Barack Obama rode a wave of economic discontent to the White House and now faces the daunting task of turning the weakening economy around.
Business groups wary of Obama’s populist campaign rhetoric hope to make common cause with the Illinois senator and other congressional Democrats by pushing for an economic stimulus package, possibly as early as this year.
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Groups such as the U.S. Chamber of Commerce hope to include corporate tax breaks in the stimulus, along with spending on roads and bridges intended to create jobs, which is likely to be the cornerstone of his plan.
“We start off with a shared and very strong and mutual interest,” said Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce. “The number one issue today is … the economy.”
Still, Obama has promised tougher government regulation for a range of industries, including financial services, energy and health care, and he is likely to be a strong ally for labor unions.
Wall Street “will be surprised by the speed and degree to which the corporatist agenda is replaced by 1970s-style economic populism,” wrote Andrew Parmentier, an analyst at FBR Capital Markets, in a note to clients.
Concerns about the budget deficit, which could approach $1 trillion in the budget year that began Oct. 1, will likely take a back seat in the short term, economists said.
“It’s going to be ‘damn the deficit and full speed ahead on the stimulus,’ ” said Stuart Hoffman, chief economist at PNC Financial Services. Hoffman expects the package to include an extension of unemployment benefits and new spending on roads, bridges and other infrastructure.
Obama supported a $50 billion stimulus during the campaign that included funds for infrastructure spending and grants to state and local governments.
House Speaker Nancy Pelosi, D-Calif., on Wednesday called for Congress to approve a new stimulus bill in a lame duck session before the end of the year. House Majority Leader Steny Hoyer, D-Md., said in a television interview the package would likely be in the “neighborhood” of $100 billion.
Whatever the amount, Josten said the chamber will push to include tax breaks for business investment, which has slowed in the face of tight credit.
More bad economic news is likely this week. Wall Street economists expect the Labor Department to report Friday that companies cut 200,000 jobs in October, sending the unemployment rate to 6.3 percent. Unemployment stood at 4.9 percent at the beginning of this year.
