In an effort to stimulate hiring in the face of a stubborn 10% unemployment rate, U.S. President Barack Obama on Tuesday announced proposals to create more jobs with an expansion of his $787 billion stimulus plan.
In a speech at the Brookings Institution, President Obama avoided calling the proposals a new stimulus package. But the initiatives bear a striking resemblance to the package debated by Congress last February, including more infrastructure spending and a hiring tax credit that didn't make the final cut after objections from members of his own party.
In addition to $50 billion in infrastructure spending, the proposals call for increased lending to small businesses, a one-year moratorium on capital gains taxes, and extending relief to state and local governments.
The big question will revolve around how to pay for the programs – which some analysts are estimating will cost upwards of $170 billion – without adding to the ballooning federal deficit.
President Obama has said that the administration could spend more to stimulate hiring and still shrink the deficit by using more than $200 billion in savings from the Troubled Asset Relief Program (TARP). Republicans are adamantly opposed to using the unexpected windfall for anything but deficit reduction.
As if on cue, U.S. Treasury Secretary Timothy Geithner notified Congress that the administration is extending the $700 billion TARP financial-rescue program until October 3, 2010.
In a letter to congressional leaders, Geithner said the government must have access to the funds in case of new financial shocks, and to help struggling homeowners and small businesses. He said the administration doesn't expect to disburse more than $550 billion of the money.
“As we wind down many of the government programs launched initially to address the crisis, it is imperative that we maintain this capacity to respond if financial conditions worsen and threaten our economy,” Geithner wrote.
President Obama revealed his proposals as a stagnant job market fuels heated debate about the effectiveness of the stimulus plan and Democrats begin to openly worry about the looming midterm elections in 2010. Although it offered some hope, the national unemployment rate still hovered around 10% in November, ratcheting up political pressures.
"There was some surprise in the numbers. There's also question about whether they're a blip that may not reflect the future," U.S. Rep. George Miller, D-CA, told The Wall Street Journal. "There's a big sense of urgency about doing this."
The new package would likely be comprised of two separate bills.
One would extend unemployment benefits and COBRA health-care insurance for the unemployed and increase temporary food-stamp payments. It will probably be attached to a spending bill before year-end, and cost about $100 billion.
Next will come a jobs bill containing many of the administration's hiring proposals that likely won't be passed until early next year, carrying a price tag estimated at $70 billion.
But GOP lawmakers continued to point to the double-digit unemployment numbers as proof that the previous stimulus package has fallen far short of the goals the president's economic team promised.
"Obamanomics has failed and failed miserably," U.S. Rep. Jeb Hensarling, R-TX told The Journal.
News & Related Story Links:
- Bloomberg News:
Geithner Extends $700 Billion Bank-Bailout Program
- The Wall Street Journal:
Obama Pushes New Job Stimulus