President Obama signs most sweeping stimulus bill in US history

But U.S. stocks plunged on fears the mammoth bill, a new plan to tackle mortgage foreclosures expected Wednesday and a fresh effort to save decrepit U.S. automakers would not be enough to end the worst economic slump since the 1930s.

 

Obama, on a visit to Colorado, put his name to what he termed the "most sweeping" recovery package in U.S. history, which cleared Congress less than a month into his presidency, but with negligible Republican support.

 

"We have begun the essential work of keeping the American dream alive in our time," Obama said.

 

The president, who has been warning darkly of economic "disaster" without quick government action, adopted a more hopeful tone as he signed the bill, which may have deep implications for the success of his presidency.

 

But U.S. stocks plunged as investors worried whether government action would save the ailing economy, with the Dow Jones Industrial Average down 297.41 points (3.79 percent) to 7,553.00 at the closing bell.

 

Obama however said the new law, designed to create or save 3.5 million jobs, overhaul creaking U.S. infrastructure and to launch a healing wave of consumer spending, was a watershed.

 

"I don’t want to pretend that today marks the end of our economic problems, nor does it constitute all of what we have to do to turn the economy around," Obama said in the city where he vowed to unleash a tide of change in his Democratic convention speech in August.

 

"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 wont be able to pay next months bills.

 

"The beginning of the first steps to set our economy on a firmer foundation, paving the way to long-term growth and prosperity," he said.

 

Obama signed the bill on a wooden desk in the Denver Museum of Nature and Science, under a glass roof allowing shafts of sunlight to filter through, contrasting sharply with the dark days of economic gloom.Â

 

The museum has a pioneering solar plant, an example of new generation energy sources funded in the bill, which Obama says will retool the U.S. economy.

 

The White House meanwhile released state-by-state details on what it said would be the impact of the stimulus, known officially as the "American Recovery and Reinvestment Act."

 

The U.S. unemployment rate rocketed to 7.6 percent in January, its highest rate in 16 years, and Obama aides warned that it could hit double figures without urgent government action.

 

Roughly one-third of the stimulus funds will be spent on tax cuts, totaling 286 billion dollars, in an effort to boost consumer spending, a key engine of the world’s largest economy.

 

But a further 120 billion dollars is being allocated to "shovel-ready" infrastructure projects, in such sectors as transportation, road-building, improving the power grid and renewable energy installations.

 

The bill also includes a controversial "Buy American" clause, which though watered down, has provoked fears of protectionism among U.S. trade partners.
Republicans balked at the size of the package, and the bill was pushed through Congress only after a bruising battle.

 

"Our nation is in recession, and responsible action is required to help our economy protect and create jobs, this isn’t it," said House Republican minority leader John Boehner in a statement on Tuesday.

 

"The flawed bill the President will sign today is a missed opportunity, one for which our children and grandchildren will pay a hefty price.

 

While he took his victory lap, Obama also learned on Tuesday of the staggering depths of the crisis facing the once mighty U.S. auto industry.

 

Both General Motors and Chrysler went cap-in-hand to the government, calling for billions more in loans to stave off bankruptcy and win extra time for restructuring.

 

Both companies met Tuesday’s deadline to present plans to the U.S. Treasury, an attempt to convince government of their long-term viability, one of the conditions of a 17.4-billion-dollar government bailout.