US

Obama says US will emerge stronger from financial crisis

Article published on the 2009-02-25 Latest update 2009-02-27 15:38 TU

(Photo: Reuters)

Speaking on Tuesday to lawmakers in the House of Representatives for the first time, US President laid out domestic policy for overcoming the current financial crisis. He promised to save money by building a more efficient health system and warned that more money may have to be added to the current stimulus package.

Obama announced a lending plan to fund car and home purchases. The plan will also seek to free up credit for business.

He said the federal budget was being reduced as his staff searched for ways to reduce the country's deficit, which he has promised to halve.

Obama said he would reduced the deficit by eliminating the "no-bid" type contracts used in Iraq, and reform defence spending so that no outdated weapons are bought.

He also said he would no longer keep the military costs from Iraq and Afghanistan outside the main budget, as the Bush administration did.

It is "worrying that he has brought up the question of austerity and deficit reduction so early in this process," says Eileen Appelbaum of the US Centre for Economic and Policy Research.

She is "concerned that the problems are much stronger than he thinks, that the recession will last longer than a year and that in fact he will have to come back to the American people with another round of stimulus".

Applembaum told RFI that Obama's promise to save money by reforming the health sector was a positive note, pointing out that "57 per cent of health care spending comes from federal and state governments".

"So, if he can actually get health care spending under control - by reforming the health care system not by cutting access and services - this would be a tremendous accomplisment."