AP, DENVER AND WASHINGTON
Racing to reverse the country’s economic spiral, US President Barack Obama signed the US$787 billion stimulus package into law and readied a new US$50 billion foreclosure rescue for millions of Americans who are in danger of losing their homes.
There was no recovery yet for beleaguered automakers, who were back in Washington for billions more in bailout funds. General Motors Corp said it was closing plants, Chrysler LLC said it was cutting vehicle models and both said they were getting rid of thousands of more jobs as they made their restructuring cases for US$5 billion more for Chrysler and as much as US$16.6 billion more for GM.
The United Auto Workers union said it had agreed to tentative concessions that could help Detroit’s struggling automakers.
Anything but reassured, Wall Street plunged ever lower. The Dow Jones industrials fell 297.81 points, closing less than a point above their lowest level in five-and-a-half years.
Obama focused on the stimulus plan, an ambitious package of federal spending and tax cuts designed to revive the economy and save millions of jobs. Most wage-earners will soon see the first paycheck evidence of tax breaks that will total US$400 for individuals and US$800 for couples.
The stimulus package was a huge victory for Obama less than one month into his presidency. But he struck a sober tone and lowered expectations for an immediate turnaround in the severe recession that is well into its second year.
“None of this will be easy,” he said, speaking in the city where he accepted the Democratic presidential nomination last August. “The road to recovery will not be straight. We will make progress, and there may be some slippage along the way.”
Still, he declared, “We have begun the essential work of keeping the American dream alive in our time.”
Underscoring energy-related investments in the new law, Obama and Vice President Joe Biden traveled to Denver where the president signed it at the Denver Museum of Nature & Science before roughly 250 people including alternative energy business leaders. Earlier, the pair examined solar panels on the museum’s roof.
Yesterday, Obama was to outline another big piece of his recovery effort — a US$50 billion plan to help stem foreclosures — in Arizona, one of the states hardest hit by the mortgage defaults that are at the center of the nation’s economic woes.
Treasury Secretary Timothy Geithner mentioned the housing program last week as he rolled out a wide-ranging financial-sector rescue plan that could send US$2 trillion coursing through the financial system. Obama is expected to detail how the administration plans to prod the mortgage industry to do more in modifying the terms of home loans so borrowers have lower monthly payments.
One Democratic official familiar with the plans said they would provide a government subsidy so mortgage companies can rework problem loans and thus make them more affordable for borrowers.
Another part would allow homeowners to refinance their mortgages if they owe more than their homes are valued. Still another section would give bankruptcy judges more authority to change mortgages.
The official, who spoke on the condition of anonymity to avoid pre-empting the president, said the Obama administration would also use Fannie Mae and Freddie Mac to help prevent borrowers from defaulting on their mortgages and create national standards for loan modifications.