Obama's measures to stimulate recovery are not enough -- Stiglitz
Published 29/01/2010 | 05:00
THE Nobel prize-winning economist, Prof Joseph Stiglitz, has said President Barack Obama's efforts to bolster the US economy may not go far enough.
Speaking at the World Economic Forum in Davos, Switzerland, he welcomed Mr Obama's measures as a step in the right direction.
However, he warned: "He has to take a much more active approach. It has to be a second round in stimulus, focusing in particular on investment."
President Obama used his first State of the Union address on Wednesday to affirm his plan to bolster the economy, which has lost more than seven million jobs since the start of the recession in December 2007.
As part of the plan, the president called for an extension of tax incentives worth $38bn (€27bn) over this year and next to encourage businesses to reinvest in equipment.
He proposed an increased tax credit for childcare and an expansion of tax credits to match retirement savings.
"Things won't be restored until there are real signs that the economy has been restored," said Prof Stiglitz.
"One aspect is public investment but another is private investment -- and part of that would be tax credits."
Mr Obama also said the US government should use $30bn of the money paid back by banks to boost lending to small businesses.
"What is true is that banks have a fantastic record of bad lending," Prof Stiglitz said.
"If we could direct banks at giving credit to companies, that would make the economy more dynamic."