“It’s not a bad start.” That’s how David Levy, chairman of the Jerome Levy Forecasting Center described the Obama stimulus package, previewed last week by Rep. David Obey (D-WI), chairman of the House Committee on Appropriations. The American Recovery and Reinvestment Bill of 2009 includes $275 billion in tax cuts and $550 billion in funding for clean energy, science and technology, infrastructure, education, healthcare, and other areas.

Many of the intended recipients were immediately moaning “not enough,” but Obey strongly implied more was in store when he called the bill “the first crucial step in a concerted effort to create and save 3 to 4 million jobs” and transform the U.S. economy.

During a week of unremittingly gloomy data and layoff announcements, the stimulus preview provided at least a harbinger of hope. Still, the $825 billion, which most expect to hit at least $1 trillion once the good works in every congressional district are added in, “will have less effect than people hope,” Levy warns. “The economy is currently in a state of an accelerating, vicious cycle. We’re going to see the economy deteriorate through 2009. The stimulus may be effective, along with additional Fed actions, in stopping this decline, but employment will continue to fall through 2010.” What will it take to spur a return to prosperity? “World War II-level spending,” Levy believes; $5 to $10 trillion in government spending should do the job.

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