Video: Obama puts recovery plans on table

updated 1/5/2009 7:57:47 PM ET 2009-01-06T00:57:47

President-elect Barack Obama plunged into rare pre-inaugural crisis talks with congressional leaders Monday, declaring the national economy was "bad and getting worse" and embracing tax cuts now expected to reach $300 billion. He predicted lawmakers would approve a mammoth revitalization package within two weeks of his taking office.

If the two-year plan is enacted, workers would see larger paychecks almost immediately because taxes withheld by the government would drop. The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks as the government tries to spark more consumer spending.

"The economy is very sick," said Obama, who met privately with leaders of both parties at the Capitol. "The situation is getting worse. ... We have to act and act now to break the momentum of this recession."

Obama, who takes office two weeks from Tuesday, has said there can be only one president at a time — and he repeated that principle Monday "when it comes to foreign affairs." But when it comes to the foundering economy, he clearly feels he cannot sit by until the swearing-in.

"The reason we are here today is because the people's business cannot wait," Obama said as he arrived on Capitol Hill.

"I expect to be able to sign a bill shortly after taking office," he said. Pressed on the timing, he said, "By the end of January or the first of February."

$300 billion in tax cuts
Obama's proposal to stimulate the economy includes tax cuts of up to $300 billion — including $500 for most individuals and $1,000 for couples if one spouse is employed — as well as more than $100 billion for businesses, an Obama transition official said. The total value of the tax cuts would be significantly higher than had been signaled earlier.

New federal spending, also aimed at boosting the moribund economy, could push the overall package to the range of $800 billion or so. Some $77 billion would be used to extend unemployment benefits and to subsidize health care for people who have lost their jobs.

Video: Back to work for Obama

The rest would go toward job-creation projects such as roads and bridges and toward long-term goals such as alternative energy programs.

Meeting with Democratic House Speaker Nancy Pelosi, Obama set a tone of urgency for dealing with a financial situation that he described as "precarious."

  1. Other political news of note
    1. Animated Boehner: 'There's nothing complex about the Keystone Pipeline!'

      House Speaker John Boehner became animated Tuesday over the proposed Keystone Pipeline, castigating the Obama administration for not having approved the project yet.

    2. Budget deficits shrinking but set to grow after 2015
    3. Senate readies another volley on unemployment aid
    4. Obama faces Syria standstill
    5. Fluke files to run in California

He said, "The speaker and her staff have been extraordinarily helpful in working with our team so we can shape an economic recovery plan and start putting people back to work."

But he also met with Republicans in an effort to build broad support for quick action.

"This is not a Republican problem or a Democratic problem at this stage," he said. "It is an American problem and we're going to all have to chip in and do what the American people expect."

Concerns over cost
At his meeting with bipartisan leaders of Congress, Obama said he would make his stimulus proposal available on the Internet, with a Google-like search function to show each proposed project or program, by congressional district, according to three people who attended.

After meeting with Obama, House Minority Leader John Boehner, R-Ohio, said he was concerned about the plan's cost.

"This is not a package that's ever going to be paid for by the current generation," Boehner said. "It's being paid for by our kids and grandkids."

Republican lawmakers want more details, Boehner said, but he replied "yes" when asked if he expected a stimulus plan to be enacted within six weeks.

Said Pelosi: "It is a great honor and personal privilege to welcome you to this office. Tomorrow we will swear in a new Congress and we will hit the ground running on the initiatives ... to ease the pain being felt by the American people."

Fatter paychecks
The Obama plan's tax cuts for individuals and couples would be a bit different from the rebate checks sent out last year by the Bush administration and Congress in a bid to boost the slowing economy. The relief this time around would be awarded by withholding less from worker paychecks. That provision would cost about $140 billion to $150 billion over two years.

For businesses, the plan would allow firms incurring losses last year to take a credit against profits dating back five years instead of the two years currently allowed.

Another provision brought to the negotiations by the Obama team would award a one-year tax credit costing $40 billion to $50 billion to companies that hire new workers, and would provide other incentives for business investment in new equipment.

"We've got an extraordinary economic challenge ahead of us," Obama said, and he predicted a jobs report at the end of the week would show new declines.

Call for quick action
Video: No first-day jitters for Obama daughters He had meetings with a broad array of House and Senate Democratic leaders and with a bipartisan group of key lawmakers. He had hoped to have Congress enact the recovery plan in time for him to sign when he takes office Jan. 20, but no one thinks that will happen now.

Obama has insisted that bold and quick action is necessary if the nation is to rebound from the greatest economic crisis since the Great Depression. He has said repeatedly he wants a plan that will create 3 million new jobs.

The economic teams of new presidents often work behind the scenes with congressional leaders before their administrations move in, but Obama's direct and public involvement is highly unusual.

He arrived Sunday night in Washington and spent all of Monday at the Capitol before returning to the hotel where he has set up shop for the two weeks before his inauguration.

Aides have said the package Obama has dubbed the American Recovery and Reinvestment Plan could cost as much as $775 billion. The president-elect has refused to put a price tag on the plan, and some members of Congress expect it to go higher.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments