JEFFREY BROWN: Paul Krugman, I will start with you. You wrote in your column today, this isn't a recovery in any way that matters. So, did you sense today that Ben Bernanke agrees and is taking the right steps?
PAUL KRUGMAN, columnist, The New York Times: Well, he may agree, but he's not taking the right steps. I mean, there was no sense of urgency in his talk. Yes, he said we will do something if the situation warrants. But here we are. You know, this is -- we're now 32 months into this slump. Unemployment is disastrously high. Growth, we -- the economy needs to grow about 2.5 percent annual rate just to keep unemployment from rising. It's not doing that.
What would it take to justify action? So, you know, it was a good signal that he is saying, you know, the Fed is kind of, sort of willing to do something, maybe, which is better than previous statements. But, if this isn't a situation that warrants action now, what would be that kind of situation? Do we have to have a whole Great Depression to get the Fed moving?
JEFFREY BROWN: Douglas Holtz-Eakin, what did you hear from the Fed today?
DOUGLAS HOLTZ-EAKIN, former Congressional Budget Office director: Well, there was a little bit in there for everybody. He said, we recognize the economy's struggling, and thus tried to make sure people didn't think the Fed was out of touch. He told those who were worried about the economy going down into double dip that they had things they could do, and he outlined them.
And then, at the end, he told the people worried about inflation, believe it or not, look, we're not promising higher inflation in the United States. We're not going on record for that. So, I thought it was a talk carefully designed to appeal to lots of audiences.
JEFFREY BROWN: All right, carefully designed, but what about the state of the economy that Paul Krugman sees as in dire straits, needing more?
DOUGLAS HOLTZ-EAKIN: The economy is not in good shape. And I think, about that, there ought to be great agreement. But the key is that the Fed has done all it can do. It did a tremendous job in propping up the economy during the crisis. It is now badly extended. The keys now are that we have an economy that is growing. It's been growing for about a year, but it is growing too slowly. We ought to rethink this, not as a crisis, sort of stimulus issue, but one where we have got to concentrate on long-term growth and do all the things to make the economy grow faster.
JEFFREY BROWN: All right, well, that gets to the nub of the argument here, Paul Krugman. What should the Fed do now? What do you want to see it do?
PAUL KRUGMAN: I think it should be throwing everything, including the kitchen sink, at the problem. I mean, Doug is saying that there's -- the Fed has done all it can do. That's not what the Fed says. The Fed says it has ammunition; it continues to have the ability to act. So, we should take them at their word and see them actually act. They can do purchases of long-term bonds. They can raise their inflation target, which, you know, Ben Bernanke, when he was a Princeton economics professor, advocated for Japan when it was in a similar situation.