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Speaking to the Economic Club of New York this week, Federal Reserve Board Chairman Ben Bernanke gave a gloomier assessment of the economy than many were expecting. The recession is over, he declared, but the Fed expects no more than "moderate" growth next year. Banks are still reluctant to lend, and "jobs are likely to remain scarce for some time, keeping households cautious about spending." In the past, steep recoveries typically followed steep recessions. This time will be different, Bernanke said. The recovery might be more L-shaped than V-shaped.

Democrats in Congress were already turning their attention to a new fiscal stimulus -- and if Bernanke is right, a second stimulus may indeed be needed. Of course, Congress would rather call it something else. Polls suggest that voters are less than enchanted with the first one. With unemployment at 10.2 percent and rising, many see the $787 billion program already in place as an outright failure. Why throw good money after bad, they ask? Public debt is already on a sharply rising trajectory. Sooner or later, voters know, that will mean higher taxes. Why make this problem even worse, they say, if the extra spending will make no difference on unemployment anyway?

Avoiding the term "fiscal stimulus," House Speaker Nancy Pelosi has said nonetheless she hopes to move a "jobs bill" before Christmas. But she wants to be sure of backing the right initiative, she says, and exactly what that might be is in doubt. President Obama has called for a "jobs forum" next month. A tax credit for new jobs, direct public service employment, and measures to promote job sharing are all being talked about. Just don't say "stimulus."

With a still-weak economy, confusion over what the first stimulus has achieved, and rising fears over the long-term consequences of debt, the political options have narrowed in a dangerous way. This was never going to be an easy situation for the White House, and one needs to remember that it inherited this mess. Even so, I think that the Obama administration and its allies in Congress deserve some of the blame for the way their hands are tied.

If the recovery is stalling, and a further stimulus is needed, the Fed's monetary policy could help to deliver it.

They made four main mistakes. For a start, if anything, the first stimulus was too small. Second, it was poorly designed: too complicated, insufficiently front-loaded, and too reliant on public spending and not reliant enough on tax cuts. Third, it was oversold: The administration set itself up for failure by promising to "save or create" too many jobs, and by defining success as a much milder rise in unemployment than has transpired.

Fourth, and most important, the plan gave insufficient attention -- no attention whatever, in fact -- to the long-term fiscal outlook. The White House's attitude was, "Trust us. We'll get to that later." The country concluded that public borrowing is simply out of control. And that impression, it seems to me, is correct: Public borrowing is out of control. Moreover, Congress and the administration have vastly compounded this last error by prevaricating over the likely enormous cost of health care reform. The result: "Fiscal stimulus" is now as toxic a phrase as "tax increase."

The prospects for recovery remain unclear. Forecasts are worth even less than usual at the moment, because conditions lie outside the experience of most forecasting models. The recent economic news is not, in fact, all bad, and stimulus money is still in the pipeline. In other words, things could go better than Bernanke suggested this week -- but they might also go worse. If aggregate demand in the economy stays weak and unemployment keeps rising, further stimulus will be needed. Somehow, if that happens, the government will need to untie its hands.

A first useful step would be to stop trying to con people. A "jobs bill" along the lines that Congress is discussing is not -- or at least one hopes is not -- going to be deficit-neutral. It will involve some mix of higher public spending and lower taxes. In other words, it will be a second fiscal stimulus. To deny this is to insult the electorate's intelligence.

It will also be necessary to argue that further fiscal stimulus will boost employment -- just as the first one (despite its failings) almost certainly has. But you do not make that case by devoting an official website to the nakedly fraudulent counting of jobs supposedly secured by stimulus money. Those reports, drawn from sources with every reason to cook the books, both overstate and understate the employment effect. They overstate it by attributing jobs that would exist anyway to stimulus money, which invites ridicule. They understate it by ignoring the indirect effects of additional demand on employment. These are most likely large but dispersed throughout the economy and impossible to audit.

The administration is right that things would be worse if not for the stimulus spending. But it needs to be honest about the limits to what it knows and can prove. It has tried the hard-sell alternative, and you see the results.

In one respect, the White House's political difficulties will improve the design of a second stimulus. Another vast, sprawling package, including every spending measure anybody ever thought of, is out of the question -- or let us hope so. Simplicity and a focus on jobs and relieving distress will be the watchwords, which is fine. Under current circumstances, there is a lot to be said for subsidizing the net creation of low-wage jobs through the payroll tax or by other means. This idea should have been in the first recovery plan. Better late than never. Further extensions of unemployment benefits, until the jobless rate returns to more normal levels, would also be good.

But while advocating a new jobs bill, or whatever it is called, the White House also needs to start talking seriously about long-term fiscal consolidation. This, to my mind, has been the crucial missing ingredient all along. On its own numbers, the administration has created a fiscal gap that is not just large but permanent. On its own budget analysis, this prospect is "unsustainable." Health care reform, if it happens, is almost certainly going to make the long-term fiscal outlook even worse. The administration blithely denies this, but nobody believes the denials.

What does the White House propose to do about it? Peter Orszag, director of the Office of Management and Budget, promises answers in next February's budget. That is not soon enough -- not if we need another fiscal stimulus right now. Even if the administration lacks for the moment a detailed plan, it needs, at the very least, to start talking about the tax increases and cuts in spending that will be required once the economy is back on its feet. It needs to give some sense of its strategy for restoring fiscal control. The clearer it can be about that, the more leeway it will be granted for additional short-term stimulus. At the moment, it is saying almost nothing on the subject. This, I think, is the biggest reason that its credibility with voters is running out.

Something else to bear in mind: If another stimulus is needed, fiscal policy does not have to carry the whole burden. Monetary stimulus would be just as effective -- arguably, more so. If Bernanke is getting gloomier about the economic prospects, he ought also to be considering what the Fed can do.

You might suppose that the Fed's monetary choices have narrowed even more than the administration's fiscal options. Interest rates are close to zero and cannot be cut any further, you might argue. Not so, as Bernanke himself has been at pains to explain in recent speeches. Monetary expansion is still possible at zero nominal interest rates. The Fed can continue to expand its balance sheet, printing money to buy financial assets from the private sector. That act might lower nominal long-term interest rates, and in any case, it would cut real (i.e., inflation-adjusted) interest rates by leading investors to expect moderately rising prices, rather than stagnant or falling prices.

Promising higher inflation is not a remedy any central banker likes to deploy. You think that a second fiscal stimulus poses a presentational challenge? That is nothing by comparison. But the fact remains, if the recovery is stalling, and a further stimulus is needed, monetary policy could and should help to deliver it. And if inflation stays below the Fed's implicit target of 2 percent, then higher inflation is indeed called for -- all the more urgently, if outright deflation begins. As in fiscal policy, the challenge is to reassure voters and markets alike that the long-term position is secure -- broad fiscal balance on the one hand, low but positive inflation on the other. The more confidence the public has in the long term, the more active policy makers can be in the short term.

I am sure Bernanke understands that. I am equally sure Congress does not. The puzzle, to me, is the White House. It understands the dynamic but behaves as if it doesn't.