Obama seen favouring $775 billion stimulus plan: Reports

President-elect Barack Obama is reported to have told House Speaker Nancy Pelosi that he is in favour of an economic stimulus package in the range of around $775 billion.

Obama is said to have met Congressional leaders from both parties at Capitol Hill yesterday to help develop and generate support that will give a leg-up to the depressed US economy. His plan aims to cut taxes for individuals and businesses alike, while increasing government spending on programs to rebuild the country's infrastructure. Obama is reported to be planning a speech on 8 January.

Tax breaks to boost consumer demand are reported to be to the tune of $500 for individuals and $1,000 for couples, and would be given by altering tax-withholding rules that will see workers take-home pay increase. The package would also be in line with Obama's campaign promise to boost jobs through spending on improvement programmes for roads, bridges and power grids, and providing aid to states that are hit by budget shortfalls.

Obama, 47, said he wants lawmakers to finish most of their work on the plan, including tax cuts and spending, by the end of this month or no later than the first week of February. The president-elect is asking that tax cuts make up 40 percent of the plan, Democratic aides and a transition official said.

Majority View
Bloomberg quoted senate majority leader Harry Reid as saying that the president-elect told lawmakers that economists are suggesting a US stimulus plan as large as $1.3 trillion, adding that Obama press secretary Robert Gibbs said the $800 billion is "not far from the upper end that we've talked about."

Obama has also pledged "unprecedented transparency" as the plan is being shaped by policymakers, and said he is considering publishing "very detailed information about all the projects that are taking place", online.

House minority leader John Boehner was quoted as saying that the plan's overall size remains a concern to Republicans, since it was not a package that was "ever going to be paid for by the current generation," adding that it would be paid for by "our kids and grandkids." He was reported to be optimistic that Congress would have some legislation for Obama to sign in around six weeks, by which time he would be settling in as the President of the United States.

Reports also said that Obama's proposal includes tax cuts of over $100 billion for businesses, that would allow some companies which posted losses last year to get refunds for taxes paid as far as five years ago. Businesses could also possibly refile their old tax returns and use losses suffered last year to offset profits made when times were good. Under current US law, businesses can offset losses against profits for the two previous years.

However, the tax cuts probably would not help auto companies, who have not paid taxes earlier. It is unlikely to help the steel and airline sectors as well, though reports suggested that the bulk of the remaining business community would be happy with the move.