Hopes pinned on Obama to revive faltering economy

Source: Xinhua | 01-21-2009 13:19

WASHINGTON, Jan. 20 (Xinhua) -- Barack Obama was sworn in on Tuesday as the 44th U.S. president and is expected to launch a federal economic stimulus package to cope with the worsening economic recession.

About 2 million people gathered in Washington D.C. to celebrate the inauguration of the first African-American president in the country's history hoping he would help the country get over the current financial crisis.

In his inauguration address, Obama said that the U.S. was "in the midst of crisis is now well understood," listing war, economy, healthcare, home foreclosures, jobs, energy and other challenges.

"Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age," he said.

As the U.S. economy faces its worst crisis since the Great Depression, Obama vowed last week that he would take dramatic action to revive it.

Early this month, Obama met with several congressional leaders including House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to discuss his new economic stimulus plan.

On Jan. 15, the Senate agreed to give Obama access to the second half of last year's 700 billion U.S. dollars bailout and House Democrats unveiled an 825 billion dollars stimulus package, which gave Obama over 1 trillion dollars on his spending bill.

Members of the Obama team told the Senate they would enlarge the size of an energy-tax incentive package and modify the proposed tax credits for individuals and for businesses to restore confidence in the country's economy.

Irwin Stelzer, a senior fellow and economist at the Washington-based Hudson Institute, said that if Obama's plan succeeded in persuading consumers that an end to the recession is in sight, banks that it is safe to lend again, businesses that it pays to invest in plants to turn out stuff consumers will buy, it would have succeeded in saving the economy.

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 ordinary homes.

The plan may also include more than 300 billion dollars in tax cuts for enterprises and individuals.

Senator Kent Conrad, chairman of the Budget Committee, said that the Obama team was hearing the questions about their plan and were responding. He had questioned previously whether the tax credits in the stimulus package were enough to encourage jobs.

But the largest public spending program since World War II and a new round of tax cuts will certainly not heal the troubled economy soon following the collapse of the real estate market, an ailing banking sector, and consumers and businesses cutting back.

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 the year.

The U.S. unemployment rate rose to 7.2 percent in December, the highest level in 16 years, as 524,000 jobs were slashed in the month, the U.S. Labor Department reported early this month.

Bruce Bartlett, a White House economist in the Reagan administration and a top Treasury official in the first Bush administration, said it was World War II that finally ended the Great Depression. Bartlett is author of a study showing that nearly all postwar stimulus packages passed by Congress came too late to be of much help, and just increased the deficit and fueled inflation.

Despite the debate on his plan and the difficulties for healing the faltering economy, Obama is enjoying the support of the American people.

"It is a reiteration of what he has said over the last year that the country is ready for change," Brad Gillenwater, a Baltimore resident said.

"All Americans, in general, wish him nothing but the best. We are excited about the leadership we hope he is going to provide."

Editor:Zhang Yun