US President Barack Obama signed a $787 billion economic stimulus bill into law on Tuesday as global markets plunged on fears that the recession would deepen despite government action around the world. Obama, who has described the package as one part of a plan to solve his country's economic ills, was expected to lay out a strategy on Wednesday to stem home foreclosures and address the housing crisis that sparked the financial sector meltdown. Meanwhile financially strapped General Motors Corp and Chrysler LLC raced to finish restructuring plans that must be submitted to the Obama administration by the end of the day as part of efforts to keep America's biggest carmakers afloat. Obama, speaking in Denver where he visited a solar power installation, has staked his political reputation on the package, a mixture of tax cuts and spending projects, saying its success will determine his success as president. He sounded a cautious but confident note in his remarks before signing the bill. “We have begun the essential work of keeping the American dream alive in our time,” Obama said “I don't want to pretend that today marks the end of our economic problems, nor does it constitute all of what we're going to have to do to turn our economy around,” he said. “But today does mark the beginning of the end - the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs. “The beginning of what we need to do to provide relief from families worried they won't be able to pay next month's bills. “The beginning of the first steps to set our economy on a firmer foundation, paving the way to long-term growth and prosperity,” the president said. The White House has said it will take about a month for the money to start flowing. Some economists, however, believe the measures will come too late to have an effect in 2009, when many forecasters predict full-year output will contract. Some US states are reeling with their own budget problems. Lawmakers in California, the nation's most populous state, failed to pass a $40 billion budget on Sunday, giving weight to Governor Arnold Schwarzenegger's threat to lay off up to 20,000 state employees. Kansas is also running out of cash and its governor said it might halt tax refunds. Less tax and more spending The stimulus package includes working class tax cuts, infrastructure spending, help for the poor and unemployed and investment in alternative energy. Obama has predicted that it will save or create more than 3.5 million jobs over the next two years. Though a major success for his young presidency, the stimulus debate in Congress laid bare bitter divisions over how to boost an economy suffering a rising jobless rate of 7.6 percent and a banking crisis that has nearly frozen lending. Only three Republicans voted for the measure in the 100-seat Senate, and no Republicans broke ranks to support it the House, arguing it had too much spending and not enough tax breaks. The final plan was split into 36 percent for tax cuts and 64 percent in spending and other provisions. Republicans lambasted the package on Tuesday for being too expensive and criticized Democrats for pushing it through. “In these difficult economic times, it is imperative that Republicans and Democrats work together to create new jobs and grow the economy,” Republican National Committee (RNC) Chairman Michael Steele said in a statement. “Instead, Congressional Democrats worked behind closed doors to write legislation that will fall short of creating the promised new jobs, but will guarantee a larger debt burden on our children and grandchildren.” US stocks slid on Tuesday, sending Wall Street near bear-market lows. Other global markets also sank on fears that government action will not be enough to pull the United States out of recession and avert a deepening worldwide financial crisis. The White House has repeatedly dismissed one-day market reactions to its proposals. Obama said the plan's focus on infrastructure, health care and renewable energy would create jobs while making up for lost time in areas where the country had fallen behind. “We're putting Americans to work doing the work that America needs done in critical areas that have been neglected for too long ... work that will begin real and lasting change for generations to come,” he said.
