What's new in Obama's economic stimulus plan?

by Fei Liena, Fu Yunwei

BEIJING, Jan. 11 (Chinese media) -- U.S. president-elect

Barack Obama unveiled a much-anticipated massive economic revival plan on

Thursday -- big spending, big tax cuts -- in a bid to inject adrenaline into an

ailing economy.

However, compared to the 700 billion-U.S.-dollar

fiscal rescue plan launched by the Bush administration in October, what's new in

this Obama's plan? Will it pull the U.S. economy out of the mire as many have

anticipated?

BIG MONEY

It is estimated that the sum of Obama's stimulus

package could reach a stunning 775 billion dollars or even more, surpassing the

already huge 700 billion dollars Bush used for his financial rescue package.

Obama even hinted that several economists believed the sum is not enough to pull

the hull out of the water, instead, the package should reach 800 billion to 1.3

trillion dollars.

The U.S. economy has been heavily hit by the crisis

stemming from the burst of financial and consuming credit bubbles gathering for

years. The authoritative National Bureau of Economic Research announced in

December 2008 that the U.S. economy had actually entered recession since as

early as December 2007.

Fifty economic analysts surveyed by the Blue Chip

Economic Indicators magazine in December predicted that even if Obama's stimulus

plan works with good results, the U.S. economy is unlikely to recover soon, at

least not in the first half of 2009.

During the economic winter when the real economy is

being hit hard, featured with investors losing confidence, a weak domestic

consumption and a high unemployment rate, the U.S. government has to take

powerful measures to break the ice.

EXTENSIVE ECONOMIC IMPACT

If Bush's financial rescue plan was an immediate

life-saving treatment at the critical moment of the crisis, then Obama's

stimulus package can be regarded as a series of "surgeries" on many industries

to repair the damage, which will produce a more extensive economic impact, with

an ultimate goal of pulling the nation out of the recession after a certain

period of time.

It was reported that Obama's stimulus plan, designed

to save or create 3 million jobs, would include money to build infrastructure,

to invest in education, medical care and the Internet, as well as to promote

renewable energies in federal buildings and normal homes. It may also include

more than 300 billion dollars in tax cuts for enterprises and individuals after

the president-elect negotiates with the Congress.

A POPULAR

POLICY

Compared to the uncomfortable seesaw battle in the

Republican-minority Congress while debating on Bush's financial rescue plan last

year, Obama's stimulus plan is more likely to enjoy an easy pass at the

Congress.

As the financial crisis has spread to the real

economy, a deteriorating situation is foreseeable. The congressmen and the

public have realized the necessity and urgency of taking immediate and effective

measures to tackle the crisis.

After several government actions including lowering

interest rates and injecting fund to financial institutions failed to achieve

desirable results, various parties have focused their hopeful eyes on Obama's

plan to save the economy.

The joint control of Democrats in both the Senate and

the House of Representatives may also help the let-go of Obama's plan. It was

reported that House Speaker Nancy Pelosi promised to urge the Congress to enact

Obama's stimulus before his inauguration on Jan.20.

It is widely expected that the stimulus package would

help curb the recession and speed up the U.S. economic recovery.

However, congressmen from both parties have expressed

profound alarm at the jaw-dropping 1.2 trillion dollars of budget deficit this

fiscal year even before any new stimulus.

Senate Budget Committee Chairman Kent Conrad even

warned that this amount of deficit may not just appear in 2009 fiscal year, but

possibly in every year in the next 10 years.

"Yes, our economy needs help, but at the end of the

day how much debt are we going to pile on future generations?" House Republican

leader John Boehner asked. "We cannot buy prosperity with more and more

government spending."