The Federal Reserve doesn't seem very confident about the future. Last week, the Fed committed to near-zero interest rates until 2013, indicating that the Fed board isn't anticipating much growth in the job market.
That's a troubling prospect for Americans, and it leaves a big challenge looming over Washington about whether the government can push growth above the painfully low bar set by the Fed.
Joseph Stiglitz, a professor at Columbia University and a Nobel Prize-winning economist, tells Weekend Edition Sunday guest host John Ydstie the president can create job growth by stimulating the economy. He also says there are investment projects that could bring back a high rate of return, like infrastructure, technology and education.
John Taylor, professor of economics at Stanford University and a senior fellow in economics at the Hoover Institution, agrees that the economy could be boosted enough to create more jobs, but not with another stimulus package.
"I agree we need much more growth, and I think [the president] could do things that would get through the Congress," Taylor tells Ydstie.
He suggests cutting government spending, and he thinks the recent budget deal had the right approach. Another way to promote growth, Taylor says, is to stop talking about tax increases.
"It makes firms worry, it makes businesses worry, it makes consumers worry about the future," Taylor says.
He also blames certain government policies he says have failed for slowing economic recovery, including the stimulus package. People and states did not actually spend the extra money they were given for the stimulus, Taylor says.
Stiglitz, however, says the stimulus worked. While he says 10-percent unemployment isn't great, it could have been worse. He says more stimulus would help the economy, but he doesn't think it would get through the political process.
"That's why I'm very pessimistic about the prospects of the economy," Stiglitz says. "So when the Fed says it doesn't think that growth is going to come before 2013, I think, given the political reality, we should be thinking 2015 or beyond."
As for the longer-term impact of the debt deal, Taylor says it doesn't solve the deficit problem, but it is a step forward.
"There's more to be done, I just think that we ought to recognize that there's some progress being made," he says, "and part of that progress as the result of these tough discussions in Washington."