Obama Pitches His Plan To Reverse Economic Slide

WASHINGTON — President Barack Obama met with his economic advisers Saturday after he asked Americans to support his economic package as a way to better schools, lower electricity bills and health coverage for millions who lose insurance.

The two-hour session in the Roosevelt Room focused the proposed $825 billion economic stimulus package that Congress is considering. The group also discussed the upcoming federal budget, Obama's first chance to shape the country's spending amid a recession that lost 2.6 million jobs last year, the most in a single year since World War II.

"Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. And we could lose a generation of potential, as more young Americans are forced to forgo college dreams or the chance to train for the jobs of the future," Obama said in a five-minute address released Saturday morning by radio and the Internet.

"In short, if we do not act boldly and swiftly, a bad situation could become dramatically worse."

It was the latest appeal from the new president for a massive spending bill designed to inject almost $1 trillion into the economy and fulfill campaign pledges. Obama spent much of last week wooing reluctant legislators _ many from his own Democratic Party _ and weighing whether there's a need for a second economic package, which aides refused to rule out.

That sequel would be designed to assuage Democratic lawmakers who fret that too little of the money is going toward public works projects that would employ their constituents. Others aides are trying to work with Republican leaders to sustain the current bill's bipartisan flavor; the president planned to visit to Capitol Hill on Tuesday to meet privately with GOP lawmakers.

House Republican leader John Boehner of Ohio said his party would continue to push for immediate tax cuts _ "not slow-moving government spending programs" _ in the weekly GOP address.

"We let families, entrepreneurs, small businesses and the self-employed keep more of what they earn to encourage investment and create millions of new private-sector jobs," he said.

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Republicans also proposed a tax credit for home purchases, an end of taxation of unemployment benefits and tax incentives for small businesses to invest in new equipment and hire new employees. Boehner was scheduled to make the case for the GOP plan on Sunday morning talk shows; Vice President Joe Biden and Obama economic adviser Larry Summers also planned interviews that morning.

"We cannot borrow and spend our way back to prosperity," Boehner said.

Both parties, though, agree something has to be done.

Manufacturing is at a 28-year low and even Obama's economists say unemployment could top 10 percent before the recession ends. One in 10 homeowners is at risk of foreclosure and the dollar continues its slide in value. On Friday, 1st Centennial Bank of Redlands, Calif., became the third U.S. bank to fail this year.

That harsh reality has dominated Obama's first days in office.

In addition to the president's speech, Obama aides released a report Saturday that outlined exactly what people could expect if Congress supported his proposed economic legislation.

Many of the ideas, such as shifting to electronic medical records and investing in preventive health care, were familiar from Obama's two-year campaign for the presidency. Other parts added specifics.

Obama's recovery package aims to:

_Double within three years the amount of energy that could be produced from renewable resources. That is an ambitious goal, given the 30 years it took to reach current levels. Advisers say that could power 6 million households.

_Upgrade 10,000 schools and improve learning for about 5 million students.

_Save $2 billion a year by making federal buildings energy efficient.

_Triple the number of undergraduate and graduate fellowships in science.

_Tighten security at 90 major ports.

The plan would spend at least 75 percent of the total cost _ or more than $600 billion _ within the first 18 months, either through bricks-and-shovels projects favored by Democrats or tax cuts that Republicans have pushed.

There is heavy emphasis on public works projects, which have lagged as state budgets contracted. Governors have lobbied Obama to help them patch holes in their budgets, drained by sinking tax revenues and increased need for public assistance such as Medicaid and children's health insurance. Obama's plan would increase the federal portion of those programs so no state would have to cut any of the 20 million children whose eligibility is now at risk.

___

On the Net:

Obama video: http://www.whitehouse.gov

Obama economics report: http://tinyurl.com/db83d8

Comments

[morph366]

If the Obama administration and the Europeans, especially the French and German governments, are serious about cracking down on the labyrinth of offshore tax havens and the conduits that allow corporations and individuals to avoid paying tax and having to be transparent about their accounts, this will put them on a collision course with the Brown government. UK governments have for years have remained intransigent on the idea of cleaning up all of the offshore wheezes that favor the City of London.
UK governments, of both parties, have shown no interest in dismantling the “supportive arrangements” that encourage foreigners to want to conduct business in London. Indeed during recent years when the City was booming it was often claimed that the regulatory “light touch”, which included keeping quiet about the UK’s special neo-colonial links to many offshore financial centers, had been of great benefit to the overall UK economy.

We shall have to see how firm Mr. Obama is about his desire to tackle offshore shenanigans, but if he is serious he will find that he will almost certainly bang heads with policymakers in the UK. Mr. Brown and his successors will fight very hard to protect London’s appeal as a financial center by continuing to turn a regulatory blind eye to all of the various financial strategies that are favorable to corporate structures that integrally involve tax- havens, and which have been nurtured as part of London’s financial infrastructure over many years.

[Mugzi]

How come the Repubs don't mind spending billions of dollars on bank bailouts, Halliburton, Blackwater, Iraq, etc, but have a problem with oversight and the stimulus plan which covers health care, technology, construction infrastructure, schools, jobs in all categories ,etc???

[Buckeyenutschell]

Continued from previous post

3.) Create a new branch of service called the Corp of Science and Engineering. Incorporating the Seabees, the Medical Corp, the current Corp of Engineers and such. This new branch of non military service members would replace contractors we hire in foreign countries like Haliburton saving billions of dollars but also work with private firms to rebuild the infrastructure within the U.S. This would immediately put 60,000 direct hire people to work, shore up the military, fight forest fires, respond to disasters like Katrina, provide critical infrastructure improvements across the country and provide millions of support jobs across the country around the country.

These are the times that require extraordinary measures and these are in fact extraordinary measures. Any of things alone would be a start but in conjunction could right the sinking ship and propel us into a new era of prosperity.

Let me know what you think.

[Buckeyenutschell]

For all problems, there are solutions if people would look at the causes and address them from the bottom up. Here are four things I feel would make the most bang for the buck:

1.) Immediately withdraw from the WTO and cancel all trade agreements current and proposed. The authors of these trade agreements promised riches and employment for all. The CEO's of several of the largest companies testified before congress about all the benefits. Tariffs level the playing field for American workers competing with slave labor from foreign countries and can be used to leverage other countries to buy more of our goods.

2.) Initiate a new stimulus package that pays every home owner up to 7.5% of their mortgage (up to $250,000 single home value with the condition that is the only use of the money and no refinancing within one year) and offer a 5% interest rate (by leveraging the banks whom have received bailout money). In the second stage, offer all non-homeowners 7.5% only towards the purchase of a home. This would radically increase home sales, reduce the negative equity in existing homes effectively turning risky home loans owned by the banks into low risk assets. By using 5% loans, more home owners would be able to afford heir mortgage and fewer mortgage defaults. This would do more for saving the banks than giving them cash to ensure their bonuses.

Continued on next post:

[jj1]

I hope that Obama, his economic team, and Congress can work together to get a sensible stimulus package passed quickly.

I recently saw articles on a few newspaper websites talking about how Obama was working with the U.S. Chamber of Commerce to make sure that the stimulus package was smart and effective at fixing the economic problems, now and into the future. I take that as a very positive sign, since Democrats haven't always worked closely with the business community.

The main points of their discussions have been making sure that the stimulus package includes tax relief, infrastructure funding, housing industry tax credits to assist homeowners, and reducing borrower & lending fees through the Small Business Administration. Of course, there are other items that need to be in the stimulus package, but I agree with all four of those ideas.

I noticed that the U.S. Chamber of Commerce is asking for input from the public to let them know which of those proposals they support the most. The Chamber can then use that data in their discussions with Obama and members of Congress. Make sure to vote in their poll here - http://www.friendsoftheuschamber.com/email/email4.cfm?id=196

[junebuginFL]

Why would anyone forgo collete graduating from high school? If your grades are good, there are loans, grants, scholarships. I just dont buy that crap. I have been out of college about 5 yrs now, my family was poor, but there was still plenty of other options. Anyone here affected by this, and reason why skipped college? Just doesnt make sense to me, if you want something bad enough, your going to do what you have to achieve that goal.

[Mugzi]

True, but some young people need mentoring and guidance. Sometimes you don't "just know".

[Dante in Madison]

Interesting thread.

Naysayers and negative types have limited themselves to bitching about plans being suggested without suggesting any feasible solutions of their own (Not surprising).

Optimistic types are making feasible suggestions that are great seeds to plant for long term growth--but they aren't carrying the ball to the finish line on time required for those plans to be implemented or start to take effect.

What's missing from this mix? What can be done RIGHT NOW.

Want to know why?

NOTHING can be done RIGHT NOW (i.e. tomorrow or within a week).

Any plan implemented today is going to require a ramp up period. Even the best plans are going to require months to implement--simple reality. There isn't a thing that's going to help you, me, or the guy (sadly) closing his business tomorrow or next week.

If there is, let's hear it. Put it out there and get some movement behind it. But unless it takes effect TOMORROW or within A WEEK, stop bitching about how long it's going to take to get things back on track. Real course correction for this country is going to take time.

In the interim, would you rather have a band aid to keep your pulse going or would you prefer to bleed to death? Buck up and do what you can to survive this mess.

This country wasn't built by people who drown themselves in self-pity or bitchiness. Stop bitching and do something to help fix the problem.

[research]

Too pessimistic.

States have programs stalled because of lack of funding.

They will restart/continue immediately. Layoffs will stop.

[MossyOak]

Some short term fixes easily rendered that cost nothing....

1) Give the remaining TARP money back to the tax payers instead of to the banks
2) Force banks who already received TARP money to start lending it to small businesses and home buyers instead of using it to redecorate CEO offices and buy other banks.
3) Require credit card companies to ramp down their interest rates for a specific period, say a year.
4) Force insurance companies to sell policies to all the people (in the millions) who have been turned down for bogus medical reasons but have the money to pay premiums.

Does that help?

[FogBelter]

I don't envy President Obama's position. There is a reality behind the World Economic Crisis that makes correction extremely difficult and honest explanation virtually impossible.

The massive wealth generated worldwide in the last 9 years is due to abandonment of core economic principles in favor of fraud. Whatever the root value of Credit Default Swaps their purpose became the generation of fictitious wealth. At the beginning of the century there were 8 trillion dollars worth of CDS at the point the collapse began there was 68 trillion ... that is simply a vast amount of fictitious wealth. Add to that the 1.144 quadrillion dollars in derivatives of equally questionable value and it is pretty plain to see that a 1 trillion dollar stimulus package wouldn't come anywhere near addressing that. It would be easier to spin straw into gold than fix the current economic crisis vexing the world.

I have faith that President Obama can address the needs of the American Economy, but it will require walking entirely away from the current economic system that is, frankly, unsalvageable.

But how, faced with the knowledge he has, does President Obama tell the truth knowing the international economic ramifications? As I said, I don't envy him.

[Peter007]

Why are you worried? Do you own any bad derivatives? I don't. IN fact , I don't know any of my neighbors that do either. We're ok here in Pleasantville.

[Zeroes]

$200,000,000.00 for sex control is not thinking green...all those clogging our sewer systems.

[aweissnet]

what?

population control, if that's what you're talking about, is most certainly "green."

overpopulation is one of the single most damaging problems to hit our little planet.

[Gladys1963]

I totally agree--and there's never enough written or said about it.

[Zeroes]

Record low interest rates do not help the "Real Estate" market. The low rates help the "Refinance Market". If you want to jump start the "Real Estate" market restrict low interest rates for home purchases.

Cut the Pork!

[aweissnet]

Well, the real estate market simply has to drop. It got out of hand. And no one wants to see that happen, who owns a house. And everyone who doesn't own a house wants to (or needs to) see that happen!

[kellygrrrl]

Maddow and DeFazio discuss

http://firedoglake.com/2009/01/23/defazio-smacks-larry-summers-for-being-anti-infrastructure/

[Cinnamonape]

Somebody tell me what the Republican plan is other than the typical Herbert Hoover "Let's make a Depression" plan that occurred in 1929?

Lemme see...they want to cut tax rates substantially on the wealthy. They are arguing that the money that go to the lower and middle classes in the Obama plan is not going to create jobs quickly. Recall that they made the same argument about the first "stimulus package" presented by the Bush Administra­tion...tha­t you had to give the money to the banks and Wall Street since "they create the jobs". Well they took that money and used it for bonuses...or simply sat on it.

And the Republicans see this as a way of eliminating all the New Deal reforms. If you cut employer payroll taxes you bankrupt Social Security...which is what the Republicans have been trying to do since the Great Depression. They want to cut off the employer share (which only affects the larger businesses) of Health Care...which would send millions into having to pay for health care out-of-pocket. They want to cut the payroll tax...for unemployment benefits. At a time when millions more are being unemployed.

In other words they want a world like it was in the Darkest Days of the Great Depression.

[ike39]

Our country is in trouble. Obama has a plan. It may or may not work; but, it is a plan that we elected him to put in place. There may be problems with some of the details; but, the risk of failing to implement the plan is to fall deeper into recession, and from there into depression. The GOP had almost a decade to present their vision. The results are here for all to see.

[marijam]

Try 30 years. Ever since Reagan.

[preemptivelove]

rachel maddow broke it down last night. only 18% is for infrastructure projects. 33% is for tax cuts. and 49% goes to spending to the states and schools and healthcare. that 33% is too much for tax cuts. that money won't be spent. it will be saved, or maybe used to pay off existing debt. it won't be spent to stimulate the economy. nobel prize winning economists agree. bold infrastructure projects will get us on the road to economic recover, not tax cuts. obama is getting bad advice from the likes of larry summers, just like us progressives KNEW he would. bummer. let the heartbreak begin.........

[Peter007]

Infrastructure doesn't produce a penny in profits.
I don't get your logic. On one hand you say people don't need any more money. That we all have enough money already. Next you say we need to stimulate the economy. Why? If everyone is doing fine with the money they have, why the stimulus package?.

[Cinnamonape]

I can't get these Republicans. On the one hand they argue that 87% of taxes are paid by the wealthy. Then they argue that more tax cuts will assist families by an average of $3500. Of course that's an "average" I guess...cause if they are right then the tax cuts would disproportionately benefit the wealthy...once again. Because tax "cuts" wouldn't reach those whom the Repugs are asserting "don't pay taxes".

These are the same folks that benefitted from the excessive bailouts to Wall Street and the Big banks, who, BTW are just sitting on the "stimulus" they received.

Oh and it's nice that Boehner said that they wanted to cut "even the lowest income tax rates".

But one of the biggest cuts they want to do is eliminate "payroll taxes". Just what are these mysterious taxes on employers? Oh, just the employers "match" on Social Security (okay workers...have your SSI cut in half and pocketted by your boss). Workers health care insurance. Contributions made to unemployment.

Do these guys take us for suckers?