Special Report: Global Financial Crisis
by Fei Liena, Fu Yunwei
BEIJING, Jan. 11 (Xinhua) -- U.S. president-elect
Barack Obama unveiled a much-anticipated massive economic revival plan on
Thursday -- big spending, big tax cuts -- in a bid to inject adrenaline into an
ailing economy.
However, compared to the 700 billion-U.S.-dollar
fiscal rescue plan launched by the Bush administration in October, what's new in
this Obama's plan? Will it pull the U.S. economy out of the mire as many have
anticipated?
BIG MONEY
It is estimated that the sum of
Obama's stimulus package could reach a stunning 775 billion dollars or even
more, surpassing the already huge 700 billion dollars Bush used for his
financial rescue package. Obama even hinted that several economists believed the
sum is not enough to pull the hull out of the water, instead, the package should
reach 800 billion to 1.3 trillion dollars.
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U.S. President-elect Barack Obama. He
speaks to the media during a news conference at his transition office in
Washington Jan.7, 2009.(Xinhua/Reuters Photo)
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The U.S. economy has been heavily hit by the crisis
stemming from the burst of financial and consuming credit bubbles gathering for
years. The authoritative National Bureau of Economic Research announced in
December 2008 that the U.S. economy had actually entered recession since as
early as December 2007.
Fifty economic analysts surveyed by the Blue Chip
Economic Indicators magazine in December predicted that even if Obama's stimulus
plan works with good results, the U.S. economy is unlikely to recover soon, at
least not in the first half of 2009.
During the economic winter when the real economy is
being hit hard, featured with investors losing confidence, a weak domestic
consumption and a high unemployment rate, the U.S. government has to take
powerful measures to break the ice.
EXTENSIVE ECONOMIC IMPACT
If Bush's financial rescue plan was an immediate
life-saving treatment at the critical moment of the crisis, then Obama's
stimulus package can be regarded as a series of "surgeries" on many industries
to repair the damage, which will produce a more extensive economic impact, with
an ultimate goal of pulling the nation out of the recession after a certain
period of time.
It was reported that Obama's stimulus plan, designed
to save or create 3 million jobs, would include money to build infrastructure,
to invest in education, medical care and the Internet, as well as to promote
renewable energies in federal buildings and normal homes. It may also include
more than 300 billion dollars in tax cuts for enterprises and individuals after
the president-elect negotiates with the Congress.
A POPULAR
POLICY
Compared to the uncomfortable seesaw battle in the
Republican-minority Congress while debating on Bush's financial rescue plan last
year, Obama's stimulus plan is more likely to enjoy an easy pass at the
Congress.
As the financial crisis has spread to the real
economy, a deteriorating situation is foreseeable. The congressmen and the
public have realized the necessity and urgency of taking immediate and effective
measures to tackle the crisis.
After several government actions including lowering
interest rates and injecting fund to financial institutions failed to achieve
desirable results, various parties have focused their hopeful eyes on Obama's
plan to save the economy.
The joint control of Democrats in both the Senate and
the House of Representatives may also help the let-go of Obama's plan. It was
reported that House Speaker Nancy Pelosi promised to urge the Congress to enact
Obama's stimulus before his inauguration on Jan.20.
It is widely expected that the stimulus package would
help curb the recession and speed up the U.S. economic recovery.
However, congressmen from both parties have expressed
profound alarm at the jaw-dropping 1.2 trillion dollars of budget deficit this
fiscal year even before any new stimulus.
Senate Budget Committee Chairman Kent Conrad even
warned that this amount of deficit may not just appear in 2009 fiscal year, but
possibly in every year in the next 10 years.
"Yes, our economy needs help, but at the end of the
day how much debt are we going to pile on future generations?" House Republican
leader John Boehner asked. "We cannot buy prosperity with more and more
government spending."
Obama unveils economic stimulus
plan
WASHINGTON, Jan. 8 (Xinhua) -- U.S. President Barack
Obama on Thursday unveiled his economic stimulus plan, designed to help lift the
economy out of a deepening recession, urging Congress to approve it as soon as
possible.
"I don't believe it's too late to change course, but
it will be if we don't take dramatic action as soon as possible," Obama warned
in a speech at George Mason University in Fairfax, Virginia, outside Washington.
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