Finance Globe

U.S. financial and economic topics from several finance writers.
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Obama's American Recovery and Reinvestment Plan

President-elect Barack Obama said today that the ongoing recession could last for years unless dramatic action was taken as soon as possible.

Obama said, "Throughout America’s history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation – the kind that mark a clean break from a troubled past, and set a new course for our nation. This is one of those years."

He blamed the nation's economic crisis on "an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC" and cited the poor decisions made by Wall Street executives, not enough regulatory scrutiny or accountability, easy lending by banks, over-extended borrowers taking on too much debt, and wasteful government spending.

"The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government."

Obama continued, "Now, the very fact that this crisis is largely of our own making means that it is not beyond our ability to solve. Our problems are rooted in past mistakes, not our capacity for future greatness. It will take time, perhaps many years, but we can rebuild that lost trust and confidence. We can restore opportunity and prosperity."

Obama acknowledged that the proposed American Recovery and Reinvestment Plan will come at great cost, but said that simply doing nothing could cost many more jobs and income, and an ever greater loss of confidence in the U.S. economy.

Many Republicans and even some Democrats are worried that the estimated $800 billion plan - with about $300 billion of it in tax cuts - won't do enough to help the economy to be worth the additional burden to taxpayers. The Congressional Budget Office just announced that the federal deficit 2009 is estimated at $1.2 trillion.

Addressing those who are skeptical of the plan, Obama said, "Our government has already spent a good deal of money, but we haven’t yet seen that translate into more jobs or higher incomes or renewed confidence in our economy. That’s why the American Recovery and Reinvestment Plan won’t just throw money at our problems – we’ll invest in what works. The true test of the policies we’ll pursue won’t be whether they’re Democratic or Republican ideas, but whether they create jobs, grow our economy, and put the American Dream within reach of the American people."

Obama said that "all Americans will be able to hold Washington accountable by going online to see how and where their tax dollars are being spent. And as I announced yesterday, we will launch an unprecedented effort to eliminate unwise and unnecessary spending that has never been more unaffordable for our nation and our children’s future than it is right now."

He said, "It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy – where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit."

Obama says the plan will save or create at least three million jobs over the next few years. "It is not just another public works program. It’s a plan that recognizes both the paradox and the promise of this moment – the fact that there are millions of Americans trying to find work, even as, all around the country, there is so much work to be done."

The plan aims to double the production of alternative energy over the next three years, modernize over 75% of federal buildings, improve the energy-efficiency of two million homes, computerize medical records, and update tens of thousands of schools, community colleges, and universities. The plan also includes a $1000 tax cut that Obama says will go to 95% of middle-class American workers in an effort to boost the economy, and extended health care and unemployment benefits.

"Government at every level will have to tighten its belt, but we’ll help struggling states avoid harmful budget cuts, as long as they take responsibility and use the money to maintain essential services like police, fire, education, and health care."

Obama expressed the urgency of the situation, "It is time to set a new course for this economy, and that change must begin now. We should have an open and honest discussion about this recovery plan in the days ahead, but I urge Congress to move as quickly as possible on behalf of the American people. For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."

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Thursday, 25 April 2024

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