US Congress set for stimulus vote
The US Congress was set to vote on a $789 billion economic stimulus package , as the new US intelligence chief said that the global financial crisis was now America's top security concern.business Updated: Feb 14, 2009 02:55 IST
The US Congress was set to vote on a $789 billion economic stimulus package Friday, as the new US intelligence chief said that the global financial crisis was now America's top security concern.
Facing President Barack Obama's declared February 16 deadline, lawmakers said the final shape of the bill, winnowed down from the Senate and House versions, amounted to 35 percent tax cuts and the rest in government spending.
"When they finally pass our plan, I believe it will be a major step forward on our path to economic recovery," Obama said.
The president has repeatedly pressed Congress to move swiftly on the measure, which he believes is essential in helping to spur the suffering US economy and ease the burden on taxpayers hit by the downturn.
Obama's national intelligence director Dennis Blair said the global crisis, first sparked by so-called subprime loans in the United States, was now the top US security concern.
Warning that a prolonged downturn raised the worldwide risk of "regime-threatening instability," Blair said that social unrest in Europe has already highlighted the security risks triggered by the spreading malaise.
"The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications," Blair said in testimony to the Senate Select Committee on Intelligence.
The retired admiral also warned against the deeper menace of trade barriers going up and "unleashing a wave of destructive protectionism."
That sentiment was echoed by Japanese Finance Minister Shoichi Nakagawa who lashed out against protectionism, calling it an "absolute evil" ahead of a meeting of the Group of Seven economic powers.
"For the US, Europe and other countries that sought liberalisation from Japan to run to protectionism is an absolute evil," Nakagawa told reporters before leaving for the G7 meeting in Rome.
French and US protectionist tendencies are expected to be in the spotlight at the meeting, which will bring together the group's finance ministers and central bank chiefs.
Nakagawa said on Tuesday that the G7 nations -- Britain, Canada, France, Germany, Italy, Japan, and the United States -- were expected to discuss the "Buy American" clause in a US economic stimulus package.
US senators voted last week to soften the clause, which barred spending on a project unless all the iron, steel and manufactured goods involved are made in the United States.
Japan, the European Union and Canada have fiercely attacked the clause, warning it could start a global round of tit-for-tat trade reprisals.
It was not clear in what form the clause had made it into the final bill to be voted on by Congress on Friday.
US calls for industrialised nations to take bold and immediate steps to revive the global economy were brought into focus by a growing casualty list of major economies hit by the downturn.
Spain announced that it was in recession, joining a growing list that includes the United States, Germany, Japan and Britain. Germany said GDP fell by 2.1 percent in the fourth quarter.
Australia's senate meanwhile passed a 42 billion Australian $ (28 billion US) stimulus package that had been briefly blocked in parliament, clearing the way for it to win final approval soon.
"The most irresponsible thing to do today, with the worst global economic recession since the 1930s staring us in the face, would be to do nothing," Australian Prime Minister Kevin Rudd said.
There was more gloomy corporate news, as airline Air France-KLM reported a 194 million euro ($250 million ) operating loss for the third quarter of 2008 and announced 1,000 to 1,200 job cuts.
DBS Group Holdings, Southeast Asia's biggest bank by assets, said fourth-quarter net profit fell 40 percent year on year as weak financial markets hit income.
Fresh data showed US jobless claims remained at a high level in the past week, with 620,000 new filings.