Obama prepares economic stimulus

The US president-elect is planning a package far in excess of the $175bn promised during his election campaign.

The US president-elect Barack Obama and his vice president-elect Joe Biden during a press conference with the Transition Economy Advisory Board, in Chicago, on Nov 7 2008.

WASHINGTON // President-elect Barack Obama is constructing a gigantic economic stimulus package far in excess of the US$175 billion (Dh642bn) he promised during the campaign, hoping the new Congress will have it ready for his signature as he takes office on Jan 20. Top aides said yesterday that Mr Obama also wants the next 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 aides said, however, the plan would not offer an immediate tax increase on wealthy taxpayers. During the campaign, Mr Obama said he would pay for increased tax relief by raising taxes on people making more than $250,000. "There won't be any tax increases in the January package," said one Mr Obama aide, who spoke on condition of anonymity because the details of the Mr Obama package have not been fleshed out.

Instead, Mr Obama could let taxes on upper-income families increase when the current Bush administration tax cuts expire in 2011. The incoming president's senior adviser David Axelrod unambiguously voiced Mr 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 20."

Congress will have two weeks to hold hearings and write legislation between its return to Washington in early January and Obama's inauguration. Mr Axelrod also warned executives of the nation's 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, he said, "there is very little taxpayers can do to help them".

Advisers to Mr Obama would not discuss the size of the new economic stimulus, though economists have called for spending as much as $600bn to shock the economy back onto a positive trajectory. "I don't know what the number is going to be, but it's going to be a big number," Mr Obama's economic adviser Austan Goolsbee said. "It has to be. The point is to, kind of, get people back on track and startle the thing into submission."

*AP