Monday, Nov 24, 2008
Facing an increasingly ominous economic outlook, President-elect Barack Obama and other Democrats are rapidly ratcheting up plans for a massive fiscal stimulus program that could total as much as $700 billion over the next two years.
That amount, more than the nation has spent over the past six years in Iraq, would rival the sum Congress committed last month to rescuing the country’s financial system. It would also be one of the biggest public spending programs aimed at jolting the economy since President Franklin D. Roosevelt’s New Deal.
Hints of a hefty new spending program began emerging last week. New Jersey Gov. Jon Corzine (D), an Obama adviser, and Harvard economist Lawrence H. Summers, whom Obama has chosen to lead his White House economic team, both raised the possibility of $700 billion in new spending. Yesterday, Obama adviser and former Clinton administration Labor secretary Robert Reich and Sen. Charles E. Schumer (D-N.Y.) also called for spending in the range of $500 billion to $700 billion.
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Transition officials would not confirm that they are considering spending of that magnitude, but they made clear that economic conditions are dire, and suggested that Obama might be forced to delay his pledge to repeal President Bush’s tax cuts for the wealthy.
Last week, Goldman Sachs said it expects the economy to shrink even faster by the end of the year, at a 5 percent annualized rate. Meanwhile, the Dow Jones industrial average dropped 5.3 percent for the week; and the nation’s largest bank, Citigroup, sought government assistance to avoid collapse.
This article was posted: Monday, November 24, 2008 at 12:36 pm