Democrats put the jobs figure at 3.5 million, the report said. The package passed on Feb. 11 and was signed by Obama in Denver on Feb. 17.

“…Obama had been pushing Congress to act fast to help reverse the recession he inherited on taking office three weeks ago,” the report said. “U.S. stock markets, hammered the day before by uncertainty over the new administration’s financial recovery effort, reversed losses after (the) news.”

The Dow Jones industrial average gained 0.64 percent on the news, with other stock indices posting similar gains, later lost.

At the same time, on Capitol Hill, lawmakers grilled bankers on how wisely they have spent taxpayer money already received.

For one, Vikram Pandit, CEO of Citigroup Inc., said he told his board he would take a salary of $1 per year until a return to profitability.

The same scenario unfolded in London, the story said. There, a parliamentary investigation is looking into the integrity of the British banking system, which was partly nationalized in the crisis.

The report also said the Commerce Department noted a worldwide drop in demand for goods, driving U.S. imports and exports down for a fifth straight month in December.

“The clear message is that global trade activity has collapsed, as the world economy sinks deeper into recession,” Nigel Gault, chief US economist at IHS Global Insight in Lexington, Mass. told Reuters.