Obama lays groundwork for $850-B economic stimulus package

WASHINGTON (AP) – President-elect Barack Obama is laying the groundwork for a giant economic stimulus package, possibly $850 billion over two years, in his first test of legislative give and take with Congress.

Obama’s economic advisers are assembling a recovery plan and reaching out to members of Congress and their staffs. Obama aides cautioned that they have not settled on a specific grand total. But they noted that economists from across the political spectrum have recommended spending similar or even larger amounts to jolt the worsening economy.

House Speaker Nancy Pelosi, D-Calif., this week said Democrats were preparing their own recovery bill in the range of $600 billion, blending immediate steps to counter the slumping economy with longer-term federal spending that encompasses Obama’s plan.

Senate Majority Leader Harry Reid, D-Nev., said Wednesday that Obama has indicated that Congress will get his recovery recommendations by the first of the year.

“He’s going to get that to us very quickly, and so we would hope within the first 10 days to two weeks that he’s in office, that is after Jan. 20, that we could pass the stimulus plan,” Reid said. “We want to do it very quickly.”

Obama is promoting a recovery plan that would feature spending on roads and other infrastructure projects, making government buildings energy-efficient, building and renovating schools and adopting environmentally friendly technologies.

There also would be some form of tax relief, according to the Obama team, which is aware of the political difficulty of pushing such a large package through Congress, even in a time of recession. Any tax cuts would be aimed at middle- and lower-income taxpayers, and aides have said there would be no tax increases for wealthy Americans.

While some economists consulted by Obama’s team recommended spending of up to $1 trillion over two years, a more likely figure seems to be $850 billion. There is concern that a package that looks too large could worry financial markets, and the incoming economic team also wants to signal fiscal restraint.

In addition to spending on roads, bridges and similar construction projects, Obama is expected to seek additional funds for numerous programs that experience increased demand when joblessness rises, one Democratic official said.

Among those programs are food stamps and other nutrition programs, health insurance, unemployment insurance and job training programs.

Obama advisers, including Christina Romer and Lawrence Summers, have been contacting economists in search of advice as they assemble a spending plan that would meet Obama’s goal of preserving or creating 2.5 million jobs over two years.

Among those whose opinions Obama sought were Lawrence B. Lindsey, a top economic adviser to President George W. Bush during his first term, and Harvard professor Martin Feldstein, an informal adviser to John McCain and chairman of the Council of Economic Advisers under President Ronald Reagan.