Barack Obama requests $50 billion in emergency funding from Congress

Telegraph UK (Link) - Alex Spillius (June 13, 2010)

Barack Obama has sought to shore up the US economy with a request for $50 billion (�34 billion) in emergency funding from Congress to save the jobs of �hundreds of thousands� of teachers, firemen and policemen.

He said the aid, which also included measures to help small businesses, was essential to ensure that the country did not �slide backwards just as our recovery is taking hold.�

�It is essential that we continue to explore additional measures to spur job creation and build momentum toward recovery, even as we establish a path to long-term fiscal discipline,� Mr Obama wrote in a letter sent to party leaders in Congress.

Pointing out that 84,000 public sector jobs had been lost so far this year, he said keeping people employed in the short term would cost less than their unemployment.

The demand to inject further government spending into the economy puts America on the opposite course to its major trading partners in the developed world. Britain, Germany, Japan, France and Italy have all announced cuts after boosting spending to counter the recession in recent years.

Mr Obama is also likely to encounter stiff domestic opposition. Republicans immediately criticised the president for seeking to spend more money when the national debt has risen to �9.6 trillion.

John Boehner, the Republican leader in the House of Representatives, said spending more public money without offsetting the costs was irresponsible.

�The spending spree in Washington continues unabated, though the American people are screaming at the top of their lungs: �Stop�.�

Even Democrats acknowledged that it would be hard to find support for the request in Congress, where members are worried about re-election in November�s midterm elections.

Steny Hoyer, the Democratic leader in the House, admitted there was �spending fatigue� on Capitol Hill and across the country. He said he had asked the White House to look at using funds from the �543 billion stimulus package that had not been spent yet.

The White House has been engaged in an ongoing tussle with the White House over spending. Last month the House of Representatives stripped a �16.5 billion request for state aid from a bill that would extend emergency benefits for jobless workers.

An earlier request for �15.8 billion to prevent up to 300,000 teachers losing their jobs has not passed either chamber.

Since the crisis in Greece unfolded, and other European economies introduced austerity measures, Mr Obama has faced even more pressure to control spending. Mr Obama has urged government agencies to compile a list of low-priority programs for elimination. He also proposed a three-year spending freeze on matters unrelated to entitlement spending or national security.

Robert Gates, the defence secretary, has additionally demanded major savings on weapons systems thought to be extravagant or unnecessary.

But the president and his advisers believe that selected stimulatory moves will remain necessary alongside cuts. �While some people say you have to spend and some people say you have to cut, the president wants to talk about both cuts and investing,� said Rahm Emanuel, the White House chief of staff.