President Obama has just been inaugurated. But now after his moving speech, promise slowly turns toward action and results as the grand expectations are tested.
Obama steps in to office with a significant piece of the economic stimulus package already cleared by the House Democrats. Its still a work in progress but the size and composition of the package is now public. The gargantuan $825 bln package has cleared the first stage of inspection with few calls for less aggressive action as some cushion the response to forward results warning that more may be needed.
The broad outline includes $275 bln of middle class tax cuts that were promised during the presidential campaign. $500 ($1,000 for couples) for all working Americans who make less than $200,000 a year.
The two thirds majority of the package is broad in scope. It includes spending on education ($117 b), infrastructure ($90 b), energy ($54 b) and science/technology ($16 b) while providing for the needy ($106 b) and state governments ($119 b). Its provisions go toward every thing from law inforcement to public schools and highway construction and the expansion of Internet service.
This tidal wave of spending and tax cuts is largely seen as necessary to put the economy back on track. But expectations are extremely high for the new president and the daunting economic task ahead of him.
The tax cuts will the fastest to see results through increased consumer spending. The infrastructure spending will be the slowest (and the longest lasting) and hopefully not the biggest miss on actual spending (think Big Dig in Boston).
The economic effects are expected to lift GDP by almost 3.5%, reduce unemployment by about 1.7% and raise employment by nearly 3.5 million jobs. But the costs shouldn't be downplayed as the bipartisan Congressional Budget Office current sees a FY09 budget deficit of $1.2 tln (yeah, that's Trillion) even before accounting for this massive fiscal stimulus. Borrowing now means paying ahead as the country also encounters the growing fiscal problems of Medicare and Social Security.
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