Obama expands goals of stimulus

Barack Obama has expanded the goals of his proposed economic stimulus, with a plan to create or save an additional 500,000 jobs.

The president-elect raised his jobs target over the next two years to 3m – up from the 2.5m goal set last month – after US unemployment hit its highest level for 15 years in November.

Transition officials said Mr Obama had agreed the outlines of a $675bn-$775bn two-year recovery plan last week. But the price tag is likely to rise above $800bn (€575bn, £535bn) as Congress makes its own demands during the legislative process.

The moves come amid a warning on Sunday, from the International Monetary Fund, that governments must act more aggressively to prevent a deeper slump

Dominique Strauss-Kahn, IMF managing director, told BBC radio that inadequate stimulus measures risked making the slowdown worse than expected next year. “I’m specially concerned by the fact that our forecast, already very dark . . . will be even darker if not enough fiscal stimulus is implemented,” he said.

The IMF has called for combined stimulus measures in 2009 of $1,200bn – or 2 per cent of global annual economic output – amid fears of the deepest slump since the Great Depression.

Mr Strauss-Kahn’s remarks echoed Joe Biden, US vice-president-elect, who told ABC’s This Week on Sunday that the American economy was in danger of “absolutely tanking” without “bold” action.

“The economy is in much worse shape than we thought it was in,” he said. “There is going to be real significant investment, whether it’s $600bn or more, or $700bn, the clear notion is, it’s a number no one would have thought about a year ago.”

Under Mr Obama’s proposals, most of the cash would be spent on tax cuts for the middle class, aid to cash-strapped state governments and investments in infrastructure, “green” energy and other policy priorities.

Detailed talks have been under way with congressional leaders for the past few days, with a view to legislation being ready for Mr Obama to sign soon after taking office on January 20.

Mr Obama’s stimulus package represents a sharp increase from the $175bn stimulus plan he proposed during the election campaign. It would be by far the biggest intervention of its kind in the US economy for decades, on top of the $700bn bail-out already committed to the financial and automotive industries.

Many of the 3m jobs that Mr Obama aims to save or create will come in the construction industry as his administration pours billions of dollars into infrastructure projects, including road and bridge building, mass transit systems and modernisation of schools and other government buildings.

Source : Here