By Robert Pore
robert.pore@theindependent.com

But he also said the economy will improve later this year because of Federal Reserve interest rate cuts and the $168 billion stimulus package signed by President Bush on Wednesday.

But U.S. Sen. Chuck Hagel, R-Neb., a member of the Senate Banking Committee, said he stands behind his vote against the stimulus package and remains skeptical that it will have much impact on the nation's economy.

During a telephone conference with Nebraska reporters Thursday, Hagel quoted Sen. Richard Shelby, R-Ala., who compared the supposed impact of the stimulus package to "pouring a glass of water into the ocean."

Hagel said the economic challenges facing this country are tremendous, such as the subprime mortgage dilemma and higher energy costs that will affect the future of the economy this year.

"When you take the so-called stimulus package and put that into the larger frame of reference about our economy, it is minuscule," he said.

But Sen. Ben Nelson, D-Neb., has a differing opinion about the impact of the stimulus package on the nation's ailing economy. Nelson, who voted for the stimulus package, said it will benefit more than 800,000 Nebraskans.

"This is an important piece of legislation that will provide a boost to our economy and is a good first step to getting things back on track," he said.

Nelson said the IRS has announced that the process to receive the rebate checks will not require any further action on the part of taxpayers as long as they file a 2007 tax return.

While the Feds have lowered interest rates, Bernanke also told lawmakers he was concerned about inflation as higher energy prices have pushed up the costs of everything from gasoline to food.

During Hagel's questioning of Bernanke and other officials at the hearing, he brought up the need for federal investment in the nation's crumbling infrastructure, which is key to the nation's economic prosperity.

Also, Hagel said the rising cost of nation's entitlement commitments are taking a larger share of the country's budget each year.

He said Standard and Poor's and Moody's, the nation's two leading bond rating agencies, said this week that if the U.S. doesn't deal with entitlement reform, such as Social Security and Medicare, the U.S. triple A bond rating will be in jeopardy.

"That's astounding that the United States' government bonds could lose a triple A rating," Hagel said. "We have never seen anything like that. The economic stimulus package isn't going to bring back the economy. The economy is going to come back by dealing with the fundamentals of these big issues."