Obama Is Said to Favor About $775 Billion for Stimulus Plan
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By Laura Litvan and Brian Faler
Jan. 6 (Bloomberg) -- President-elect Barack Obama told House Speaker Nancy Pelosi he favors a price tag of about $775 billion for the U.S. economic stimulus plan, a Democratic aide said.
Obama met with congressional leaders from both parties at the Capitol yesterday to help craft and shore up support for a two-year plan to boost the sagging economy. He said the plan would cut taxes for individuals and businesses and spend money on government programs to rebuild the nation’s infrastructure.
“We have to act now to address this crisis and break the momentum of the recession, or the next few years could be dramatically worse,” Obama told reporters after a separate meeting with top economic advisers. He plans to deliver a speech on the economy on Jan. 8.
The plan would attempt to boost consumer demand by providing tax breaks worth $500 for individuals and $1,000 for couples. The change would come by altering tax-withholding rules so workers would see an immediate increase in their take-home pay.
Cutting the payroll tax “would be more efficient” in helping the economy, Michael Darda, chief economist for MKM Partners LP, said on Bloomberg Television, while cautioning that “there is no silver bullet.”
Senate Republican leader Mitch McConnell of Kentucky said there will be “widespread Republican enthusiasm” to include tax relief as a large part of the stimulus package.
“The atmosphere for bipartisan cooperation was sincere on all sides,” McConnell, 66, said after meeting with Obama. He was “interested in what Republican ideas might be offered to the stimulus package,” McConnell said.
Boosting Jobs
The package would also fulfill Obama’s promise to boost jobs with spending on improvements to roads, bridges and power grids, as well as aid to states being hit by budget shortfalls.
Obama, 47, said he wants lawmakers to finish most of their work on the plan, including tax cuts and spending, by the end of this month or no later than the first week of February. The president-elect is asking that tax cuts make up 40 percent of the plan, Democratic aides and a transition official said.
Senate Majority Leader Harry Reid said Obama told the lawmakers that economists are suggesting a U.S. stimulus plan may have to be as large as $1.3 trillion.
Obama “has indicated that there’s at least 20 economists that he’s talked with, and all but one of those believe it should be from $800 billion to $1.2 trillion or $1.3 trillion,” Reid said after the meeting.
Even so, Obama press secretary Robert Gibbs said, “The $800 billion is not far from the upper end that we’ve talked about.”
“The point that he was making was simply that this is a range of economists that have been polled in terms of what needs to happen to get this economy moving again, but he also added that this is not what he’s put forth,” Gibbs said. “Our number hasn’t changed.”
Talks With Advisers
The president-elect met with his economic advisers, including Treasury Secretary-designate Tim Geithner and Lawrence Summers, whom Obama picked as his director of the National Economic Council. Obama, who takes office Jan. 20, was accompanied to the Capitol by Vice President-elect Joe Biden.
Obama plans to meet again today with advisers including Geithner and Summers on budget issues and health-care costs.
Obama pledged “unprecedented transparency” as policymakers hash out the stimulus plan. He said he is considering publishing online “very detailed information about all the projects that are taking place.”
Deficit-wary lawmakers should accept a fiscal stimulus measure of at least $775 billion to avoid long-term damage caused by a sustained economic slump, said Charles Rangel, the New York Democrat who is chairman of the tax-writing House Ways and Means Committee.
‘Very Sick’
“We’re very sick, and indeed if we die we won’t be able to pay back anything to anybody,” Rangel said in a Bloomberg Television interview yesterday.
House Minority Leader John Boehner said the plan’s overall size remains a concern to Republicans. “This is not a package that’s ever going to be paid for by the current generation,” he said. “It’s going to be paid for by our kids and grandkids.”
Boehner added, though, that he thinks Congress can agree to something within six weeks and send legislation to Obama for his signature.
The stimulus package probably will increase federal college aid to low-income families, said House Education and Labor Committee Chairman George Miller, a California Democrat. He said lawmakers are concerned about a recession-driven surge in demand for the so-called Pell Grant tuition awards.
‘Sense of Urgency’
Pelosi, 68, of California told reporters that all sides will work with a “sense of urgency” on a plan. She didn’t predict how soon it might be enacted.
McConnell said he suggested to Obama the idea of offering loans to states as part of the plan, much like loans are being offered to troubled financial sectors. He said he assured Obama that a large tax-cut package would help attract bipartisan support.
“That clearly is appealing to all Republicans, from Maine to Mississippi,” McConnell said.
To contact the reporters on this story: Laura Litvan in Washington at
llitvan@bloomberg.net; Brian Faler in Washington at
bfaler@bloomberg.net.
Obama said to be in favor of 775 billion stimulus package
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