A new warning today from the Federal Reserve Board that the economic recovery is weakening. The Fed held steady in interest rates, but it said it will use proceeds from its investments on mortgage bonds to buy government debt. That move could help tamp down some long-term rates. It also sends a message about where the economy may be heading and what the Fed may be doing next.
Let's bring in our senior political analyst, David Gergen -- David, it looks like, at least on this day, the Fed had a vote of no confidence in this economic recovery.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: Well, it certainly was a vote that said we're losing confidence and that -- that we -- we see an economy that's sagging and we want to help and we're going to help modestly now. But this, very importantly, sent a signal that if things continue to weaken, they would help much more aggressively in the fall.
BLITZER: The administration has got a big problem now. Obviously, it's got to start getting some real jobs created. Modest numbers simply are not going to do the trick in terms of turning around public attitudes.
GERGEN: Oh, that's exactly right, Wolf. And there are not many, you know, arrows left in the quiver. You know, normally, a -- a president can do three things. He can ask the Congress -- and try to create jobs. He can ask Congress to spend money or cut taxes. And this Congress is now balking at spending much more money or -- you know, or doing much on the tax front. So he can't look to fiscal stimulus.
He can look to the Fed to cut interest rates, but they've been practically zero now since December of 2008.
Or he can ask the Fed or the -- the Fed on its own, as it was looking at today, and move to put more money into the system.
And the what -- it's that third area where the Fed has started to move modestly. But it's not a lot.
And so there's not much the president can do.
He's in a -- you know, he has to hope that the wheels just start moving more rapidly. And there's no sign of that.
So we're in a tough situation right now.
BLITZER: Can the Democrats make some inroads by using this argument, you know what, it would have been a whole lot worse if we hadn't done what we did do?
GERGEN: It hasn't worked in past campaigns. I think they'd be far better off to be exploring, are there some unusual, unorthodox, new, innovative ways that we could be creating some jobs?
The columnist for "The Wall Street Journal" had a -- a set of those this week, saying, well, there are some people out there who've got some ideas. I -- we've mentioned before that Bill Clinton has got some ideas about creating green jobs through -- through retrofitting buildings.
So there are some things to be doing. But, Wolf, to come back to what the Fed was doing today, they're trying to pump -- pump more money and keep the money in the economy -- keep more money out there. But there is an argument from many economists, the problem is not whether there's enough money out there. As -- as we've talked about, corporations and banks are sitting on a huge amount of money. Some people are saying up to $2 trillion that corporations are sitting on. They're not investing it. They're not loaning the money out because the CEOs say there's too much uncertainty about what Washington is going to do to us next, what they're going do through taxes or regulation or whatever.
Somehow, we have got -- the president has got to crack this nut so that business has more confidence in Washington and business thinks Washington is going to be more supportive in order to get these wheels moving on this economy.
BLITZER: And right now, what you're saying is big business doesn't necessarily have that confidence in what the federal government is doing?
GERGEN: No, they don't. And -- and, Wolf, what they say now, there -- there are people who -- you know, this a matter of dispute, as all things are in politics these days. There is some dispute about this. But if you talk -- and you -- you've talked to the business community. One businessperson after another will say, I am not investing right now because I don't know what's coming out of Washington next. I don't know what my taxes are going to be, I don't know what my regulations are going to be. That's -- I don't know what -- you know, what -- what hostility is going to be shown there. I can see my dividend taxes going up. I can see, you know, taxes on -- on -- capital gains taxes going up. I can see taxes going up on my -- on my own personal life, on my -- you know, my estate, all these kind of -- there's too much uncertainty. It pertains especially to the health industry. It pertains to the energy industry. And, yes, it pertains to the financial industry.
BLITZER: David Gergen, thanks very much.
GERGEN: Thank you