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A debate has just begun over whether it is necessary for the administration of US President Barack Obama to introduce a second stimulus package to prop up the US economy. The first stimulus package of US$787 billion(Bt26.8 trillion), passed in February, is disbursing money to public projects designed to create jobs and win back confidence. But so far many people remain afraid that the first stimulus is not only too little and too late but also is missing the target. Most of the money from the first stimulus does not go to projects that create jobs but to programmes that promote consumption.

The root causes of the economic crisis in the United States are over-consumption and indebtedness.

US policy-makers simply cannot expect Americans to spend their way out of the economic recession when over-consumption is the problem in the first place. Over-consumption and indebtedness are weighing down the US economy. The mindset has to be transformed toward restructuring the indebtedness and reducing consumption before creating jobs via the support of small- and medium-scale enterprises.

Still, President Obama said on Saturday that Americans should give the $787 billion stimulus package a chance to work before anybody may consider a second stimulus for the still-ailing economy. Obama acknowledged in his weekly radio and Internet address that people are getting nervous about continuing high joblessness. The unemployment rate hit 9.5 per cent in June. But the president said that reversing payroll losses will take time, and he asked Americans to be as patient as possible.

Republicans have already come out to label the stimulus package - earmarked for spending over the next two years - a failure. Both Obama and Vice President Joe Biden have argued that the bulk of the money from the programme is still being disbursed and that it has already saved many jobs.

But Time magazine, on July 13, reported that the White House is afraid that money from the stimulus might be wasted. It quoted a study that found that more jobs are created when cities and states repair existing roads than when they build new ones. Highway maintenance projects not only put more people to work more quickly than building new roads, but also keep costs down in the future. At present the US is losing about 500,000 jobs a month.

Senator Sherod Brown, an Ohio Democrat, said: "Of course, it is not creating enough jobs. We're not going to have enough jobs because we lost so many."

Politically, Obama does not want to admit that the US might need a second stimulus package, although this idea has been discussed widely among the Democrats and even by Warren Buffett, the legendary investor.

"We must let it work the way it's supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity," Obama said.

For Obama to admit that a second stimulus is necessary would amount to accepting that the first is not working. That would trigger a loss of confidence in the financial markets, as well as consumer confidence, both of which are already badly hurt. There is little liquidity left, so the second stimulus looks inevitable.

Since Obama signed the first stimulus package into law, the US economy has shed more than 2 million jobs and the unemployment rate has climbed higher than the White House predicted it would have ever reached without the stimulus. Then, Obama had a strong mandate to push out the stimulus. Now, the Republicans are expected to give him a harder time if he decides to go for a second stimulus.

"The reality is that it hasn't helped yet," said Republican senator Jon Kyl of Arizona. "Only about 6.8 per cent of the money has actually been spent. What I proposed is, after you complete the contracts that are already committed, the things that are in the pipeline, stop it."

Republican Eric Cantor of Virginia said: "I do think it is fair to say that the stimulus is a flop. The goal that was set when we passed it was unemployment wouldn't rise past 8.5 per cent, and what we see now is businesses just aren't hiring. Even the best projections have us losing 750,000 more jobs this year."

"A lot of it has been spent on ridiculous projects," said Senator John McCain, the Arizona Republican who was his party's presidential nominee last year.

Obama's allies defended the spending they helped usher into law. "It's a two-year plan and we're four months into it," said Senator Dick Durbin of Illinois.

However, the economic weakness is spreading around the US economy. The auto industry, airline industry, consumers, as well as banks, are in bad shape. Without support ahead, the US economy is likely to slip further. But first, policy-makers have to address the hard question of restructuring the excesses in the economy. Without this painful action, the economy won't reach bottom and a recovery will never come to pass. For all the derivatives involved, the financial black hole, particularly in the banking sector, might be too big to mend.