In news out of Washington, the reported that Pres. Barack Obama will be asking Congress to try and help stimulate struggling economy through further fiscal measures. That includes extending the payroll tax cut that had been enacted last December as well as extending unemployment benefits for the long-term unemployed. He also said that he would propose fresh spending cuts that would you propose fresh deficit reductions that would go beyond their called for measures in their recent debt ceiling deal.
The dollar amount of the additional long-term deficit reduction measures would exceed the cost of the short-term spending that he would propose. These plans are set to be unveiled in a speech in early September and with that other key themes to try and help boost the economy including the streamlining the patent process, a mix of tax cuts, passing trade deals, as well as an infrastructure bank they can help with construction projects such as road building.
Some of these measures would need approval from Congress though some of them can be run straight out of the executive branch.
It may be difficult for the president to get any of his proposals passed through a Congress that does not want to see any type of spending increases from government. However Obama has been making the case on his bus tour to the people that some form of short-term stimulus to help the economy accelerate job growth is needed, but that it would be coupled with medium to long-term deficit reduction that would go above and beyond the spending he is calling for in his proposals.
His economic speech will come after the Federal Reserve has its Jackson Hole Symposium meeting in which we will here are details from Fed Chairman Bernanke on whether the Fe is contemplating more stimulus measures of its own from the monetary side.
In any case we'll see if some of these economic policies proposed by the president can make it through a fractious Congress, or if this will be simply another round of political deadlock that doesn't get the country moving forward in the right direction in terms of creating jobs and regaining the momentum in the recovery.
Chief Market Analyst