Researchers from major U.S. banks claim that the impact of the proposed stimulus package may be smaller than meets the eye.
Alec Phillips, an economist at Goldman Sachs, was quoted by Reuters as saying that of the $825 billion package under consideration by Congress, only about $250 billion will make it into the economy in 2009.
His assessments are echoed by Richard Berner, from Morgan Stanley, who believes that the Obama team’s economic policy proposals – which rely on a mix of tax cuts and higher spending – "don’t get to the causes of this downturn – they mainly tackle its symptoms," according to the news service.
Barack Obama pledged to make an economic stimulus package a top priority of his new presidency – and still hopes to push relevant legislation through by mid-February – but recent reports indicate that he is facing mounting opposition from the Republicans.
And voices calling for the government to set up a "bad loans" bank to collect all the toxic debt are growing increasingly louder.
As the debate continues, on Wall Street bank shares have hit historic lows, with such erstwhile giants as Goldman Sachs trading at less than 40 percent of its value compared to last year.