WASHINGTON (CNNfn) - A closed-door meeting between Federal Reserve Chairman Alan Greenspan, former Treasury Secretary Robert Rubin and the Senate Finance Committee to discuss the health of the U.S. economy Tuesday included talk about an economic stimulus package of about $100 billion.|
But it's too soon to tell if such a large boost is needed, Senate Finance Committee Chairman Max Baucus, D-Mont., and the Committee's ranking Republican, Charles Grassley, R-Iowa, said after emerging from the meeting.
Greenspan and Rubin met privately with the Senate Finance Committee to discuss ways to help the economy in the wake of the Sept. 11 terrorist attacks on New York and Washington that destroyed the World Trade Center, damaged the Pentagon and killed thousands.
Greenspan and Rubin agreed that any economic stimulus package Congress passes should be big enough to be effective -- namely, 1 percent of gross domestic product (GDP), or about $100 billion.
Grassley said he was surprised at the size of the possible stimulus and told reporters, "We heard much higher numbers today of the stimulus package from our two experts than I anticipated we would hear. In other words, if you're going to do something, it better be something significant enough to get the job done."
Democrats and Republicans on the committee agreed that any stimulus should be temporary, perhaps limited to two or three years, to guard against negative long-term effects such as federal budget deficits and higher home mortgage rates, according to a Reuters report.
No decisions were made about specific plans to pursue or even whether to proceed with a stimulus plan at all, according to the report.
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Greenspan and Rubin agreed that more time is needed to weigh the impact of the attacks on the economy, according to Baucus and Grassley.
Both Senators also noted there's already a great deal of stimulus in the pipeline: The Fed has cut its target for short-term interest rates eight times this year, while Congress passed a tax cut this summer, approved an emergency spending package of $40 billion immediately after the attacks, and crafted a $15 billion aid plan for the U.S. airline industry.
The Fed is widely expected to cut rates again at or before its next policy meeting, scheduled for Oct. 2, especially in light of an abrupt plunge in consumer confidence reported Tuesday.
Consumer spending fuels two-thirds of the U.S. economy, and many economists expect it to suffer in the wake of the attacks, helping trigger a recession.
Despite the risks, Greenspan cautioned in testimony before the Senate Banking Committee last week, lawmakers should wait at least 10 days before beginning to plan a course of action for stimulating the economy.
"I would strongly suggest that, while there is an obvious strongly desired sense to move rapidly, it's far more important to be right than quick," Greenspan said.
Reuters and CNNfn's Scott Spoerry contributed to this report