Obama to call for quick action on fiscal stimulus

Obama will call for quick action on a fiscal stimulus package in a speech at George Mason University in Fairfax, Virginia, at 11 a.m. (1600 GMT).

Obama to call for quick action on fiscal stimulus

U.S. President-elect Barack Obama will call for quick action on a fiscal stimulus package in a speech on Thursday aimed at reassuring Americans that he is determined to stem the economic crisis.

Obama will deliver his remarks at George Mason University in Fairfax, Virginia, at 11 a.m. (1600 GMT).

As he prepares to take over from President George W. Bush in less than two weeks, Obama is about to inherit an economy that has been in recession for more than a year.

The president-elect and his advisers have been working with the U.S. Congress to craft a two-year plan for tax cuts and infrastructure spending he says is needed to prevent the country from slipping into an even deeper slump.

The speech will offer new details on the proposal, which will carry a price-tag of around $775 billion. The package would include tax relief for the middle class and money for the building of roads and new schools as well as aid to cash-strapped state governments.

Obama, who takes office on Jan. 20, hopes to secure passage of the economic plan by mid-February. He has warned that the already grim economic conditions could turn dire and the unemployment rate could hit the double digits without a boost from the government. The jobless rate is now 6.7 percent.

But on Wednesday, a report on the U.S. budget outlook painted a bleak picture that might add to Obama's challenges in pushing his plan through Congress.

The budget deficit for the current 2009 fiscal year ending Sept. 30 is expected to nearly triple to around $1.2 trillion, according to the Congressional Budget Office.

The report said bailouts for the U.S. automakers and financial industry had combined with falling tax receipts to bloat the deficit.

Record-breaking deficit

A deficit in that range would be about 8.3 percent of gross domestic product, shattering the previous post-World War Two record of 6 percent hit in 1983.

Obama acknowledged this week the country could face trillion-dollar deficits for years to come. He has pledged to try to rid government of wasteful spending and to look at ways to address costly entitlement programs such as Social Security and Medicare.

But the $1.2 trillion forecast for the budget deficit this year could be a low estimate. The CBO number does not factor in the cost of Obama's proposed stimulus plan.

And in an interview with CNBC on Wednesday, Obama did not rule out that the cost of the economic stimulus package could expand beyond the roughly $775 billion he will propose as the plan moves through Congress.

"We've seen ranges from $800 billion to $1.3 trillion and our attitude was that given the legislative process, if we start towards the low end of that, we'll see how it develops," Obama said.

"But what we are concerned about is making sure that the money is spent wisely, that there's oversight, that there's transparency," he added.

Obama's call for dramatic action to lift the struggling economy has found support in the Democratic-led Congress but getting agreement on the details will be the difficult part.

Some Republicans and conservative Democrats have expressed concern that the stimulus package could bust the federal budget with new programs that will require funding for years to come.

To win over Republicans for the big stimulus package, Obama has touted plans to include tax breaks for individuals and businesses in the plan.

Reuters
Last Mod: 08 Ocak 2009, 14:06
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