U.S. needs to borrow and spend to stimulate the economy : Natwar Singh

U.S. needs to borrow and spend to stimulate the economy : Natwar Singh    

WASHINGTON: The Chief Financial Officer of Washington DC, Natwar Gandhi, who is credited with turning around the financial fortunes of the U.S. capital, said America needs to borrow more and spend more money in order to stimulate the economy.

He was of the view that though the American economy is weak, it is not headed toward a second recession.

"I strongly believe that the economy is weak. It is not going to go into the so-called double dip recession, but it is very weak, it is limping along and what we really need to do is to have another stimulus," Gandhi told Press Trust of India in an exclusive interview.

The first stimulus, Gandhi noted, was not large enough. "We should have spent more money," he said, adding that the country's infrastructure required massive investment.

The second stimulus, he said, should be to the tune of $1 trillion.

"There is no consumer demand as we speak. The businesses are not investing as they do not see any demand out there. So the only player who can really generate demand is government. The government needs to spend money. There is a need to spend money on our infrastructure, which is abysmal," he opined.

He further said, "Unless government spends money to generate demand, I see very likely a lost decade, the kind that the Japanese have experienced over the last 10 years."

"This is the time to borrow. United States can borrow cheaply... Never have the interest rates been as low as they are now. Even with the so-called lower rating, people are still buying U.S. Treasuries," he said.

"So my sense is that they should borrow money and spend in infrastructure," Gandhi said.

He said Standard and Poor's decision to revise the U.S. credit rating downward was not very responsible, given that the Treasury had pointed out that there was a $2 trillion error in their analysis.

"Remember, these are the same guys who had AAA to Enron and other corporations and all those financial institutions like Lehman Brothers... so I think it was irresponsible," he said.

Gandhi also said there is a big question mark on the credibility of S&P's credit rating.

"I think, they (S&P) should have been more careful about this," he said.

Gandhi, who assumed the post of CFO of Washington in June, 2000, is responsible for the city's approximately $7 billion annual budget.  ”    




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