Barack Obama rode a wave of economic discontent to the White House and now faces the daunting task of turning the weakening economy around...
WASHINGTON — Barack Obama rode a wave of economic discontent to the White House and now faces the daunting task of turning the weakening economy around.
Obama’s victory makes a new economic stimulus package — perhaps as large as $150 billion — more likely, economists said. The U.S. Chamber of Commerce on Wednesday called on the current Congress to approve a stimulus measure this year.
“We have to get the economy back on track,” said John Castellani, president of the Business Roundtable, in a television interview.
Concerns about the budget deficit, which could approach $1 trillion in the budget year that began Oct. 1, will likely take a back seat in the short term, economists said.
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“It’s going to be ‘damn the deficit and full speed ahead on the stimulus,”‘ said Stuart Hoffman, chief economist at PNC Financial Services.
The Illinois senator has pledged to offset some expenditures by raising income taxes on families making more than $250,000.
Obama supported a $50 billion stimulus during the campaign that included funds for infrastructure spending and grants to state and local governments to prevent cuts to health, education and other services.
Hoffman said the stimulus will likely include an extension for unemployment benefits and potentially even permanent tax cuts for middle and lower-income families.
The economy, which many analysts believe is already in a recession, was foremost on most voters’ minds Tuesday. Six in 10 voters said it was the most important issue facing the country.
The country’s gross domestic product — a measure of the overall economy — shrank by 0.3 percent in the July-September quarter, the government said last week. More bad economic news is likely this week. Wall Street economists expect the Labor Department to report Friday that companies cut 200,000 jobs in October, as the financial meltdown worsened, sending the unemployment rate to 6.3 percent. Unemployment stood at 4.9 percent at the beginning of this year.
The stock markets, after rallying on election day, fell in early trading Wednesday. The Dow Jones industrial average dropped 140 points, or 1.5 percent, to 9,485, while the broader S&P 500 fell more than 1 percent.
Obama is expected to move quickly to put his stamp on the huge $700 billion financial bailout Congress approved last month, analysts said.
Anil Kashyap, an economics professor at the University of Chicago’s Graduate School of Business, said Tuesday that naming the next Treasury Secretary and his top deputies — who will oversee the bailout plan — should be the new president’s top economic priority.
Obama’s victory means that industries such as oil and gas producers, utilities and pharmaceuticals may face greater regulation and even taxes, while labor unions and automakers are expected to benefit.
In addition, banks, insurance companies, hedge funds and the rest of the financial sector will almost certainly face a regulatory overhaul effort by the Democratic Congress next year.
Obama’s reputation as a conciliator, meanwhile, will be sorely tested by the labor-backed Employee Free Choice Act, which would allow workers to form unions by getting a majority of employees to sign a card in support of a union, rather than through a secret ballot election.
Business groups such as the U.S. Chamber of Commerce fiercely oppose the measure because they say the elimination of the secret ballot would open up workers to intimidation and harassment.
The measure, supported by Obama and most Democrats in Congress, was approved in the House last year but stalled in the Senate.
Obama has promised to help Ford Motor Co., General Motors Corp. and Chrysler LLC by doubling a recently approved loan program to $50 billion to help the auto industry develop more fuel-efficient cars.
Oil and gas companies such as Exxon Mobil Corp. and Chevron Corp., however, could face a windfall profits tax, which Obama has promised to impose to pay for a $1,000 “emergency energy rebate” for families.
Also on energy, Obama proposes spending $150 billion over 10 years to speed the development of plug-in hybrid cars and “commercial-scale” renewables, such as wind and solar.
Under an Obama administration, pharmaceutical companies will struggle to defend the lucrative Medicare drug benefit, which pays for medications taken by 47 million elderly people. Obama has pledged to allow the government to negotiate drug prices under the program directly with the pharmaceutical companies, saying it could save $30 billion.