Federal Reserve Chairman Alan Greenspan says if Congress does decide to pass an economic stimulus package, it may take as much as $100 billion to produce the economic growth needed to recover from the effects of the Sept. 11 terror attacks. 
Meeting with members of the Senate Finance Committee Tuesday, the central bank chief cautioned that more time is needed to gather data and anecdotal information that would show how badly the U.S. economy was shaken by the hijack attacks on New York and Washington that left nearly 7,000 people missing or dead. 
A Fed spokesman says Greenspan's estimated $100 billion price tag includes money already approved by Congress for counter-terrorism and recovery efforts in the wake of the attacks, about $40 billion to date. 
The spokesman said Greenspan told lawmakers any possible package should be "of significant size in order to have the intended economic effect." 
"In giving a rough approximation of what could be considered significant, the chairman noted that 1 percent of GDP, or roughly $100 billion, might be an appropriate benchmark, depending on the nature of the programs. This number includes the additional spending approved by Congress in the last two weeks," the Fed spokesman said. 
The finance panel, which would play a major role in putting together any further package of tax cuts and other measures to give the economy a boost, met with Greenspan and former Treasury Secretary Robert Rubin to discuss the state of the economy and the merits of a stimulus package. 
Finance Committee Chairman Max Baucus, a Montana Democrat, said the conclusion from the meeting was to wait a few more weeks to gather more information and that if something needs to be done it should be short-term and enough to make a difference. 
He also said lawmakers were told to weigh those considerations against the impact of additional government spending and tax cuts on long-term interest rates such as mortgage rates, which can be influenced by government borrowing and balance sheets. 
"That's the balancing act we are all faced with," Baucus told reporters following the meeting. 
Sen. Olympia Snow, a Maine Republican who sits on the Finance Committee, said Greenspan told them that something in the order of $100 billion would be needed to have an impact on the $10 trillion U.S. economy. 
He told them it would take at least another week to get a better sense of the health of the economy following the attacks, she said. 
Senate Republican Leader Trent Lott of Mississippi said many lawmakers felt the economy would need help. 
"I think everybody is willing to wait a week or two to get and assessment of how things are coming back. But there is also a feeling by a lot of us that we are going to probably have to put a little more juice in the economy with some sort of economic stimulus," Lott said. 
Sen. Charles Grassley of Iowa, the top Republican on the Finance Committee, said there was general agreement that any package should be short-term, but enough to give the economy a jolt. 
"I think it has to be temporary, but significant enough to make a difference," he told reporters following the meeting. He said the amount of a stimulus being discussed was much higher than he anticipated. 
Lawmakers said Greenspan and Rubin stressed the importance of restoring consumer and business confidence in the economy and in airline safety. 
Snowe said Greenspan emphasized that the number one priority for the economy was to get the aviation industry back on track. Airlines were ordered to ground planes immediately after three hijacked planes slammed into the World Trade Center and Pentagon and a fourth crashed in Pennsylvania. The industry has announced massive layoffs in the face of slumping demand. 
Congress has already approved $15 billion to help airlines recover. 
By Donna Smith ? MMI Reuters Limited. All Rights Reserved.