WASHINGTON, Sept 12 — The economic stimulus package US President Barack Obama rushed through Congress during his first days in office is rapidly pumping energy into the country's once-moribund economy, and has already created or preserved more than a million jobs, says his chief economic adviser.
In her first official assessment of the US$787billion (RM2.45 trillion) stimulus, Christina Romer, chairman of the President's Council of Economic Advisers, concluded that the package of tax cuts and government spending — the largest dose of economic medicine in United States history — had poured about US$150billion into the economy since its passage in February, boosting overall economic output by about 2.3 percentage points during the quarter that ended in June.
Countries around the world that had larger stimulus packages fared better economically than those with smaller ones, the report also concluded.
Romer told reporters the package was on track to save or create 3.5million US jobs by the end of next year. She said the White House expected unemployment in the country to peak at around 10per cent by the beginning of next year. Unemployment came in at 9.7per cent last month.
Even with the stimulus package, the US economy contracted at a 1per cent annual rate in the second quarter after a steep 6.4per cent collapse in the first quarter of this year.
While the economy remains in recession and has shed more than three million jobs since stimulus cash began flowing, the downturn would have been more severe and the number of jobs lost far greater without the stimulus, Romer said.
As spending continues to ramp up next year, the power of the package should grow stronger, she said, though she declined to rule out the possibility that additional government action may be needed.
Republican lawmakers, who voted unanimously against the stimulus package, quickly dismissed Ms Romer's assessment and accused the White House of whipping up a self-serving estimate of saved jobs that can never be substantiated or disproved.
“Despite skyrocketing unemployment rates and millions of lost jobs, the administration can use these models time and again to avoid accountability. By creating the immeasurable metric of 'jobs created or saved', the administration can make job claims month after month that fly in the face of economic reality,” said Republican Representative Darrell Issa.
Romer cited an array of independent estimates that back up the administration's claims. For example, Mr Mark Zandi, chief economist for Moody's Economy.com, projects that the stimulus will have created about one million jobs by the end of this month, while the non-partisan Congressional Budget Office projects that the number could be as high as 1.5million.
Two other independent forecasters, Macroeconomic Advisers and IHS Global Insight, come in much lower, projecting around 650,000 jobs saved or created so far.
Speaking separately, Treasury Secretary Timothy Geithner said on Thursday that the US banking system had regained enough health to begin removing the government's backstops.
“We must begin winding down some of the extraordinary support we put in place for the financial system," he told the congressional panel that oversees the financial bailout programme.
Citing a steady revival in financial markets and in the economy, Geithner said banks and corporations were increasingly able to raise capital from private investors.
Treasury officials said they expected banks and other financial institutions to repay an additional US$50billion that they borrowed from the government, on top of US$70billion already repaid, over the next 12 to 18 months. — NYT
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