US PRESIDENT Barack Obama defended his administration’s economic policies yesterday, blaming Republicans for creating the financial crisis and then trying to obstruct his attempts to steer the country out of recession.
Without specifying amounts, Mr Obama also announced new measures intended to create jobs: financial help for small businesses, investment in infrastructure and incentives to make homes more energy efficient.
Republicans immediately attacked Mr Obama’s intention to “shift funds that would have gone to help the banks on Wall Street to help jobs on Main Street”.
The bank bailout has cost $500 billion (€340 billion) rather than the $700 billion expected. The opposition are adamant that the savings should go towards deficit reduction, not job creation.
Referring to Republicans as “folks”, a combative Mr Obama said those who approved “budget-busting tax cuts and spending programmes” under his predecessor “are now waxing political about fiscal responsibility, while opposing our efforts to reduce deficits by getting healthcare costs under control. It’s a sight to see.”
Mr Obama devoted a quarter of his speech, entitled On Job Creation and Economic Growth, to recapitulating the history of the financial crisis.
When he came to office, “five trillion dollars of Americans’ household wealth evaporated in just 12 weeks as stocks, pensions, and home values plummeted. We were losing an average of 700,000 jobs each month.”
Mr Obama’s administration was “forced” to help “the very banks whose actions . . . helped precipitate the turmoil”. As a result of his actions, including the $787 billion stimulus package and $30 billion in tax cuts for struggling businesses this autumn, “we are in a very different place today”, Mr Obama said. “We are no longer facing the potential collapse of our financial system and we’ve avoided the depression many feared. Our economy is growing for the first time in a year.”
The congressional budget office says Mr Obama’s Recovery Act saved 1.6 million jobs. But there are still 17 million unemployed Americans.
Small businesses create 65 per cent of all new jobs in the US, Mr Obama said. He proposed eliminating capital gains tax on small-business investment and creating a tax incentive for them to keep employees. He will step up investment in modernising transportation and communications networks, in addition to 10,000 projects already funded through the Recovery Act.
“A healthcare system in which exploding costs put our businesses at a competitive disadvantage” is an important cause of the recession, Mr Obama noted, as senators continued to debate a healthcare Bill on Capitol Hill. After a weeks-long deadlock over the “public option”, which would create government medical insurance to compete with private companies, there is an emerging consensus around the idea of allowing people under 65 to enrol in the senior citizens’ Medicare programme.
The minimum age and cost have not been determined, but the Medicare “buy-in” could remove one obstacle to the Senate approving a draft Bill this year.
Abortion may prove to be a more difficult issue. Republican senators Ben Nelson and Orrin Hatch have introduced an amendment that would ban women who receive subsidies to buy health insurance from purchasing coverage for abortion, even as a separate, personally financed option.
A similar amendment was attached to the draft healthcare Bill passed by the House of Representatives last month, leading to accusations that women’s rights were sacrificed on the altar of political necessity.
A vote on the abortion amendment was expected yesterday. Several Democrats said they would oppose it. “We should be debating healthcare, not abortions,” senator Barbara Mikulski said.