Racing to reverse the country's economic spiral, President Barack Obama signed the mammothstimulus package into law Tuesday and readied a new $50 billion foreclosure rescue for legions ofAmericans who are in danger of losing their homes.
There was no recovery yet for beleaguered automakers, who were back in Washington for morebailout billions. General Motors Corp. said it was closing plants, Chrysler LLC said it was cuttingvehicle models and both said they were getting rid of thousands more jobs as they made theirrestructuring cases for $5 billion more for Chrysler and as much as $16.6 billion more for GM. TheUnited Auto Workers union said it had agreed to tentative concessions that could help Detroit'sstruggling Big Three.
Anything but reassured, Wall Street dove ever lower. The Dow Jones industrials fell 297.81points, closing less than a point above their lowest level in five and a half years.
Obama focused on the $787 billion stimulus plan, an ambitious package of federal spending andtax cuts designed to revive the economy and save millions of jobs. Most wage-earners will soon seethe first paycheck evidence of tax breaks that will total $400 for individuals and $800 forcouples.
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 severerecession that is well into its second year.
"None of this will be easy," he said. "The road to recovery will not be straight. We willmake 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 inour time."
Underscoring energy-related investments in the new law, Obama and Vice President Joe Bidentraveled to Denver where the president signed it at the Denver Museum of Nature & Sciencebefore roughly 250 people including alternative energy business leaders. Earlier, the pair examinedsolar panels on the museum's roof.
On Wednesday, Obama will outline another big piece of his recovery effort - a $50 billionplan to help stem foreclosures - in Arizona, one of the states hardest hit by the mortgage defaultsthat are at the center of the nation's economic woes.
Treasury Secretary Timothy Geithner mentioned the housing program last week as he rolled outa wide-ranging financial-sector rescue plan that could send $2 trillion coursing through thefinancial system. Obama is expected to detail how the administration plans to prod the mortgageindustry 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 will provide a government subsidyso mortgage companies can rework problem loans and thus make them more affordable for borrowers.Another part will allow homeowners to refinance their mortgages if they owe more than their homesare 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 also will use Fannie Mae and Freddie Mac to help prevent borrowersfrom defaulting on their mortgages, and create national standards for loan modifications.
More than 2.3 million homeowners coast-to-coast faced foreclosure proceedings last year, an81 percent increase from 2007. Analysts say that number could soar as high as 10 million in thecoming years, depending on the severity of the recession.
In Denver, Obama said the stimulus package had received broad support in Washington andelsewhere, though Democrats pushed it to passage with only three Republican votes in the Senate andnone in the House.
One of the biggest public spending programs since World War II, the new law is designed tocreate jobs in the short term and to boost consumer confidence to battle the worst economic crisissince the Great Depression. It also makes down payments on Obama's health care, energy andeducation goals.
Taking the long view, Obama cast the law as just "the beginnings of the first steps" to jerkthe country out of a crisis he inherited from GOP President George W. Bush.
White House press secretary Robert Gibbs, asked by reporters, would not rule out anotherstimulus in the future, though he said a sequel was not in the works "at this point." He added,"The president is going to do whatever he thinks is necessary to get our economy moving again."
The nation's distressed economy has dominated Obama's first weeks in office.
While laying the groundwork to address woes in the auto, financial and housing sectors, Obamaspent some of his political capital lobbying hard for the stimulus package that theDemocratic-controlled Congress approved last week. Obama has essentially pinned his politicalfuture on his prescriptions for the ailing economy, going so far as to raise the possibility of aone-term presidency if he fails.
There's no guarantee that Obama's enormous marshaling of resources and multi-pronged approachwill stunt the economic freefall, much less produce jobs or bring prosperity. The only thingcertain is that Obama is on track to boost a federal debt that stands at $10.7 trillion.
Clearly mindful of that, Obama said: "We will need to do everything in the short term to getour economy moving again" as well as "begin restoring fiscal discipline and taming our explodingdeficits over the long term."
As he spoke in Denver, General Motors Corp. and Chrysler LLC were racing to complete plansdetailing how they would repay government loans and restructure their operations to remain viable.Detroit's third major automaker, Ford Motor Co., has not requested government help.
GM submitted a dire plan to the Treasury Department, saying it would try to borrow up to$16.6 billion more from the government on top of the $13.4 billion it has received. The planincludes cutting 47,000 more jobs and closing five more U.S. factories.
Chrysler said it needed $5 billion more to survive on top of the $4 billion in governmentloans it received in December. It said it would cut 3,000 jobs and three vehicle models as part ofits restructuring plan.
The United Auto Workers union said it had reached a tentative deal with Chrysler, GM and Fordto modify its contracts with the automakers to help them endure.
As a White House task force prepared to oversee the companies' restructuring, presidentialspokesman Gibbs said the administration had not closed the door to a government-backed bankruptcyfor the companies.
GM said it had considered bankruptcy, but the only credit available to finance areorganization would be from the government and that could cost as much as $100 billion.
As for the stimulus plan, Obama contends it will create or save 3.5 million jobs. Critics,mostly Republicans, contend it is filled with wasteful spending and provisions that won't boost theeconomy.
Recession victims will get extended unemployment benefits and help with health care coverage,as well as more food stamps and job training opportunities. States will get cash to prevent themfrom cutting aid for schools and local governments. Billions are slated for road and bridgeconstruction, mass transit, high-speed rail and national parks.
Middle-income and wealthy taxpayers will be spared from income tax increase that wouldotherwise hit them. First-time home buyers, new car buyers, college students, poor families withseveral children and people who make their homes energy efficient also will get breaks.
The measure also includes money for three top items on the president's agenda - expandingcomputerized information technology in the health care industry, creating "green" jobs Obama sayswill help wean the country off foreign oil dependence, and improving the quality of kindergartenthrough 12th grade education.
