WASHINGTON – President-elect Barack Obama is developing a plan to create or preserve 2.5 million jobs over the next two years by spending billions of dollars to rebuild roads and bridges, modernize public schools, and construct wind farms and other alternative sources of energy.
The plan, which Obama announced Saturday during the weekly Democratic radio address, is more expansive – and undoubtedly more expensive – than anything proposed so far to revive the nation’s deteriorating economy. Obama said the darkening economic outlook demands that Washington act “swiftly and boldly” to diminish the risk that the nation “could lose millions of jobs next year.”
“The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions,” Obama said, citing chaotic financial markets, rising jobless claims and the specter of a “deflationary spiral that could increase our massive debt even further.”
He provided few details and no price tag, but said his economic team is working on “a plan big enough to meet the challenges we face that I intend to sign soon after taking office.”
While cast as a response to a rapidly worsening crisis, the plan could enable Obama to shift massive sums to domestic priorities that Democrats say have long been neglected, such as health care and education. It also could provide seed money to reshape major U.S. industries, hastening the production of wind and solar energy and fuel-efficient cars, for example. Obama said the plan would be “a down payment on the type of reform my administration will bring to Washington.”
Obama has scheduled his second formal news conference since the election for Monday to introduce his economic team, including Federal Bank of New York President Timothy Geithner, Obama’s nominee for Treasury secretary, and Harvard economist Lawrence Summers, a Clinton administration Treasury chief who is expected to serve as a top Obama White House economic adviser.
Obama’s advisers are coordinating with Democrats in Congress to craft a proposal intended to spur economic activity. Congressional leaders have said they hope to pass it shortly after the new Congress convenes next year and have it on Obama’s desk soon after he takes office on Jan. 20.
Obama’s address echoed many of the same ideas Democrats on Capitol Hill have been advocating for nearly a year.
Obama said his plan would launch “a two-year nationwide effort to jump-start job creation in America and lay the foundation for a strong and growing economy. We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels,” as well as producing fuel-efficient cars.
“These aren’t just steps to pull ourselves out of this immediate crisis; these are long-term investments in our economic future that have been ignored for far too long,” he said.
Economists have called on the federal government to spend at least $150 billion and as much as $500 billion to ease the effects of what is expected to be the most painful and prolonged recession since World War II. A stimulus package signed by President Bush in February cost $168 billion.
House Democrats have been talking about a new package worth at least $150 billion, and possibly much more. During the presidential campaign, Obama proposed a two-year, $175 billion stimulus package with money for cash-strapped state governments and infrastructure projects as well as a $1,000 tax credit for working families.
The campaign did not release an estimate of the number of jobs that his proposal would create. But congressional aides who have been involved in developing stimulus proposals said that any plan to create 2.5 million jobs is likely to be significantly larger – probably well over $200 billion, or between 1 percent and 2 percent of the gross domestic product.
Such a plan would be bold by historic standards. President Bill Clinton, facing a weak economy when he took office in 1993, proposed a $16 billion stimulus package, which was blocked in the Senate. Obama’s proposal would be an order of magnitude larger, even when adjusted for the larger size of today’s economy.
Some economists have compared Obama’s proposals to the spending spree President Franklin D. Roosevelt launched during his early months in office in 1933. Roosevelt offered jobs programs, such as the Civilian Conservation Corps, and cash for public-works projects, such as the Tennessee Valley Authority, in hopes of easing the pain of the Great Depression.
While the stimulus plan Obama discussed on the campaign trail included tax cuts, he did not mention any changes in tax policy in his address Saturday. But House Democrats say they expect to push much of Obama’s tax-cutting agenda along with a stimulus measure in January. That could mean enacting legislation that would extend Bush tax cuts for families who earn less than $250,000 past the 2010 expiration date.