US president-elect Barack Obama’s economic stimulus plan may cost between US$675 billion and US$775 billion and will favor long-term infrastructure and job creation projects, top Obama aides said.
With the US facing gloomy forecasts of up to 10 percent unemployment and a deepening recession next year — likely “the bleakest economic outlook since World War II” — Lawrence Summers said creating three million new jobs was a “key pillar” of Obama’s plan.
Obama senior adviser David Axelrod told CBS television on Sunday that US$675 billion and US$775 billion were “not fixed” numbers.
“In this crisis, doing too little poses a greater threat than doing too much,” Summers, tapped to head the White House National Economic Council, wrote in an editorial in the Washington Post. “Any sound economic strategy in the current context must be directed at both creating the jobs that Americans need and doing the work that our economy requires.”
Summers, who served as Treasury secretary under former president Bill Clinton, signaled that Obama would adopt a different approach than US President George W. Bush.
“Some argue that instead of attempting to both create jobs and invest in our long-run growth, we should focus exclusively on short-term policies that generate consumer spending,” he said.
“But that approach led to some of the challenges we face today — and it is that approach that we must reject if we are going to strengthen our middle class and our economy over the long run.”
Obama’s incoming administration and congressional leaders are “getting awful close” to a general agreement on the huge economic stimulus package the Obama team hopes to implement soon after the Jan. 20 inauguration, vice president-elect Joseph Biden said last week.
“I don’t think Americans can wait,” Axelrod said. “People are suffering, our economy is sliding and we need to act. So our message to Congress is to work on it with all deliberate speed.”
Axelrod said the economic downturn adds urgency to repealing Bush’s tax cuts for wealthier Americans and will not prevent the future Obama administration from enacting its planned middle-class tax cuts.
Bush’s tax cuts are “something that we plainly can’t afford moving forward. And whether it expires or whether we repeal it a little bit early we’ll determine later, but it’s going to go. It has to go.” he told NBC.
He argued that eliminating the Bush tax cuts did not mean Obama would raise taxes.
Obama’s economic stimulus plan “will amount to a net tax cut for the American people,” he said. “We feel it’s important that middle-class people get some relief now.”
In terms of job creation, “we’re talking about investing in alternative energy projects that will help us achieve energy independence. We’re talking about rebuilding the nation’s classrooms to bring them into the 21st century, and labs and libraries so our kids can compete,” Axelrod added.
Around 80 percent of the 3 million new jobs Obama aims to create will be “in the private sector, including emerging sectors such as environmental technology,” Summers said, calling it a “bold goal.”
“Failure to create enough jobs in the short term would put the prospect of recovery at risk,” Summers said. “Failure to start undertaking necessary long-term investments would endanger the foundation of our recovery and, ultimately, our children’s prosperity.”