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Obama Says Passage of Stimulus Only First Step in Recovery Plan

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By Kim Chipman

Feb. 14 (Bloomberg) -- President Barack Obama said congressional passage of a $787 billion economic stimulus plan last night must be followed by action to stabilize the financial and housing markets to pull the nation out of a recession.

“This historic step won’t be the end of what we do to turn our economy around, but rather the beginning,” Obama said in his weekly address. “The problems that led us into this crisis are deep and widespread, and our response must be equal to the task.”

Obama said the next phases of his economic plan will be stabilizing and reforming the banking system to unlock credit for businesses and consumers; writing new regulations “to stop unscrupulous speculators from undermining our economy ever again;” and stemming the raft of home foreclosures.

The president also pledged to submit a new proposal in coming weeks to rein in the ballooning federal deficit.

“This is a challenging agenda, but one we can and will achieve,” he said.

The stimulus legislation, which includes $212 billion in tax cuts and $575 billion in spending, passed the House of Representatives without any Republican support. The Senate approved the measure with the votes of three Republicans.

Obama sidestepped the political divide in Congress. “I want to thank the members of Congress who came together in common purpose to make it happen,” he said in the address, released this morning on the radio and the Internet.

Signing Next Week

Obama said he will “sign this legislation into law shortly.” White House spokesman Robert Gibbs said yesterday the bill likely won’t reach the president’s desk before Feb. 16.

“Accountability, responsibility and transparency” will be key to the success of the spending portion of the stimulus, Obama said.

“I’ve tasked my Cabinet and staff to set up the kind of management, oversight and disclosure that will help ensure that, and I challenge state and local governments to do the same,” he said. “Ultimately, this is your money, and you deserve to know where it’s going and how it’s spent.”

Republicans argue that the stimulus bill is weighted too much toward government spending and, because of that, will fall short of providing a boost for the economy.

“Republicans have been supportive of a stimulus plan all along. Yet, over the past few weeks, a serious difference of opinion has emerged over what an economic recovery plan should include,” Senator Lisa Murkowski, an Alaska Republican, said today in the weekly Republican address.

Spending Priorities

“Democrats, it seems, settled on a random dollar amount in the neighborhood of $1 trillion and then set out to fill the bucket. Republicans, on the other hand, thought that we should figure out what was at the root of the problem, and then see how much it would cost to fix,” she said.

The costliest item in the stimulus package is a $400 tax credit for individuals earning less than $75,000 a year and $800 for couples with income of less than $150,000.

Infrastructure construction makes up a big portion of the spending, including $29 billion for highways, $17.7 billion for mass transit and rail and $18.8 billion for clean water and flood control projects.

The plan provides $87 billion for Medicaid, the health insurance program for the poor. It contains $39 billion for unemployed workers in families, including provisions extending jobless benefits for 20 additional weeks in most states and 33 additional weeks in states with high unemployment rates. It also increases weekly benefits by $25.

Housing Plan

Obama plans to unveil more details on his proposals to deal with the housing crisis with a speech Feb. 18 in Arizona, which had the third-highest rate of foreclosures in January -- one in 182 housing units -- after Nevada and California.

Obama has pledged to commit money toward housing relief, using $50 billion to $100 billion from the $700 billion Troubled Asset Relief Program enacted last year. Lawrence Summers, the president’s top economic adviser, said that the administration intends to focus its efforts on reducing monthly payments for homeowners struggling with their mortgages.

“Going directly at the problem means addressing affordability by addressing payments,” Summers said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” scheduled to air this weekend.

To contact the reporter on this story: Kim Chipman in Chicago at kchipman@bloomberg.net.

Last Updated: February 14, 2009 06:00 EST

via bloomberg.com

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