Obama’s economic stimulus plan to cost up to $775B

Published by rudy Date posted on January 1, 2009

WASHINGTON: US President-elect Barack Obama’s economic stimulus plan may cost between US$675 billion and US$775 billion (S$978 billion and S$1.12 billion) and will favour long-term infrastructure and job creation projects, his top aides said.

With the United States facing gloomy forecasts of up to 10 per cent unemployment and a deepening recession next year – likely ‘the bleakest economic outlook since World War II’ – Mr Lawrence Summers, tapped to head the White House National Economic Council, said creating three million new jobs was a ‘key pillar’ of Mr Obama’s plan.

Obama senior adviser David Axelrod told CBS television on Sunday that US$675 billion and US$775 billion were ‘not fixed’ numbers.

Mr Summers wrote in an editorial in The Washington Post: ‘In this crisis, doing too little poses a greater threat than doing too much.

‘Any sound economic strategy in the current context must be directed at both creating the jobs that Americans need and doing the work that our economy requires.’

Mr Summers, a former treasury secretary under former president Bill Clinton, signalled that Mr Obama would adopt a different approach from President George W. Bush. ‘Some argue that instead of attempting to both create jobs and invest in our long-run growth, we should focus exclusively on short-term policies that generate consumer spending,’ he said.

‘But that approach led to some of the challenges we face today – and it is that approach that we must reject if we are going to strengthen our middle class and our economy over the long run.’

Mr Obama’s incoming administration and congressional leaders are ‘getting awful close’ to a general agreement on the huge economic stimulus package the Obama team hopes to implement soon after the Jan 20 inauguration, vice president-elect Joseph Biden said last week.

Said Mr Axelrod: ‘I don’t think Americans can wait… people are suffering, our economy is sliding and we need to act. So our message to Congress is to work on it with all deliberate speed.’

He added that the economic downturn adds urgency to repealing Mr Bush’s tax cuts for wealthier Americans and will not prevent the future Obama administration from enacting its planned middle-class tax cuts.

Mr Bush’s tax cuts are ‘something that we plainly can’t afford moving forward. And whether it expires or whether we repeal it a little bit early, we’ll determine later, but it’s going to go. It has to go.’ he told NBC.

He argued that eliminating the Bush tax cuts did not mean Mr Obama would raise taxes.

The President-elect’s economic stimulus plan ‘will amount to a net tax cut for the American people’, he said. ‘We feel it’s important that middle-class people get some relief now.’

Mr Summers said around 80 per cent of the three million new jobs Mr Obama aims to create will be ‘in the private sector, including emerging sectors such as environmental technology.’ He called it a ‘bold goal’.

‘Failure to create enough jobs in the short term would put the prospect of recovery at risk,’ he added.

The Obama stimulus plan was originally intended to safeguard 2.5 million jobs in the next couple of years. But its scope was expanded to three million jobs earlier this month as the US economy sank deeper into recession.

Mr Biden reaffirmed that Mr Obama wants the new Democratic-led Congress to make the economic package its top priority when it convenes early next month, calling it ‘the most urgent order of business for the new administration’.

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