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Obama favors reducing taxes

US president-elect Barack Obama, center, walks with Secret Service detail to the University of Chicago Lab School for a basketball game in Chicago, Illinois, on Sunday. PHOTO: EPA

US president-elect Barack Obama is rolling out an ambitious economic vision likely to cost far more than the US$175 billion he proposed in his campaign, hoping the new Congress will cooperate even before he takes office in the midst of the most severe US financial crisis in eight decades.

Obama was to introduce his new economic leadership team yesterday, a key step toward putting into place a recovery plan that aims to save or create 2.5 million jobs over the next year.

The assertiveness is aimed at calming down wildly fluctuating financial markets, but also makes clear Obama’s intention to influence lawmaker action before he takes office on Jan. 20.

Top aides said on Sunday that Obama also wanted Congress to use its large Democratic majority when it convenes on Jan. 6 to prepare tax cuts for low and middle-income earners as part of the massive government intervention designed to pull the country out of its frightening economic nosedive.

The plan would not offer an immediate tax increase on wealthy taxpayers. During the campaign, Obama said he would pay for increased tax relief by raising taxes on people making more than US$250,000.

Obama senior adviser David Axelrod unambiguously voiced Obama’s expectations.

“Our hope is that the new Congress begins work on this as soon as they take office in early January, because we don’t have time to waste here,” he told Fox News. “We want to hit the ground running on January 20th.”

Congress will have two weeks to hold hearings and write legislation between its return to Washington in early January and Obama’s inauguration.

Representative Steny Hoyer, the second-ranking Democrat in the House of Representatives, acknowledged a readiness for quick action.

“We expect to have during the first couple of weeks of January a package for the president’s consideration when he takes office,” Hoyer said.

Axelrod also warned executives of the US auto industry to draw up plans to retool and restructure their industry if they want the billions of dollars they are seeking from Congress.

Otherwise, Axelrod said: “There is very little taxpayers can do to help them.”

Obama advisers would not discuss a specific size of the new economic stimulus, though economists have called for spending as much as US$600 billion to shock the economy back onto a positive trajectory.

Obama also delved into one of the most pressing foreign policy issues facing his presidency, calling Afghan President Hamid Karzai by telephone and telling him that fighting terrorism there and in the region would be a top priority, Karzai’s office said on Sunday.

The Saturday conversation between Obama and Karzai was the first reported contact between the two leaders since the Nov. 4 US election. The US has about some 32,000 troops in Afghanistan, a number that will be increased by thousands next year.

On the domestic front, Axelrod confirmed that the president-elect would name Timothy Geithner, the New York Federal Reserve president, as his treasury secretary yesterday. Axelrod spoke on Sunday on Fox News and ABC television.

Geithner will team with Lawrence Summers, a treasury secretary under former president Bill Clinton, who will take over the National Economic Council. Both Geithner and Summers were to appear with Obama at a news conference in Chicago yesterday.

Also on Sunday, a Democratic official said Obama would name New Mexico Governor Bill Richardson as commerce secretary, adding a prominent Hispanic and one-time Democratic presidential rival to his Cabinet.
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