O-Conomy: Obama to Sign Stimulus, Tackle Foreclosure | NBC New York

O-Conomy: Obama to Sign Stimulus, Tackle Foreclosure



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    As he struggles to lift the country from the worst economic downturn since the Great Depression of the 1930s, Obama termed passage of the stimulus package a "major milestone on our road to recovery."

    WASHINGTON  — President Barack Obama heads to the American West this week to sign the $787 billion economic stimulus package and to tackle the home mortgage foreclosure crisis, signaling his determination to sidestep the partisan fires still raging in the capital.

    Passage of the stimulus — unprecedented in its cost to the federal treasury — was a major victory for Obama as he struggles lift America out of an economic nosedive not seen since the 1930s Great Depression.

    While predicting Americans would begin to see a decline in the skyrocketing unemployment rate once the money begins to flow, top Obama aides cautioned Sunday that the economy would continue its negative spiral in the near future.

    "The president has said it's likely to get worse before it gets better," Obama senior adviser David Axelrod said. "But I do expect the rise in unemployment to be retarded."

    The stimulus package, which passed with no Republican support in the House and only three Republican votes in the Senate, aims to save or create as many as 3.5 million jobs through massive government investment while boosting consumer spending through modest tax cuts.

    The president's determination to sign the stimulus bill into law in Denver on Tuesday suggests Obama will continue taking his economic message to the American people, who are giving him high marks for handling the crisis. The symbolism is obvious for Colorado, where a growing green-energy industry will draw major benefits from the stimulus.

    "He is determined to keep in touch with the American people who sent him here to do this job," Axelrod said on "Fox News Sunday.

    White House spokesman Robert Gibbs said the president had taken "unprecedented" steps in a bipartisan effort to include Republicans in the legislative process. But Sen. John McCain remained highly critical, declaring the stimulus would create what he called "generational theft" — huge federal deficits for years to come.

    McCain, who lost the presidential race to Obama, said the president had backtracked on promises of bipartisanship and was off to a bad start. "Let's start over now and sit down together," said McCain, who appeared with Gibbs on CNN's "State of the Union."

    Republican Sen. Lindsay Graham put it more bluntly in an appearance on NBC's "Meet the Press": "If this is going to be bipartisanship, the country's screwed."

    With the stimulus victory in hand, Obama moves Wednesday to Phoenix, where he was to outline plans for reversing the collapse of the housing market.

    Late last summer, Americans began feeling the pinch of the recession and left the housing market in huge numbers. That coincided with a sharp increase defaults on home mortgages, a devastating combination that triggered the U.S. financial crisis. Lending froze as banks and investment houses realized they were holding trillions of dollars in bad assets.

    Under an emergency $700 billion bailout program passed late last year, the Bush administration used half of those funds to forestall a financial collapse. But the flow of credit did not ease and use of the money was criticized because it was poorly administered and monitored.

    Obama is now working to leverage the second portion of the bailout money into a program that could result in $2 trillion in government and private sector cash infusions to help banks and investment houses clear away "toxic" holdings and thereby spur lending.

    As part of the next steps on the bailout, Obama was expected to introduce measures to help homeowners on the brink of foreclosure. Details have not been disclosed, but the nature of the crisis suggested mortgage loans would have to be revalued downward along with interest rates.

    "We obviously have a major problem; problems with foreclosure, problems with people living on the edge and problems with home values around the country just plummeting, which is affecting family, family finances everywhere," Axelrod told NBC. "We want to do something that will address all of those things."

    On another major crisis facing the administration, Axelrod said that any plan to shore up the auto industry will require sacrifice by all involved, from auto workers and industry executives to shareholders and creditors.

    His statement came just before negotiations about such concessions were set to resume Sunday between General Motors Corp. and the United Auto Workers, according to a person briefed on the talks. Bargaining had broken off Friday night in a dispute over payments into a union-run trust fund that will take on retiree health care costs next year.

    GM and Chrysler LLC are expected to submit plans to the government by Tuesday, the deadline for showing how they can repay billions in loans and become viable in spite of a drop in auto sales not seen for a generation.

    "We need an auto industry in this country. There are millions of lives, livelihoods that depend on it," Axelrod said on NBC. "We have a real interest in seeing the auto industry survive, but it's going to require a major restructuring of the auto industry."