[Marxism] WSJ:Meatier Stimulus Plan in Works

Greg McDonald sabocat59 at mac.com
Sat Dec 13 06:40:04 MST 2008


DECEMBER 13, 2008

Meatier Stimulus Plan in Works
Obama Team Considering Beefing Up Earlier Goals; $1 Trillion Is Possible


President-elect Barack Obama's economic team is considering an  
economic-stimulus program that will be far larger than the two-year,  
half-trillion-dollar plan under consideration two weeks ago,  
according to people familiar with the team's thinking.

The president-elect is expected to be briefed on the broad parameters  
of the plan next week, with aides still hoping for Congress to pass a  
bill by the time Mr. Obama takes office Jan. 20.

With the unemployment rate now expected to hit 9% without aggressive  
intervention, Obama aides and advisers have set $600 billion over two  
years as "a very low-end estimate," one person familiar with the  
matter said. The final number is expected to be significantly higher,  
possibly between $700 billion and $1 trillion over two years.

Transition spokeswoman Stephanie Cutter denied any decisions have  
been made on the scope of the plan. "Any speculation on size or scope  
is premature at this time," she said.

Mark Madden, a Corvette assembly worker, hangs a door Friday at the  
Bowling Green, Ky., facility. As economic conditions worsen, Obama  
economists say the package will have to be larger than expected to  
ensure the stimulus reaches the economy.

On the upper bounds, liberal economists in the team have staked out  
$600 billion in the first year and $300 billion to $600 billion in  
the second, depending on economic conditions in 2010. Incoming Obama  
White House Chief of Staff Rahm Emanuel said early this week he had  
tasked National Economic Council Director Lawrence Summers to sound  
out conservative and liberal economists on their views.

The general sense among economists being canvassed by the Obama team  
is that "every day there's a new bad number," one of the people  
familiar with the matter said. "And people's sense of what the  
appropriate stimulus is rises" with the news.

Christina Romer, who will lead Mr. Obama's Council of Economic  
Advisers, is also surveying economists, trying to build political  
consensus around a larger number before it is presented to Congress  
in early January.

People familiar with the discussion say Lawrence Lindsey, President  
George W. Bush's first NEC director, has counseled $800 billion to $1  
trillion in stimulus over two years. Harvard University economist  
Martin Feldstein, a Reagan White House economic adviser, has raised  
his initial, one-year, $300 billion figure to at least $400 billion.

Neither Messrs. Lindsey nor Feldstein returned calls requesting comment.

As economic conditions worsen, Obama economists now say the package  
will have to be larger than expected to ensure the needed stimulus  
actually reaches the economy. Households will save some percentage of  
the initial tax cut. And some amount of spending, especially on  
infrastructure, won't reach the economy in the expected time frame of  
the package, since contracts and projects may be delayed.

"How much do you have to spend to give $100 billion of stimulus? One  
hundred billion is the wrong answer. It's more," a person familiar  
with the deliberations said.

The process of putting together the package is now far enough along  
to bring the president-elect into the mix. The economic team will  
brief Mr. Obama next week, largely about the size of the package.  
Discussions are still under way about content.

Mr. Obama has said the package will include an initial tax cut and a  
massive infusion of funds for roads, bridges, water systems, school  
repair, spreading broadband access, promoting health-care information  
technology, improving energy efficiency in buildings, renewable- 
energy projects, and assisting struggling state and local  
governments. But the balance of those projects is still under debate.

Write to Jonathan Weisman at jonathan.weisman at wsj.com and Deborah  
Solomon at deborah.solomon at wsj.com

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