Keeping the economy front and center, US President Barack Obama heads west this week to sign the $787 billion stimulus bill and tackle the home mortgage foreclosure crisis. The direct appeals for public support follow scant GOP backing in Congress for his agenda and increasing partisan bickering.
Passage of the stimulus measure?
– unprecedented in its cost
– was a major triumph for Obama as he struggles to lift the country from a financial nosedive unseen since the Great Depression of the 1930s.
Top aides said Sunday the skyrocketing unemployment rate would fall once the money begins to flow. But they also said the economy will continue its downward spiral in the short term.
"I think it's safe to say that things have not yet bottomed out," press secretary Robert Gibbs said. "They are probably going to get worse before they improve. But this is a big step forward toward making that improvement and putting people back to work."
The stimulus package, which passed with no GOP support in the House and three Republican votes in the Senate, aims to save or create as many as 3.5 million jobs through massive government investment while boosting consumer spending through modest tax cuts.
The president's determination to sign the stimulus bill into law in Denver on Tuesday suggests Obama will continue taking his economic message to the American people, who are giving him high marks for handling the crisis. The symbolism is obvious for Colorado, where a growing green-energy industry will draw major benefits from the stimulus.
"He is determined to keep in touch with the American people who sent him here to do this job," senior adviser David Axelrod said.
Gibbs said the president had taken "unprecedented" steps in a bipartisan effort to include Republicans in the legislative process. But Sen. John McCain was highly critical, declaring the stimulus would create what he called "generational theft" – huge federal deficits for years to come.
McCain, who lost the presidential race to Obama, said the Democrat had backtracked on promises of bipartisanship and was off to a bad start. "Let's start over now and sit down together," McCain said.
Sen. Lindsay Graham, R-S.C., put it more bluntly: "If this is going to be bipartisanship, the country's screwed."
With the stimulus victory in hand, Obama planned to shift to the housing crisis with an announcement Wednesday in Phoenix about reversing that sector's collapse.
Late last summer, Americans began feeling the pinch of the recession and left the housing market in huge numbers. That coincided with a sharp increase defaults on home mortgages, a devastating combination that triggered the financial crisis. Lending froze as banks and investment houses realized they were holding trillions of dollars in bad assets.
Under an emergency $700 billion bailout program passed late last year, the Bush administration used half to forestall a financial collapse. But the flow of credit did not ease and use of the money was criticized because it was poorly administered and overseen.
Obama is now working to leverage the second portion of the bailout money into a program that could result in $2 trillion in government and private sector cash infusions to help banks and investment houses clear away "toxic" holdings and thereby spur lending.
As part of the next steps on the bailout, Obama was expected to offer help homeowners on the brink of foreclosure. Details have not been disclosed, but the nature of the crisis suggested mortgage loans would have to be revalued downward along with interest rates.
"We obviously have a major problem: problems with foreclosure, problems with people living on the edge and problems with home values around the country just plummeting, which is affecting family, family finances everywhere," Axelrod said. "We want to do something that will address all of those things."
On another troubled front, Axelrod said any plan to shore up the auto industry will require sacrifice by all involved, from auto workers and industry executives to shareholders and creditors.
General Motors Corp. and Chrysler LLC are expected to submit plans to the government by Tuesday, the deadline for showing how they can repay billions in loans and become viable in spite of a drop in auto sales not seen for a generation.
"We need an auto industry in this country. There are millions of lives, livelihoods that depend on it," Axelrod said. "We have a real interest in seeing the auto industry survive, but it's going to require a major restructuring of the auto industry."
(Agencies via China Daily February 16, 2009)