By Fei Liena, Fu Yunwei
U.S. president-elect Barack Obama unveiled a much-anticipated massive economic revival plan on Thursday -- big spending, big tax cuts -- in a bid to inject adrenaline into an ailing economy.
However, compared to the 700 billion-U.S.-dollar fiscal rescue plan launched by the Bush administration in October, what's new in this Obama's plan? Will it pull the U.S. economy out of the mire as many have anticipated?
Big money
It is estimated that the sum of Obama's stimulus package could reach a stunning 775 billion dollars or even more, surpassing the already huge 700 billion dollars Bush used for his financial rescue package. Obama even hinted that several economists believed the sum is not enough to pull the hull out of the water, instead, the package should reach 800 billion to 1.3 trillion dollars.
The U.S. economy has been heavily hit by the crisis stemming from the burst of financial and consuming credit bubbles gathering for years. The authoritative National Bureau of Economic Research announced in December 2008 that the U.S. economy had actually entered recession since as early as December 2007.
Fifty economic analysts surveyed by the Blue Chip Economic Indicators magazine in December predicted that even if Obama's stimulus plan works with good results, the U.S. economy is unlikely to recover soon, at least not in the first half of 2009.
During the economic winter when the real economy is being hit hard, featured with investors losing confidence, a weak domestic consumption and a high unemployment rate, the U.S. government has to take powerful measures to break the ice.
Extensive economic impact
If Bush's financial rescue plan was an immediate life-saving treatment at the critical moment of the crisis, then Obama's stimulus package can be regarded as a series of "surgeries" on many industries to repair the damage, which will produce a more extensive economic impact, with an ultimate goal of pulling the nation out of the recession after a certain period of time.
It was reported that Obama's stimulus plan, designed to save or create 3 million jobs, would include money to build infrastructure, to invest in education, medical care and the Internet, as well as to promote renewable energies in federal buildings and normal homes. It may also include more than 300 billion dollars in tax cuts for enterprises and individuals after the president-elect negotiates with the Congress.
A popular policy
Compared to the uncomfortable seesaw battle in the Republican-minority Congress while debating on Bush's financial rescue plan last year, Obama's stimulus plan is more likely to enjoy an easy pass at the Congress.
As the financial crisis has spread to the real economy, a deteriorating situation is foreseeable. The congressmen and the public have realized the necessity and urgency of taking immediate and effective measures to tackle the crisis.
After several government actions including lowering interest rates and injecting fund to financial institutions failed to achieve desirable results, various parties have focused their hopeful eyes on Obama's plan to save the economy.
The joint control of Democrats in both the Senate and the House of Representatives may also help the let-go of Obama's plan. It was reported that House Speaker Nancy Pelosi promised to urge the Congress to enact Obama's stimulus before his inauguration on Jan. 20.
It is widely expected that the stimulus package would help curb the recession and speed up the U.S. economic recovery.
However, congressmen from both parties have expressed profound alarm at the jaw-dropping 1.2 trillion dollars of budget deficit this fiscal year even before any new stimulus.
Senate Budget Committee Chairman Kent Conrad even warned that this amount of deficit may not just appear in 2009 fiscal year, but possibly in every year in the next 10 years.
"Yes, our economy needs help, but at the end of the day how much debt are we going to pile on future generations?" House Republican leader John Boehner asked. "We cannot buy prosperity with more and more government spending."
(Xinhua News Agency January 12, 2009)