Stock exchange traded funds rallied Wednesday after three days of losses amid reports President Barack Obama will announce a new economic stimulus plan in an eagerly awaited speech Thursday.
SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 2.5% on Wednesday. Still, any further spending would likely face a tough battle on Capitol Hill as Democrats and Republicans remain deadlocked on many key issues facing the economy.
On Thursday, Obama will clearly lay out his $300 billion economic plan to stimulate job growth through tax cuts — which will account for half the stimulus — infrastructure spending and direct aid to municipals, reports Albert R. Hunt for Bloomberg. Obama plans to cover the deficit spending through higher taxes, and spending and entitlement cuts later on.
The rescheduled speech on jobs and economic growth was originally planned for Thursday when the primary debate among GOP presidential hopefuls will take place.
Observers of the political scene in Washington anticipate opposition from the Republican party. Obama has challenged the Republican Party’s platform on lower government taxes, asking if they really are the party of tax cuts. [Markets, ETFs Wait on Obama’s Job Creation Plan]
“Prove you’ll fight just as hard for tax cuts for middle- class families as you do for oil companies and the most affluent Americans,” Obama said in a Labor Day speech.
Senate Budget Committee ranking member Jeff Sessions (R-Ala.) has promised that Republicans would thwart Obama’s stimulus plan, saying the move would create more debt, reports Pete Kasperowicz for The Hill.
“There’s no doubt in my mind that the debt that we’ve now incurred is already weakening our economy,” stated Sessions on the Senate Floor. “It comes to a point that you can’t keep borrowing in a futile attempt to stimulate the economy when the increased debt itself is weakening the economy.”
A U.S. president has only presented a speech on economic and business issues before a joint session of Congress seven times since the Great Depression, says 24/7 Wall St. The speeches have had no real effect on the economy, and in fact, the economy may have gotten worse after the presidential address in some cases, according to the 24/7 Wall St. analysis.
SPDR Dow Jones Industrial Average ETF
Max Chen contributed to this article.