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June 10, 2009

Obama pledges 600,000 jobs with stimulus spending

WASHINGTON

U.S. President Barack Obama promised this week to deliver more than 600,000 jobs through his US$787-billion stimulus plan this summer, with federal agencies pumping billions into public works projects, schools and summer youth programs.

Obama is ramping up his stimulus program this week even as his advisers are ramping down expectations about when the spending plan will affect a continuing rise in the nation’s unemployment.

Many of the stimulus plans that Obama announced already were in the works, including hundreds of maintenance projects at military bases, about 1,600 state road and airport improvements, and federal money states budgeted for 135,000 teachers, principals and school support staff.

The administration had always viewed the summer as a peak for stimulus spending, as better weather permitted more public works construction and federal agencies had processed requests from states and others.

But Obama now promises an accelerated pace of federal spending over the next few months to boost the economy and produce jobs.

“We have a long way to go on our road to recovery but we are going the right way,” Obama said in a written statement prepared for his public announcement of the additional summer stimulus activity.

The announcement comes days after the government reported that the number of unemployed continues to rise; the unemployment rate now sits at 9.4 per cent, the highest in more than 25 years.

Just how much of an impact Obama’s recovery program had on the pace of job losses is up for debate. Obama has claimed as many as 150,000 jobs saved or created by his stimulus plan so far, even as government reports have shown the economy has lost more than 1.6 million jobs since Congress approved funding for the program in February.

Republicans remain critical of the stimulus spending, slamming it as a big government program that ultimately will do little for recovery. With only a fraction of the federal money actually spent thus far, it’s premature to give the stimulus plan credit for economic trends, congressional Republicans said last week.

Obama initially offered his stimulus plan as a way to put people back to work, a promise that 3.5 million jobs would be saved or created. The administration’s predictions that unemployment would rise no higher than 8 per cent already have been shattered, leaving Obama’s advisers to caution that job growth takes time, even as recovery spending intensifies.

Federal agencies will release billions of stimulus dollars to states in the coming months.

Health and Human Services will provide funding for 1,129 health centres to provide expanded service for 300,000 patients; Interior will begin improvements on 107 national parks; Veterans Affairs will start work on 90 medical centres in 38 states; the Justice Department will fund 5,000 law enforcement jobs; the Agriculture Department will begin 200 new rural waste and water system projects; and the Environmental Protection Agency will begin or accelerate the cleanup of 20 Superfund sites.

At the same time federal money for these projects is released, America’s unemployment rate likely will continue to increase, said Austan Goolsbee, a member of the White House Council of Economic Advisers.

“I don’t think there’s any question it’s going to be a rough patch not just in the immediate term, but for a little bit of time,” Goolsbee said, “because you’ve got to turn the economy around, and jobs and job growth tend to come after you turn the economy around. So it’s likely going to be a little higher.”

Obama senior adviser David Axelrod argues that the stimulus program is working and points to fewer jobs lost in May than the month before as a hopeful sign of economic recovery. Improvements in unemployment numbers naturally come later, he said.

Associated Press

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