U.S President Barack Obama announced he is going to bring a new proposal for an economic stimulus package, in line with the package announced in 2009. The package, which would be introduced in Congress in September, aims to lower budget deficits while allocating finances for employment generation and to foster growth.
“When Congress gets back in September, my basic argument to them is this: we should not have to choose between getting our fiscal house in order and jobs and growth. We can’t afford to do just one or the other, we’ve got to do both,” Obama said, rounding up a three day tour of Minnesota, Iowa and Illinois, before proceeding for a 10-day vacation in Massachusetts.
Obama plans to present his input to the 12-member congressional committee, in charge of coming up with a workable plan to achieve a $1.5 trillion cut in budget deficits by November 23. He would propose scrapping entitlement benefits such as Social Security and Medicare, the health insurance program for the elderly, as well as generating additional revenue through tax reforms.
Building a voter confidence bank
Obama is hoping to create additional employment and boost growth in an economy struggling to cope with a 9.1% unemployment rate and lagging economic growth, while trying to gain back lost voter confidence. This would require fresh spending on infrastructure and tax cuts. ?I don?t think it?s good enough for us to just do it partly. If we?re going to do it, let?s go ahead and fix it. And if we?re going to fix it, the only way I believe to do it in a sensible way is you?ve got to have everything on the table”.
“There is no reason why we should not extend a payroll tax cut that put $1,000 into the pockets of every single family out there. That means they’ve got more money to spend, that means businesses have more customers, that means the economy grows and more people get hired. And we could renew it right now to give businesses certainty that they’re going to have customers, not just this year but next year as well,” Obama said, addressing people during his bus tour.
Obama’s job approval rating hit an all time low of 39% in a Gallup daily tracking poll mid August, whereas, Congressional rating slumped to 13%.
The stimulus package is bound to face tremendous opposition from Republican-dominated Congress, which has voiced its disapproval of additional spending time and again. In an opinion article published in USA Today, Boehner, a Republican, and Majority Leader Eric Cantor said: “The American people understand that Washington can?t keep spending money it doesn?t have. They want to see less government – not more taxes.?
According to Boehner, in order to make serious progress, Obama will have to come up with brand new initiatives, and not re-incarnate previous attempts at tax reforms and lowering budget deficits. “To get our economy moving, what the American people need from the president is leadership and serious solutions that reflect a true change in his approach to our economy and the role of government.”
In a separate move, Obama seeks to implement an increase in tax rates for America’s richest citizens. According to American billionaire, Warren Buffet, America’s rich and affluent end up paying lesser percentages of their taxable income compared to others. This move also faces opposition from the Republicans.
Growing public anger, slowing economic growth, mounting budget deficits and the recent credit rating downgrade might ultimately force the Republicans and the Democrats to come to a mutual compromise. Till that happens, Obama will have the Republicans to blame for a lack of progress towards improving unemployment and growth rates. “I need you to send a message. I need you to send a message to folks in Washington: Stop drawing lines in the sand, stop engaging in rhetoric instead of actually getting things done,” Obama said during his bus tour.
Sources: Bloomberg, Reuters, MSNBC News.