US 'confident' economy will rebound within a year

 

The Obama administration is "incredibly confident" the US economy will rebound within a year, a top adviser said today, before a critical week in efforts to flesh out and sell the president's recovery agenda.

"We will be seeing signs the economy is turning around," Christina Romer, head of the White House Council of Economic Advisers, told the Fox News Sundayprogram.

On CNN's State of the Unionshow, Ms Romer said she had "every expectation, as do private forecasters, that we will bottom out this year and actually be growing again by the end of the year".

President Barack Obama's steps to reverse a deep recession and restructure the ailing US financial system have global implications as he prepares to meet leaders of major developed and developing nations at a Group of 20 summit in early April.

But Mr Obama's reform plans and the vast spending envisioned to reboot the world's largest economy and purge at least one trillion dollars in "toxic" assets from bank balance sheets face hurdles from some in Congress and corporate boardrooms.

In two key parts of the agenda, treasury secretary Timothy Geithner is expected to unveil long-awaited details of his bank bailout plan on Monday and then on Thursday expand on proposals for financial regulatory reform at a congressional hearing.

One aim of the three-part strategy to cleanse the financial system will be to entice private investors with abundant loans and generous terms to buy bad mortgages and other toxic assets, a source familiar with the plan said on Saturday.

Mr Obama, whose high approval ratings are being tested in his third month as president as public anger rages over big bonuses at bailed-out financial firms, will discuss his recovery efforts in a prime-time news conference on Tuesday.

Mr Geithner has been attacked over his failure to halt bonuses of at least $165 million, and possibly as much as $218 million, paid out to employees by hobbled insurer American International Group, which has been bailed out with about $180 billion in taxpayer money.

Mr Obama has stepped up his defense of Mr Geithner, including some Republican demands for him to quit, telling the CBS show "60 Minutes" taped on Saturday that he would not accept his treasury secretary's resignation even if it were tendered.

Mr Geithner, who dismissed the calls to step down while taking responsibility for the AIG bonuses controversy, has also been criticised over his slow roll-out of the rescue plans for the banking sector that are seen as vital to an overall recovery.

Public anger over the AIG bonuses overflowed last week, prompting the House of Representatives to pass a tax bill to claw back the payouts. The Senate has several of its own ideas about how to deal with executive pay.

Mr Obama's team is also trying to win support for big-ticket items in his record $3.5 trillion budget proposal for the 2010 fiscal year - something in very short supply among Republicans in Congress.

"It's an economic blueprint for our future, a vision of America where growth is not based on real estate bubbles or over-leveraged banks, but on a firm foundation of investments in energy, education and healthcare that will lead to a real and lasting prosperity," Mr Obama said in his weekly radio address on Saturday.

The budget committees of the Senate and House are set to begin crafting their budget bills this week.

Reuters