Slowly the shape and nature of the huge US stimulus package, to be released next month by President-elect Barak Obama, is taking shape.
Last weekend he mentioned 2.5 million jobs being created, he has supported aid to the struggling big three car companies, emphasised the importance of helping US homeowners who are losing their homes to foreclosure at record levels, and now he’s promised the “single largest new investment” in roads, bridges and public buildings since the Eisenhower Administration to lift the sagging economy and create jobs in 1952-53.
On his weekly radio and internet address he said his plan to create or preserve 2.5 million jobs will also include making public buildings more energy efficient, repairing schools and modernizing health care with electronic medical records.
“We won’t just throw money at the problem,” he said. “We’ll measure progress by the reforms we make and the results we achieve — by the jobs we create, by the energy we save, by whether America is more competitive in the world.”
Obama spoke a day after a government report showed employers in the US slashed 533,000 jobs last month, the biggest number for 34 years.
The unemployment rate hit 6.7% as tens of thousands of people simply stopped looking for work or benefits.
At the same time, consumer credit fell in October, the second time in three months it has dropped, according to figures from the US Federal Reserve.
A total of 1.9 million jobs have been lost since last December and revisions for September and October losses increased by 199,000. November was the 11th consecutive drop in payrolls.
More than 1.3 million jobs have been lost in the past three months, a enormous escalation of pain and misery for the US and its people.
No wonder this employment slump was a key factor in determining the start of the recession with the National Bureau of Economic Research, (the arbiter of US business cycles) announcing a week ago that the recession started in December 2007.
At 12 months, the recession is already the longest since the 16-month slump that ended in November 1982. The recession is the 11th since a downturn that occurred in 1945, the year that World War II ended.
The recession will go on well into 2009.
The job losses are “another painful reminder of the serious economic challenge our country is facing,” Obama said in his speech.
The jobless figures added urgency to negotiations over aid to the trio of automakers.
Democrats in Congress reached an agreement in principle with the Bush administration on providing funds to prevent a collapse of General Motors Corp. and Chrysler.
There’s talk the car companies will get $US17 billion in aid (half what they asked for) to last them into the early months of next year.
The money will come from the $US25 billion approved in car efficiency legislation earlier this year.
The speech offered the first details of Obama’s job-creation program.
He said the investment in infrastructure will be the largest since President Eisenhower created the interstate highway system a half-century ago.
“When Congress reconvenes in January, I look forward to working with them to pass a plan immediately,” he said. Obama takes office on January 20.
Congressional Democrats says they will send Obama an economic stimulus package as soon as he takes office.
It has been estimated at between $US500 billion and $US700 billion, but some economists reckon the figure should be much larger at $US1 trillion over two years..
The president-elect said that in addition to investing in infrastructure, requiring energy standards on public buildings and updating health-care processes and practices.
He said he will start a “sweeping effort to modernize and upgrade school buildings” and will boost broadband access across America.
“If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money,” he said.
(There are some similarities here to some of the ideas of the Rudd Government’s existing announcements and moves to boost infrastructure spending. Rudd has done agreements with the states to spend more on hospitals and schools for example, plus the school computer program.)
Obama’s plan to make public buildings more energy-efficient is aimed at cutting the US government’s energy bill, which he said was the highest in the world. He plans to replace heating systems and install energy-efficient light bulbs.
Obama also plans to upgrade Internet infrastructure, calling it “unacceptable that the United States ranks 15th in the world in broadband adoption". (The Rudd Government has been planning this for Australia for well over a year.)
Upgrading health care is the final component of the plan.
He said in his speech that by introducing new technology and electronic medical records, health-care workers could “prevent medical mistakes and help save billions of dollars each year”.
Meanwhile the pressures in the US financial system continue.
Consumer credit fell in October for the second month in the three according to a report from the US Federal Reserve on Friday.
That’s a real sign that banks and other financial groups are rationing credit. Car loans fell.
The Federal Reserve said Friday that consumer borrowing fell by $US3.6 billion in October to $US2.578 trillion from an upwardly revised $US2.581 trillion in September.
The annual rate of consumer borrowing fell by 1.6% in the month. In September, the annual rate grew by 3.1%. Credit in Augus
