Video: Obama on economic challenges

CNBC
updated 1/8/2009 7:29:51 AM ET 2009-01-08T12:29:51

President-elect Barack Obama confirmed to CNBC Wednesday that he plans to lay out a roughly $775 billion economic stimulus plan but indicated that the amount could grow once it gets taken up by Congress.

"We've seen ranges from $800 (billion) to $1.3 trillion," he said in an exclusive interview with CNBC's chief Washington correspondent John Harwood. "And our attitude was that given the legislative process, if we start towards the low end of that, we'll see how it develops."

In the interview, Obama also:

  • said he's concerned that the stimulus money "is spent wisely, that there's oversight and that there's transparency."
  • hopes the U.S. economy will be growing again in the second half of 2009, though "I don't have a crystal ball."
  • indicated that he may not seek a quick repeal of President George W. Bush's tax cuts for people making over $250,000 and will let them expire in 2010.

Obama also said he wants to avoid living in a "bubble" and will pay close attention to how financial markets react to his policies.

"Given the sensitivities of the market, I've got to pay some attention to market psychology," he said. "Because part of what we have right now is such a loss of trust both in the marketplace and in government. Restoring that trust — restoring that confidence — is going to be very important."

'I'm probably not going to be watching the crawl at the bottom of an interview," he added. "What I will be doing is making sure I'm communicating with key market participants on a regular basis, again to explain to them exactly what our plans are—and to solicit from them good ideas."

In a news conference earlier Wednesday Obama said that he was still talking to congressional leaders about his economic stimulus package and that the final price tag would likely be at the high end of estimates.

"We expect that it will be on the high end of our estimates but will not be as high as some economists have recommended because of the constraints and concerns we have about the existing deficit," Obama told a news conference.

Obama plans to propose $310 billion in tax cuts for the middle class and businesses as part of the $775 billion stimulus plan. Some U.S. governors and economists are pushing for a larger package—around $1 trillion. Many Republicans want a more modest bill, possibly in the range of $500 billion.

Noting that the Congressional Budget Office had just estimated he would inherit a $1.2 trillion federal deficit for fiscal 2009, Obama promised to cut unnecessary spending.

"We expect that discussion around entitlements will be a part, a central part of those plans," Obama said at a news conference. "And I would expect that by February in line with the announcement of at least a rough budget outline we will have more to say about how we're going to approach entitlement spending."

Reuters contributed to this report.

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