Controversy is expected as US president Barack Obama prepares to ask Congress to back a new plan that may boost economic growth. The schemes would cost the US government billions of dollars.
President Obama said in a television interview “There are some immediate things we can do around infrastructure, tax policy that would make a difference in terms of people hiring right now”.
The measures will in all probability include new policies for citizens who have been unemployed for a long time, tax cuts and spending on the US infrastructure. The decision came after recent data showed that prices are rising despite financial problems.
Producer expenses rising
The price of wholesale goods (not including energy and food) has risen by 0.4% in July – 2% higher than they were 12 months ago.
“Producer expenses are on the rise and while weak demand may limit pricing power, the pressure on costs will cause firms to look for any possible way to pass on those increases,” said Joel Naroff, chief economist at Naroff Economic Advisers.
The Labor department published a report yesterday that showed fuel costs declining by 0.6% in July. Federal Reserve Chairman Ben Bernanke has been forced to come to a decision as to how the central bank can stimulate growth.
The Federal Open Market Committee are experiencing disagreements over the central bank’s promise to keep interest rates down to record lows until at least 2014.
Richard Fisher, the president of the Federal Reserve Bank of Dallas, was one of only three governors who does not agree with the decisions that were made by the bank last week. The governor does not believe it should be up to the Fed to stimulate the economy when the stock markets fall into chaos.
“I believe what is restraining our economy is not monetary policy but fiscal misfeasance in Washington,” he said.
As the House of Representatives is primarily controlled by the Republican Party, any further schemes designed to boost the economy are likely to be prevented from going ahead.
“The American people understand that Washington can’t keep spending money it doesn’t have”, said John Boehner, a House spokesperson.