"Recent policies have sought to contain damages spilling over from housing and financial markets to the broader economy, including monetary policy, which is the responsibility of the Federal Reserve, and fiscal policy, including a tax cut in February 2008 of $150 billion and two extensions of unemployment compensation in June and November of 2008. Over the past few months, the government has also intervened in specific financial markets, including financial assistance to troubled firms, including legislation granting authority to the Treasury Department to purchase $700 billion in assets. The broad intervention into the financial markets has been passed to avoid the spread of financial instability into the broader market but there are disadvantages, including leaving the government holding large amounts of mortgage debt. With the worsening performance of the economy, congressional leaders and President Obama have now proposed much larger stimulus packages, ranging from $600 to $850 billion, comprised of spending and tax cuts. An $825 billion package with $275 billion in tax cuts and the remainder in spending has been proposed, containing infrastructure spending, revenue sharing with the States, middle class tax cuts, business tax cuts, unemployment benefits, and food stamps."
CRS Report for Congress, R40104
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