Obama Signs $787bn Economic Stimulus Bill

President Barack Obama today signed into law one of the most expensive bills in US history, a $787bn (£551bn) emergency stimulus package on which he is pinning hopes of saving America's tumbling economy.

Obama described it as "the most sweeping economic package in US history".

The new law, which aims to save or create an estimated 3.6m jobs, puts him on course to achieve the most ambitious first 100 days in office since Franklin Roosevelt in the 1930s.

But stockmarkets in the US and elsewhere round the world plunged amid skepticism that the bill will make much impact, given the scale of the economic downturn.

Obama sat down at an antique desk in Denver to sign the bill, which will define the first four years of his administration. Afterwards, he said: "There you go. It is done."

The legislation, which Congress passed on Friday, comes only four weeks after Obama's inauguration and is fast by Washington standards. The 1,079-page law sets out a mixture of new infrastructure projects, tax cuts, new funding for education and help for the unemployed and poor.

Obama flew from Washington to Denver, Colorado for the historic signing ceremony rather than performing it, more traditionally, at a desk in the White House. It was a symbolic gesture aimed at showing the president does not want to be seen as a creature of Washington but one that is aware of the economic crisis on the whole of America.

In another piece of symbolism, he held the signing ceremony in the city's museum of nature and science, intended to underline that a big portion of spending in the new law will be directed towards green jobs. Before the ceremony, he toured a solar panel project at the museum.

In a separate move, Obama is to follow up the stimulus package with an announcement in Phoenix, Arizona tomorrow of another round of spending, at least $50bn in aid for homeowners unable to meet mortgage payments. The aim is to try to halt, or at least slow, the number of homes being repossessed.

Economists fear that the economy is spiraling out of control, with banks, companies and financial institutions in danger of going under.

The Obama administration today is set to receive proposals from America's ailing car giants, General Motors and Chrysler, which are being propped up by $14bn in federal aid, on how they plan to restructure their industry. The companies had been given a deadline of today to explain how they planned to reduce costs.

Economists say the $787bn is nowhere near enough given the extent of the crisis. Republicans are equally sceptical, saying it will do little to stimulate the economy and is basically putting in place a traditional Democratic wishlist.

The $787bn is a long way from the $150bn-plus stimulus package that Obama had been speaking about on the campaign trail, illustrating the speed with which the crisis has worsened over the last year.

Of the $787bn, about 33% will be spent on tax cuts, down from the 40% originally proposed. The tax cuts were put in partly as a sweetener for Republicans in Congress but the tactic failed: no Republican in the House voted for the package and only three in the Senate voted for it.

But governors and mayors across the US have welcomed the relief package.

Michael Bloomberg, the New York mayor, said the money could save 14,000 jobs for teachers and 1,000 jobs for police officers, as well as expand the subway system and prevent hospital closures.

Governors, including Republican ones, argued in favor of spending much more than the $787bn.

More than $89bn is to be spent on infrastructure projects that will include roads, bridges, rail tracks, public housing, water systems and broadband internet service to rural areas.

A further $81bn will go towards improved unemployment benefits and one-off $250 payments to those on social security. About $141bn is to go towards healthcare, including subsidizing health insurance for the unemployed. About $87bn is to go towards stopping cuts in state funds to schools.

Obama, who fought his campaign on a promise to tackle climate change, is to spend almost as much on energy plans as on education, $86bn, of which $20bn will go towards renewable energy projects and $11bn to modernize the electrical grid.