US president welcomes senate vote which approved $787bn economic rescue plan.
Obama will tour a solar panel installation project in Denver in a bid to show how billions of dollars of the stimulus package, slated for alternative energy, could be used for new “green jobs” which it is hoped will boost the US economy.
Democrats and Republicans spent days battling over the plan in both the US House of Representatives and senate, as Republicans complained the initial size of the bill was too large and did not incorporate enough tax cuts.
It comes as US car manufacturers General Motors (GM) and Chrysler, now kept afloat on a combined $13.4bn in federal emergency loans, were expected to report their plans for reorganising towards long-term survival on Tuesday.
Shares in GM fell more than 11 per cent on Tuesday and analysts said the recent showdown between GM, its bondholders and the United Auto Workers union underscored the heightened risk of bankruptcy for the top US car-maker.
Roughly one-third of the stimulus funds will be spent on tax cuts, totalling $286bn, in an effort to boost consumer spending, a key engine of the world’s largest economy.
|The stimulus plan|
Plan is worth $787bn
The cuts include a $400 tax break for most individual US workers and $800 for couples, including those who do not earn enough to pay income taxes.
A further $120bn is being allocated to infrastructure projects, for such things as transportation, road-building, improving the nation’s power grid and renewable energy installations.
Consumers will also receive tax incentives to buy first homes and new cars.
Poor people and workers who have lost their jobs will benefit from increased unemployment and food benefits and subsides for health insurance.
The bill also includes a controversial “Buy American” provision that, despite being watered down, has angered US trading partners.
Obama has wide public backing for his economic plans, despite the partisan atmosphere in Washington, where Republicans were nearly unanimous in opposing the stimulus plan.
Republican legislators complained that Obama’s bill was short on cutting taxes and that the spending measures failed to target the vast sums of money towards the creation of short-term jobs, the major goal of the bill.
Al Jazeera’s John Terrett, reporting from New York, said: “Obama … would be looking for a boost from the markets, just as a tangible sign that he’s on the right track, but he hasn’t got it.
“The Dow Jones is now at its lowest level since the height of the financial crisis back in November of 2008.”
The Obama administration has defended the plan, but has said it will take time for the economy to recover.
Robert Gibbs, Obama’s spokesman, also warned that “thing had not yet bottomed out” in the US economy.
“They are probably going to get worse before they improve. But this is a big step forward toward making that improvement and putting people back to work,” he said.
Financial analysts have warned the US economy will remain feeble through 2009.
Many private economists are forecasting that the US budget deficit for 2009 will hit $1.6 trillion, including the stimulus spending, about three times last year’s shortfall.