US Congress passes stimulus plan

(Source from: http://news.bbc.co.uk/2/hi/business/7889897.stm, Saturday, 14 February 2009)

Original text:

The US Senate has voted in favour of Barack Obama's $787bn (£548bn) economic stimulus plan - clearing the way for it to be signed into law.

The vote came hours after the House of Representatives passed the measure without Republican backing.

Mr Obama has said the plan - a package of tax cuts and spending - will "save or create more than 3.5 million jobs".

Republicans argue the tax cuts are insufficient, and that the economy will be saddled with debt for years to come.

Members of both houses of Congress reached a deal over the content of the stimulus package on Wednesday.

The BBC's Kevin Connolly in Washington says the first set-piece drama of the Obama era ended in a comfortable but not entirely unqualified victory for the president, who had hoped for more bipartisan support.

All 176 Republicans and seven Democrats voted against the revised package in the House. It was backed by 246 House Democrats.

In the Senate just three Republicans voted for the package.
The rebel votes were however enough under Congress rules to stop the Republican Party using blocking tactics to delay the stimulus plan, and it passed 60-38.

'Shot in the arm'

The approved version of the plan is split into 36% for tax cuts and 64% percent in spending and money for social programmes.

Running to more than 1,000 pages, it includes new road building, cash to pay police in hard-up cities, and tax breaks for consumers buying houses and cars.

The package also imposes new limits on cash bonuses and other incentive compensation for executives on Wall Street, which are much tougher than those proposed by the Obama administration last week.

The provision, inserted by Senate Democrats, targets senior executives at financial institutions receiving government bail-out funds.

The colossal package is all to be funded with borrowed money.

Republicans had insisted on larger tax cuts instead of big spending programmes.

Republican Senate minority leader Mitch McConnell said: "This isn't Monopoly money. It's real. It adds up, and it has to be paid back, by our children and by their children."

The Democratic leader of the Senate, Harry Reid, praised the three Republicans who had voted for the bill and said it was the most important piece of legislation he had worked on.

"The country is in trouble and we're so fortunate we were able to get it passed," he said.

"It's going to give this country a shot in the arm."

Earlier, Mr Obama had said that in the longer term the government needed to rein in spending, and that "we are going to have to once again live within our means".

The president told members of the Business Council in Washington that the package was "only the beginning of what I think all of you understand is going to be a long and difficult process of turning our economy around."

Presidential pressure

"We have a once-in-a-generation chance to act boldly, and turn adversity into opportunity, and to use this crisis as a chance to transform our economy for the twenty-first century," Mr Obama said.

Among the measures in the approved package is a "Buy American" clause that had caused alarm among US trading partners.

The EU and Canada said that provisions favouring American-produced materials for government projects risked provoking retaliatory protectionist measures.

In the face of this reaction, the clause was softened to a version requiring the government not to violate trade agreements.

Last week, the House had approved an earlier $825bn version of the package without any Republican support.

The Senate voted to approve a different $838bn version on Tuesday, with few Republicans opting to back it.

The two versions had to be reconciled in a joint House-Senate committee before facing final votes in the two chambers.

President Obama increased the pressure on Congress this week, saying he wanted the bill on his desk ready to sign by the weekend.

Group Commentary:

Background and Fact

Last Friday night (13th February of 2009), the $787bn economic stimulus plan proposed by President Obama had been approved by the both houses of Congress. It passed 60-38 and 246-183 in the Senate and the House respectively.

The stimulus package approved last Friday includes four main aspects: $240bn in tax breaks for individuals and businesses like buying houses and cars for consumers, $140bn for health care , $1000bn for education and $48bn transportation projects. The passed version of the plan is divided into 36% for tax cuts and 64% percent in spending and money for social programmes. Apart from those four majorities, the plan also imposes new limits on cash bonuses and other much tougher incentive compensation for executives on Wall Street. It also includes cash to pay police in hard up cities.

Summary of the story

Finally, members of both houses of Congress got a consensus of the stimulus package on Wednesday. In the House, 246 Democrats voted for package with ALL 176 Republicans and seven Democrats against the revised package. Only three Republicans voted for the plan in the Senate, however, under the Congress rules, the rebel votes were sufficient to stop the Republican Part using blocking strategy to postpone the plan.

The reasons why Republicans did not voted for the revised version were that firstly, there should be larger tax cuts instead of large spending programmes and secondly, they concerned about next few generations had to suffer from the effect of the package by paying back the borrowed money in this package.

Analysis

The issues raised from this news that we want to concern are:

1. The level of bipartisan support to President Obama, especially the Republican Party

2. Influence and consequence of provoking retaliatory protectionist measures due to the “American Buy”

In my point of view, although this package has passed and ended in a relatively comfortable way but the President Obama did not have fully support from both parties, especially the figure “ALL” -- aLL the Republican in the House voted against the package. Is it the revenge from the opposite party to the President Obama or the revised version of the package had a lot of fault that lead the Republican to vote against the plan? Whatever the reasons are, the President Obama really has a hard time to get through while he is still a freshman of being a president. Supporting from both parties, his people and even other countries are necessary for him.