Business | Economy
Obama said to favour $775b stimulus plan
President-elect Barack Obama told House Speaker Nancy Pelosi he favours a price tag of about $775 billion (Dh2,846.73 billion) for the US economic stimulus plan, a Democratic aide said.
- Bloomberg
- Published: 23:58 January 6, 2009
Washington: President-elect Barack Obama told House Speaker Nancy Pelosi he favours a price tag of about $775 billion (Dh2,846.73 billion) for the US economic stimulus plan, a Democratic aide said.
Obama met with congressional leaders from both parties at the capital 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 programmes 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 January 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.
The package would also fulfil 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 per cent 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 US 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."
"..this is a range of economists that have been polled in terms of what needs to happen to get this economy moving.. but he also added that this is not what he's put forth," Gibbs said. "Our number hasn't changed."
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