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December 8, 2009 in Nation/World
New Obama plans: ‘spend our way out’ of downturn
President Barack Obama speaks on the economy at the Brookings Institution in Washington, D.C., on Tuesday, Dec. 8, 2009.
(Full-size photo)
WASHINGTON — President Barack Obama called for a major new burst of federal spending Tuesday, aiming to jolt the wobbly economy into a stronger recovery and reduce painfully persistent double-digit unemployment.
Despite Republican criticism concerning record federal deficits, Obama said the U.S. must continue to “spend our way out of this recession” as long as so many people are out of work. More than 7 million Americans have lost their jobs since the recession began two years ago, and the jobless rate stands at 10 percent, a statistic Obama called “staggering.”
Congressional approval would be required for the new spending, the amount unspecified but sure to be at least tens of billions of dollars.
“We avoided the depression many feared,” Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, “Our work is far from done.”
It was the third time in a week the president had presided over a high-profile event on jobs, responding to rising pleas in Congress that he spend more time discussing unemployment as midterm election season draws near.
Obama proposed new spending for highway and bridge construction, for small business tax cuts and for retrofitting millions of homes to make them more energy-efficient. He said he wanted to extend economic stimulus programs to keep unemployment insurance from expiring for millions of out-of-work Americans and to help laid-off workers keep their health insurance. He proposed an additional $250 apiece in stimulus spending for seniors and veterans and aid to state and local governments to discourage them from laying off teachers, police officers and firefighters.
He did not give a price tag for the new package but said he would work with Congress on deciding how to pay for it.
Proposals in Congress being advanced by Democratic leaders that cover much the same ground would add up to $170 billion or more. Administration aides suggested the infrastructure proposals alone being weighed by the president could cost about $50 billion.
Republicans ridiculed the president’s speech and his parallel call for doing more to hold down government deficits.
“At least the president’s proposal will result in one new job — he’ll need to hire a magician to make this new deficit spending appear fiscally responsible,” said Sen. Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee. House GOP leader John Boehner of Ohio declared the president “out of ideas and out of touch.”
While Obama did not propose the kind of direct federal public works jobs that were created in the 1930s, he said government action could set the stage for more job creation by private business. Many of his proposals would extend or expand programs included in the mammoth $787 billion stimulus package passed last winter.
While acknowledging increasing concerns in Congress and among the public over the nation’s growing debt, Obama said critics present a “false choice” between paying down deficits and investing in job creation and economic growth.
“Even as we have had to spend our way out of this recession in the near term, we have begun to make the hard choices necessary to get our country on a more stable fiscal footing in the long run,” he said.
To find money to pay for the new programs, the administration is pointing to the Treasury Department’s report on Monday that it expects to get back $200 billion in taxpayer-approved bank bailout funds faster than expected.
Obama suggested this windfall would help the government spend money on job creation at the same time it eats into the nation’s debt, which now totals $12 trillion.
He called the bank bailout, under the 2008 Troubled Asset Relief Program (TARP), “galling.”
“There has rarely been a less loved — or more necessary — emergency program,” Obama said.
The program is due to go out of business at the end of this year, although Congress is expected to extend it to next October.
The perception that the program mainly bailed out Wall Street bankers while doing little to help ordinary Americans has fed anti-Washington sentiment across the nation.
In clear acknowledgment of this sentiment, Obama said the unexpected $200 billion in repaid loans and other savings “gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street.”
But Republicans cried foul, claiming that the leftover and repaid TARP money must be used exclusively for deficit reduction or additional bank bailouts, as the law setting it up spells out, and not for what amounts to an expensive new stimulus program to create jobs.
“The stimulus money clearly was a spending bill. TARP was a loan — a loan to be paid back. And we know that a number of the banks are, in fact, paying it back,” said Senate Minority Leader Mitch McConnell, R-Ky. “So I don’t think raiding a loan program to launch another spending spree is the best way to create jobs.”
David Walker, president of the Peter G. Peterson Foundation, a group that promotes fiscal responsibility, said that just because the government hasn’t had to spend all the TARP money on banks “doesn’t mean we should automatically spend it on something else.”
Walker, former head of Congress’ Government Accountability Office, said in an interview that clearly defined objectives or conditions were missing from both the $700 billion bank bailout law passed in October 2008 and this year’s $787 billion stimulus package. He said, “You can’t change history, but you need to learn from past mistakes to make sure that you don’t repeat them.”
Liberal groups praised Obama’s new initiatives. “We think that Obama made a step in the right direction,” said Karen Dolan of the Institute for Policy Studies. “He’s finally tapping into that moral outrage of the American people at the Wall Street bailouts.”
A major part of his package includes new incentives for small businesses, which account for two-thirds of the nation’s work force. He proposed a new tax cut for small businesses that hire in 2010 and an elimination for one year of the capital gains tax on profits from small-business investments.
Obama also proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year. His proposal for new tax breaks for energy-efficient retrofits in homes is modeled on the now-expired Cash for Clunkers rebates for trading in used vehicles for more fuel-efficient vehicles. Some administration officials have dubbed the proposed new program “Cash for Caulkers.”
Although the unemployment rate inched down to 10 percent in November from 10.2 percent in October, more of America’s largest companies will shrink their staffs than will hire in the next six months, according to a new survey by the Business Roundtable.
A Labor Department report on Tuesday showed there were about 6.3 unemployed people, on average, for each job opening in October. Comparable November figures were not yet available.
Beryl growing off East Coast 
smarg on December 08 at 1:17 p.m.
My God, Odumbo is nuts. We are doomed.
bcpats on December 08 at 1:38 p.m.
Obama’s mantra “Spend, Spend, Spend”. This is equivalent to spend more to get out of debt. That is not usually the way the average household manages to get out of debt. Like so many on welfare, it is easy to spend someone else’s money (China’s). His ulterior motive must be to have everyone and the country so far in debt that we will then be dependent on another country for hand outs - then he won’t have to make any decisions. Vote ‘present’.
IHike4Fun on December 08 at 2:06 p.m.
This is his new plan???
Diana on December 08 at 5:34 p.m.
If those who are criticizing this would take the time to understand it, they would see that the remainder of the TARP funds will now be used for job creation and not Wall Street. Don’t you want small businesses and the unemployed to get some relief?
Remind me how many trillions Bush borrowed from China to fund his war in Iraq?
omaha on December 08 at 6:41 p.m.
Keep drinking the Kool Aid Diana. Just admit it, Obama’s deficits are higher and he is increasing the national debt much faster than Bush.
spokanada on December 08 at 10:22 p.m.
Omaha are you kidding me? What is Obama supposed to pay off the debt with? In addition, Obama is forced to continue paying for Bush’s two wars.
Did you think that by Obama being elected our the debt would be shrinking within 12 months of him taking office?
Did you form this opinion yourself or are you simply regurgitating the garbage you heard on Fox?
Uptight_Spokanite on December 08 at 11:04 p.m.
I think many of the Obama critics are dabbing at their dewy eyes with scented handkerchiefs as they realize that finally the CEOs of the TARP funds returning financial institutions are cap-free and can get the multi million dollar contracts they so richly deserve. So pardon the commentators’ impudence and purposeful misspelling of our President’s name, now that the CEOs can get extremely rich, I’m certain the critics will feel better about things.
Diana on December 09 at 6:17 a.m.
Gee, Omaha, how many trillions were on the books when President Obama took office? If you view it as a continuum, you might not make such idiotic statements.
bdr on August 18 at 10:11 a.m.
Just spend that sweet China money……..! yeha!
default on China when they ask for it back……..!
any country that hold back trillions from its people’s pay….and allows the USA to gorge fest need to learn DEFAULT
A plumber in China with 38 years experience earns 238 a month.
his pay is limited by his nation who controls the currency and keeps it artificially low.
That China plumber would earn 70-80 thousand a year if he weren’t rent controlled…by his government.
DEFAULT on China……..they mistreat their people.